{"id":56,"date":"2020-09-26T13:08:07","date_gmt":"2020-09-26T13:08:07","guid":{"rendered":"https:\/\/www.goldenballyork.co.uk\/?page_id=56"},"modified":"2020-09-26T13:08:09","modified_gmt":"2020-09-26T13:08:09","slug":"becoming-free-of-tie","status":"publish","type":"page","link":"https:\/\/www.goldenballyork.co.uk\/index.php\/becoming-free-of-tie\/","title":{"rendered":"Becoming free-of-tie"},"content":{"rendered":"\n

This article First appeared in York CAMRA\u2019s Ouse Boozer<\/a>, Issue 138 Winter 2018.<\/p>\n\n\n\n

Back in the spring of 2012 Linda and Dave, tenants at the Golden Ball, let their regulars know that they wanted to retire and were looking for someone to take on the remaining term of the lease, then about 10 years.  Some of us thought it would be a good idea to take on the lease ourselves so we started doing some research.  We chatted with people from the Star Inn in Salford who had recently set up a cooperative to run their pub.  The Golden Ball Cooperative Limited was formed soon afterwards and we started to try and work out whether there was enough of an appetite locally to raise the cash to buy the remaining term from Linda and Dave.  A public meeting was held in the Priory Street centre and filled the room.  Our share offer was oversubscribed in 3 days: there was no holding us back.  189 people each took a single share in their favourite pub with members as far flung as Peru and as local as next door! We opened our doors in November 2012.<\/p>\n\n\n\n

We were the first ever city centre co-operative pub and just the 12th in the entire country.  The pub went from strength to strength, gaining a place in CAMRA\u2019s Real Ale Guide 2014 and placing in CAMRA\u2019s 2014 York\u2019s Best Pub competition.  The Golden Ball proudly opted to become a Living Wage Employer, making local and national news and was selected as the Living Wage Foundation\u2019s champion for Yorkshire and Humberside.  We\u2019ve since collected a CAMRA pub of the season award, have featured in the Telegraph and the Guardian, were Yorkshire Life\u2019s pub of the year and more recently Yorkshire Post\u2019s pub of the week.<\/p>\n\n\n\n

With all that success one would be forgiven for thinking that everything was peachy and our bank balance nothing to worry about.  But that\u2019s not the case.  Our lease was a Tied lease meaning that we were contractually obliged to purchase all of our draught beer through our landlord.  In the old days a tied lease was between the brewer and the tenant.  The tenant paid a low rent and in return sold just the brewer\u2019s ales, purchased at slightly above the wholesale price.  In the wake of the Beer Orders of 1989, which limited the number of pubs that brewers could tie, the ownership of pubs quickly shifted from brewers to pub companies or pubcos.  What was overlooked in the Beer Orders was any restriction on the number of pubs that a pubco could tie and these companies soon had estates much bigger than the old brewers\u2019 estates.  In order to fund their expansion rents went up and so did their mark-up on the beer that they resold.  People often find it hard to believe that the pubcos don\u2019t actually brew any beer themselves.  They\u2019re simply property companies who resell beer through the tie.  They don\u2019t store or distribute the beer themselves.  They don\u2019t even pay for the upkeep of their own pubs \u2013 that\u2019s down to the tenants.  We even had to buy the buildings insurance for a pub that we don\u2019t own.  All the while the price of beer was increasing well above the rate of inflation and up until recently we were paying up to twice the direct-from-the-brewer price for our stock.<\/p>\n\n\n\n

After years of campaigning by a mostly disparate group of individuals and organisations the government introduced The Pubs Code 2016 which seeks to redress the balance between tenants and their pubcos.  The principle is enshrined that a tied tenant should be no worse off than a free of tie tenant.  This bit of legislation opened the door for the next chapter in the Golden Ball\u2019s history.  At various points in the lifetime of a lease a tied tenant now has the right to have a principally equivalent but free-of-tie lease offered as an alternative to continuing the tied lease \u2013 the so called Market Rent Option or MRO.  Our trigger point for this was our 5 yearly rent review in August 2017.  The legislation is long and complicated and that\u2019s reflected in our journey.  An independent assessor had to arbitrate and set the rental for the MRO lease.  This decision in turn had to be arbitrated by the Pubs Code Adjudicator.  But after almost 2 years we were finally able to take an MRO lease instead of our tied lease.<\/p>\n\n\n\n

The effect will be transformative.  We\u2019re a not-for-profit organisation so any surplus we make has to be invested in the business or in local good causes.  Instead of putting off refurbishments and focussing just on essential maintenance we will have the funds to keep the pub in the condition it deserves.  It\u2019s also very much our ethos to support our local business community and now we have no restrictions on who can supply us \u2013 that means more of our exceptional local beers plus a more interesting selection from further afield.<\/p>\n\n\n\n

The decision to seek an MRO lease is a difficult and daunting one.  We have been through that process and we would be more than happy to discuss in more detail with any currently tied licensees thinking of pursuing MRO.<\/p>\n","protected":false},"excerpt":{"rendered":"

This article First appeared in York CAMRA\u2019s Ouse Boozer, Issue 138 Winter 2018. 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