David Snook discovers that the right attitude, the right people and the right product have played a helping hand in Sceptre Leisure's long and lucrative history.
"Every penny’s a prisoner, said Ken Turner, underlining one of the fundamentals that contributed to the meteoric rise of Sceptre Leisure.
Britain’s second largest individual operating company this year celebrates 10 years in existence. Turner began his pub machine operating business in 1998, but it was in the following year that it began to find its feet.
The care with costs - hence the ‘penny’s a prisoner’ - has been tempered with an acute awareness of care with customers and building a strong team around him. But Turner’s success, and that of Sceptre, is probably more a combination of a multitude of talents.
Now a public limited company following its float on the Alternate Investment Market in 2008, Sceptre operates 23,000 machines in pubs and clubs across the UK.
The majority of those machines are Category C, which in Britain is the familiar AWP machine. But it includes coin-operated products of virtually all types.
All types, also includes some really adventurous projects, which are paying handsome dividends for the company, which is headquartered near Preston, in England’s north-west. Director Chris Tulloch conducted a tour of the facility, which included considerable areas devoted to the pull-tab lottery business. Sceptre bought out the AIM-listed Gaming King last year, which brought it on to the stock market.
Gaming King introduced the group to pull-tab lotteries and now through its operating company, Lottery King, it has a strong foothold in members’ clubs across Britain, with lottery machines. Alongside Lottery King there is Kelly’s Eye, the supplier of fundraising and indoor games products to pubs and clubs and Creative Lotteries, which runs lotteries in pubs and other public places.
Sceptre’s headquarters had significant areas devoted to printing, storing and dispatching lottery tickets, lottery bingo tickets and products for other games, and the machines that dispense them. "We sent out 55 million lottery tickets last year," said Tulloch, "and we are only scratching the surface of the sector."
The key question is whether a pull-tab lottery machine in a pub or club will adversely affect the income from an AWP machine in the same location. "That was something that initially concerned us," said Turner. "Our experience has shown, however, that it doesn’t. We hoped for that result - we expected that result, and it was the main reason for our movement into that sector, but of course there are never guarantees until you try it. In the event, it has opened up for us a whole new area of business."
The conclusion is not unreasonable. Staffing an operating route for AWP machines bring employees of Sceptre into locations on a regular basis, to monitor, collect, repair or replace gaming machines. To service a pull-tab lottery machine route based on the same locations offers the type of synergy of which operators dream.
Before the ‘reverse takeover’ of Gaming King last year, which took the Sceptre group public, there had to be the groundwork to create the foundations at Sceptre. That came from Ken Turner’s own experience at leading operator Crown Leisure, which was based in the same building from which Sceptre operates today. Turner left Crown, where he was a senior executive and established Sceptre as a small operating company.
Within nine years he had grown it to the extent where it was capable of acquiring Turner’s former employer and Crown’s extensive rental operation was incorporated into Sceptre in 2007.
It was Turner’s ability to watch costs in a market which, everyone recognised, was going through tough times, added to the primary objective of giving quality service, which perhaps contributed most to that growth.
The acquisition of a highly-experienced team around him and working through the country’s only fully-staffed network of regional depots - 14 of them throughout England, Wales and Scotland - was also critical.
It was also the ability to recognise other products, which were sympathetic to Sceptre’s mainline business. The pull-tab lottery machines are an obvious example, but Turner and his team also recognised the competition to the AWP which comes from FOBTs - fixed odds betting terminals - which now form the backbone to the profitability of Britain’s leading bookmakers.
Sceptre now has nearly 1,000 of them located with some of Britain’s best bookmaking businesses. It doesn’t stop there. Sceptre is constantly on the look-out for any product which will complement - rather than compete with - its current established games.
Something old, something new
The tour of the Sceptre offices showed two soft-tipped darts machines from American producer Medalist, which are forming the basis of trials conducted by Sceptre with pub-owning retailers.
"We are happy to try out anything new, particularly equipment which can provide additional revenue streams for our customers," said Chris Tulloch.
It all forms the basis for the Sceptre philosophy, of quality care for equipment, locations and customers ("we only have five per cent of our machine stock in our depots at any one time," said Turner). It was clearly a realisation at an early stage in Sceptre’s development that relying on the AWP machine alone is not enough.
The chequered history of the Category C, or AWP, machine in the British market in recent years is well documented. The 2005 Gambling Act is widely recognised within the British industry as having done plenty for other forms of gambling, but precious little for the street market. The effects of the financial recession on the leisure industry have also depressed the business.
"I feel sorry for small independent operators struggling to find the resources to re-equip," said Turner. "An operator may be given 50 new locations by a retailer, but when you think about it, each one may consist of a Category C machine, a jukebox and a pool table, between them with installation costs representing about £12,000 in investment. Multiply that 50 times - then take in the attitude of banks at the moment - where is the operator going to find the money?"
The advent of the £70 prize in Category C this year may have doubled the top award in a machine, but it is still a far cry from the £500 which may be available in an FOBT in a bookmaker’s shop next door, but with a foot in that camp too, Turner and his Sceptre Leisure may be ‘boxing clever’, as the saying goes.
Will the £70 prize resurrect the industry? Rejuvenate it? Refresh it? Whatever the adjective may be, will it do for the British AWP what the British industry needs to have done to the AWP in order to make it a truly viable proposition again for everyone involved in it?
Ken Turner said: "It’s early to say, but initial figures are encouraging. It may take another uplift in the prize within the medium term in order to fully secure the sector, but the main concern has to be arresting the declining numbers of pubs in face of the smoking ban and the recessionary effects. Those are the locations for our machines - no matter how good the machines are, or the service behind them, if people are not going into pubs, then machines don’t stand a chance. That is a more fundamental problem which needs to be addressed."
But the brief history to date of Sceptre Leisure at least underlines one of the great truths of the coin machine industry. With the right attitude, the right business practices, the right people and the right product, it is still perfectly possible to create the business miracle that litters the industry’s longer history. There is still a magic about the coin machine business that draws and holds those of us who have been in it for a long time. Sceptre proves it.
