Visit the Cooking Lager site

Before I start, a bit of a courtesy to answer questions/criticism of the last post contained in private messages. Man up, post a comment. Can’t be much arsed with PMs. But here we go. The reason why a business may not immediately hold all the cash necessary to meet all its future obligations is that is not what a business is for. A bank account or a safe or a mattress is a tool for storing cash. A business is a mechanism for utilising cash. That is to use it for a productive purpose. Utilizing cash in a productive manner to generate more cash. The discounted value of that future cash within margin of error is the value of the business. (Ya Ben Graham) A private business may hold as much cash as it likes. What you gonna do about it? A public business is subject to public scrutiny. A large cash deposit is an indication the business has no productive use for cash. It needs to put that cash to productive use or return it to shareholders. A company with a large amount of cash (or underutilized assets like buildings and real estate and plant and machinery) is therefore badly run and you might think it can be better run and seek to take it over. Kapeesh?

Anyway. Onto my ill-informed thoughts about pub rents. Heroes and villains. Feudal Barons and serfs. A polite warning, though, I am blogging out of lockdown boredom. I also drink out of lockdown boredom. Therefore, this post contains some mild profanity and vulgarity. There’s a bit of fuck, arse, bugger, up the shitter and cock about it but nothing as bad as cunt. Apart from that. And this. I rarely use cunt. I find it particular harsh. The hard Ker. I save it and when I use it, it satisfies. It’s a delayed gratification I wait to use and relish. If I ever call you a cunt, I mean it. If I call you an arse or a cockwomble or a fuckwit, it’s just bantz and really, we’re mates.

Long ago in the age of chivalry, before lovely wonderful things like nation states and capitalism and democracy and accountable rule of law and canned lager there was an economic system known as feudalism. Here feudal Barons lorded it over downtrodden serfs. The mercenary soldiers in this monopoly of violence were called knights and given lordships and land and serfs of their own and the top Baron was called a King and all the other Barons had to pay him taxes. Many years previously there was no such thing as wealth. A man had his spear with which to hunt and maybe a piece of sharp flint or two to skin his prey, but the poor fella had bugger all else. No Lager. The move to an agrarian economy (farming) had created wealth in the form of grain (from which you can make beer) and tools and livestock and alongside it the economics of violence. Where wealth exists, there are those that know how to create it and there are those that know how to take it. Those able to monopolize violence prospered and so to an extent did their serfs. For where there was no monopoly on violence there was competition for violence and in those parts of the land there was little prosperity, only warfare, pillaging and burnt farms and the heads of knights and serfs alike on pikes. Proper horrible. Serfs learned to love their masters and appreciate a monopoly on violence.

Work harder you 'orrible serfs

The land (the capital) was owned by the Barons and the grateful serfs worked that land (the labour) and gave the largest portion of their hard-earned produce/wealth to the Baron. In return they were allowed to keep enough to survive, occasionally make merry and were protected from other practioners of violence that might wish to take from them. You had, in short, a prototype for governments and the pub and beer industry that exists to this day. A system of extortion and protection. You might imagine in this system being a serf might not be the best position in life. He may be getting regularly fucked over for the better part of the wealth he is creating but it gets worse. In Droit du seigneurhis missus and daughters may even be actually fucked. Apart from the munters, maybe. It might not have been a bad thing if your bird had a face that looked like a bag of spanners back in the day. But at least he hasn’t been killed by bandits, right?

History records the technologies of gunpowder and the printing press and the development of forms of wealth beyond land and a black death (a pandemic) which reduced the number of willing serfs and saw feudalism give way to the nation state, private capital, accountable laws and technological progress to stop the beer tasting of rotten turnips. With it the authority of the church gave way to secular law, its function of poor relief to secular authorities and in places the divine right of Kings was even challenged. History records the death of feudalism and the birth of capitalism. You might not like my potted history, and I wouldn’t blame you. If you want an authoritative account rather than this old bollocks (you would struggle to find less authoritative) I would point you to the histories of the American historian Frederic C Lane. More noted for his economic histories of Venice but treat yourself to his opinions on the decline of feudalism. We’re in lockdown. You’ve got time.

You will have guessed where we are headed and wondering when it’s gonna be about pubs but back when I was a student with only the value of my labour, and without any capital to my name I once studied an undergraduate degree in business. This is where I learnt I might want to maximise and transfer the value of that labour into capital rather than piss it all up the wall on crap (like craft beer), If I didn’t want to die a serf, that is. I liked to read off the recommended list and include nuggets of off syllabus knowledge into my essays and for this was often given a better mark than would have occurred had I merely regurgitated the views and recommended reading of my lecturers. I could confess to you how much I enjoyed the Art of the Deal by Donald Trump, but 2 other books may be more palatable to admit to having read. Grinding it out by Ray Kroc & McDonalds, Behind the Arches by John F Love. It is here I became aware of a chap called Harry J. Sonneborn. In the early years of a struggling hamburger chain Harry informed Ray the way to stop struggling was to not be in the hamburger business but to be in the real estate business. (Real estate is American for land. Like what feudal Barons own) The hamburger business was just an operation. If you have a successful operation you can sell to someone and when they make a go of that they can afford the rent on the property you own that they need to utilize to flog burgers. So, you need a good operation, you just don’t have to work that operation yourself. Ask people today what business McDonalds are in they will tell you it’s the hamburger business. It isn’t. They are in the real estate business. The franchisees are in the burger business. Burgers is an operation that makes their franchisee rich enough to pay the rent. As a result, they are not stuck with bum tenants that can’t pay the rent. They’ve got rich tenants that can. These days you can mug off those 2 books. A film called the Founder, will give you this story in a fraction of the time it takes to read books.

So now we are getting to pubs. I have explained my opinions on how serfs work the capital of others, how capitalist’s own capital and how a successful business of the capitalist age may not be in the business you think they are in.

Pubs were great weren't they? We should bring them back at some point.

Currently with all the pubs shut, there is no money kerchinging through the till’s No £1.99’s for delicious health-giving cooking lager. No 8 quids for thirds of liver rotting craft filth. No 3 quids for pints of pongy bitter that put hairs on your chest. The money has dried up. Its like a famine in the feudal period or a mad cow disease in the burger business.

There are many ways to structure a pub business. You can appoint employee managers to run your pubs for you or you could run one yourself if you like pulling pints and telling drunks and discount scrounging CAMRA members to fuck right off. You can own the freehold on the pub (own the business and the land it sits on). Own the Leasehold (Own the building & pay to maintain it whilst renting the land) or Lease a pub (pay for the right to rent a pub for fixed period) off a freeholder who in turn might own that pub outright or hold a debenture (it’s what businesses call mortgages) on it. It’s all very complicated. It’s all very feudal.

There’s those earning a salary, those paying rent and presumably at some point themselves, some paying the bank and some that own and work their own capital.

Within this there are two types of Pub landlord. Owners and Serfs. Owners work their own capital and serfs work the capital of others. This is where, if you are a serf, you get offended at being called a serf. Please don’t be. There is no shame in being at some point a serf. The only shame is in dying a serf. At some point, own your own capital. (A university lecturer with a beard and cardigan and fondness for real ale told me that so it’s probably practically socialism or something)

It is here we see the revolt of the serfs in the #NoPubsNoRentcampaign. They might not like me referring to them as serfs but know this. I support them and their cause. I’m team fucked over pub landlord! I’ll sign their petition!

At times of famine there has always been kind Barons and cruel Barons. Those that gave the serfs a break and those that didn’t. Those that did give a break ended up keeping their serfs. If you starve them to death you have to then replace them.

The no pubs no rent twitter handle has handily provided this picture telling you who is on the shit list and who isn’t. You may want to clap the kind Barons? You may want to boycott the cruel Barons?

Heroes and Villains

Alternatively, you may wish to question this system. Let’s use the examples of the private real estate company Robinsons & the public real estate company Greene King. (Let’s stop pretending they are pub companies, pubs is just an operation to give people enough to do so they can pay the rent)

Robinsons, nominally a brewer but in reality, a private real estate company renting pubs to tenants with a brewery tacked on for historical reasons. A company widely praised for giving their tenants a break over the rent. For years they have been extracting rents through overpriced beer (wet rent) and pub rent. I doubt it’s easy running a Robbies pub when the brewery charge you more wholesale for your beer than you could buy it retail in the nearby Wetherspoons? I could buy their flagship beer Trooper for either £1.99 in Wetherspoons or from one of their tenants for £3.50. The company has a number of underutilized real estate sites that are simply boarded up rather than sold into the market to be reopened or repurposed, draining the capacity of the town the firm sits in to economically regenerate. They are waiting for someone else to regenerate the town for them, then they have prime real estate. They landbank real estate having no market pressure to efficiently operate their asset base. These guys are no heroes. They may not be villains, but I’m not clapping them. They are no gold standard.

Are the villains on the shit list really villains? Greene King or Greedy Kerching as the CAMRAs call them and the like? Are these the villains? If you are public company, you have scrutiny on the utilization of assets. If no rent comes in, bond holders cannot be paid, shareholders cannot be paid. The pension funds that rely on this are screwed. Is generosity an absolute? Are you generous when you can afford it or when you cannot? Green King relented, as did others on the shit list, after being shamed into it. Does being shamed into it take them off the shit list? Sure, they didn’t want to give the serfs a break but are they sitting pretty on banked generational real estate wealth? They’ve got share and bold holders.

The swearing and colourful sexual imagery are about to start. Brace yourself,

You may think feudalism has ended. You may think Droit du seigneurno longer applies. But pub owning companies have been dry fucking their tenants up the arse for so long it’s considered normal acceptable business practice. If you are dumb enough to sign a lease with these sharks, they may not demand to fuck your wife or your daughter but you are offering them the right to fuck you. To fuck you hard and dry up the arse on a regular basis. When and if they slap on lubrication and wet fuck you up the shitter, you may even be tempted to tug your forelock and thank them for their kind consideration.

If you don’t want to be fucked in the arse, dry or wet, don’t sign with these sharks. Don’t work the Barons capital. Work your own capital. Then you don’t have to cry wank on twitter about evil property owners demanding rent off you that you can’t afford.

Don’t applaud the kind Barons. Don’t hold them up as the gold standard. Let them fail. Let them run out of serfs to work their land and run out of income and when they are starving let them sell their land to be worked by their new owners. Let capitalism win and let feudalism die. Let free people work their own capital. Smash the system! Up the revolution, comrades!