The smoking ban has left the leisure industry in poor health. Amy Duff talks to the man trying to breathe life back into the UK's most popular snooker brand
The leisure industry is still counting the cost of 2007's smoking ban. Bingo halls have been among the worst hit. Three clubs in Workington, Whitehaven and Penrith report, for instance, a 20 per cent drop in membership since the ban. According to MP Tobias Ellwood, the government has added insult to injury by changing bingo's duty structure (bingo in a licensed club will be taxed at 22 per cent as of July 22, but betting shops, exchanges, online casino and poker and football pools are taxed at 15 per cent). Bingo halls—"part of our lives, part of our fabric"—he said at a protest outside Westminster, are shutting "one or two a week".
In March this year, Rileys, the UK's dominant snooker and pool hall operator, went into administration with £18m of debt. CEO Maurice Kelly was brought into the ailing business to revive its fortunes and says that the smoking ban had been influential in its demise. "At that point [July 2008] you would classify me as being a turnaround expert," says Kelly, who has also worked to reinvigorate Granada and Esporta. "Rileys was losing money and had been bought [by Georgica] for a price that didn't really reflect the impact of the smoking ban," says Kelly. "Your ambitions are all around survival and repair. Now we're in a situation where we're beginning to make investment in the company. We're moving on from 'urgent' to the next stage."
The company restructure was forced on the business by more than just the smoking ban, though. The financial crisis also played a part. "I'm the world's leading expert on the credit crunch," he says—the collapsed Icelandic bank Kaupthing supplied Rileys's £18m of debt, while its banker was RBS. "Also, there were things within the business that meant that it was not really repairable, including a substantial number of non-commercial leases that had been negotiated."
Kelly says the company has restructured the leases, but 29 loss-making sites were closed, leaving 130 clubs trading as Rileys. He says the business is in a much better position now—"we've fixed the company, fixed the financials". So how does he intend to build on that? By improving the image of snooker halls, and diversifying into darts, says Kelly.
If you ask people in Britain to describe a snooker hall, explains Kelly, they will still say "smoky", even though there's been no smoking since 2007. Rather than embark on a big media campaign to repair its image, Kelly says the process is under way to make the clubs look "attractive, friendly and inviting" from the outside, as well as in, while highlighting the fact that they're members-only and hence safe from "the war zone that is the provincial high street on a Friday and Saturday night".
With 50 or so pubs closing in Britain a week, adds Kelly, he hopes that Rileys will attract the displaced pool and darts teams. "We're focusing on putting in more English pool tables and big darts areas because it's not the Chardonnay and foccacia pubs that are closing, it's your boozer where the darts and pool teams play. We'll lose those skills, and the fact that we dominate both of those sports." He's enlisted the help of Phil "The Power" Taylor, "who's just the nicest man"—and 14-times world champion—to promote the new darts areas.
As for Kelly, he no longer thinks of himself as simply a turnaround expert. He now owns 30 per cent of the company, and sees Rileys as "the great work of my life". He explains: "I feel completely different about this company than any other company I've been involved with. I was heading for retirement, for the Alps, and thought long and hard about whether to put all my eggs into one basket. But now I'm the CEO and I feel like an owner."
The adrenalin of it all makes him feel 10 years younger, he claims. That chalet in the Alps will just have to wait.
Posted 10 July 2009 : Director.co.uk
