UK: HB'S PRIZEWINNING FORMULA. - If you give away prizes people will flock to you. This simple fact and some hard selling has taken HB Leisure from the Welsh resort world of slot machine arcades to the rarefied reaches of UK amusement parks.

by Charles Darwent reports.
Last Updated: 31 Aug 2010

If you give away prizes people will flock to you. This simple fact and some hard selling has taken HB Leisure from the Welsh resort world of slot machine arcades to the rarefied reaches of UK amusement parks.

As plutocratic nightmares go, Tim Batstone's certainly has originality on its side. While the incubi of Batstone's more orthodox business contemporaries are haunted by such pedestrian spectres as the vat inspector or the local bank manager, those of HB Leisure's managing director feature the entire stampeding ranks of the Harlem Globetrotters. 'If those guys ever turned up here, it would be real hell,' he grimaces, paling momentarily at the thought. 'Let's just say that the p &l for that day would not look good.' It should perhaps be explained by way of context that Batstone's fears are centred on a specific HBL product known as Long Range Basketball. The product in question is an old-fashioned game of skill, involving - as its name may suggest - the aiming of basketballs at basketball hoops placed just outside the throwing range of the normal human arm.

If the humiliating experience of this averagely dysfunctional Anglo-Saxon is anything to go by, the median success-rate on Long Range Basketball - three balls for £1 - hovers stubbornly around the nil mark. However, Batstone insists (not altogether flatteringly) that every 21st punter or so actually manages to sink a ball, thus winning one of the large stuffed animals arrayed enticingly alongside the maddeningly elusive hoops.

As a result, any temporary financial Armageddon occasioned by the chance visit of nine preternaturally long-armed and physically co-ordinated African Americans to the Thorpe Park amusement centre - home to the game in question and handily placed next to Heathrow - would be rapidly offset by the reassuring ineptness of the common British herd. 'We do sometimes end up giving away more than we make,' says Batstone, 'but then we work on averages. If we had the Globetrotters in one day, chances are we'd have a Brownie pack in the next. We'll take £15,000 on this game a busy day, and give away perhaps a third of that in prizes.' There are several morals to be drawn from this tale, but perhaps the most compelling is to be found tucked away on HBL's bottom line. Founded in 1920 by Batstone's maternal grandfather, Harold Burt (whence the corporate initials), the family firm that Batstone took over in 1987 was, as they say, a whole different ball game. Centred principally on the slot-machine arcades of the North Wales Riviera, HBL had developed along what might be seen as quintessentially 20th century strategic lines: that is to say, its creator had divined the company's commercial future as lying in increased investment in technological sophistication ('Some of the machines my grandfather bought cost £25,000,' winces Batstone) and a commensurately decreased investment in manpower.

When the 28-year-old Batstone - armed with the improbable pedigree of an agricultural sciences degree from Oriel College, Oxford, a circumnavigation of the British Isles by windsurfer and a stint working for the late Robert Maxwell - joined his grandfather on the the company's board eight years ago, its £250,000 turnover was as a result generated by a laudably slim crew of 10. Rather less admirably, however, return on capital employed stood at 3% and pre-tax profits at a similarly slim £8,000.

To say that things have changed at HBL since the irruption of Tim Batstone is hardly to exaggerate the case, as a brief examination of the company's annual report suggests. For one thing, forecast turnover for 1995 stands at an altogether heftier £6.3 million, of which some £860,000 will be taken as profit. For another, return on capital employed now clocks in at over 30%. Mystifyingly enough, the explanation for all this growth also lies in yet another bottom-line statistic, although it is one that - at first glance - would appear to translate as commercial suicide. Where Batstone's grandfather managed to run his diminutive empire with under a dozen employees, his grandson now employs a staff of 300. 'My grandfather would spin in his grave at our sales per employee,' beams Batstone. 'They are certainly much lower - but then our profits are very, very much higher. And our depreciation figures are tiny.'

For those of you of an eschatological bent, Batstone's own Gumpish explanation of this mysterious financial calculus will have an additional moral appeal. 'The ironic thing about this story is that it is completely anti-'90s,' suggests HBL's sportif supremo, casually basketing a ball. 'When I took over the company, I went around the world and checked up on what was going on in places like the US. What I discovered was the simple fact that, wherever you go, giving away prizes means that people will flock to you.' Batstone's explanation for this phenomenon is also disarmingly straightforward. 'When you visit Disneyland, you spend all day marvelling at Walt's genius,' observes a sage MD. 'You're not clever: they are. Here, if you manage to win something, you're the clever one. There's something universally appealing about the tangibility of winning a prize, something to do with a sense of achievement. Margaret Thatcher would love it.'

(Social historians may care to note that this psychological tendency would appear to transcend barriers of class as well as of geography. HRH the Duchess of York won a pink plastic pig on another HBL Thorpe Park game - known as 'Lotta Bottle', and housed in a polymer ship called 'Tommy Tugboat' - only the day before our interview. Lady Thatcher has yet to put in an appearance).

Nor is the unexpected triumph of lo-tech the only gooily heart-warming aspect of this tale. Honesty - contrary to popular rumour - also turns out to be the best policy, in this distant corner of British business at least. 'Let's face it,' says Batstone, flawlessly navigating his way around a Wiggly Wire. 'We may be taking what is known as "fun retailing" into the 20th century, but these games are not exactly new. All we've done is find different ways of presenting them, and one of those ways is that people do actually stand a chance of winning things. I mean, take this hoopla stall. You'll have played hoopla before, but the difference here is that the hoops actually fit over the blocks. In traditional fairgrounds, the games are fixed and if you do manage to win, they always give you some crap they fish out from under the counter.' Batstone also has choice things to say about the 'hypocrisy' of a country that turns up its national nose at purveyors of Aunt Sallies and the like but whose government happily promotes 'gambling in its rawest, most addictive form' by way of a National Lottery.

Whatever the moral rights and wrongs of the matter, a brisk way of dealing with such Anglo-Saxon snootiness has certainly stood Batstone and his nice little earner in good stead. A policy of up-marketing a business that Batstone himself admits he once thought of as 'vaguely seedy' - introducing staff uniforms and strict accounting procedures were two particularly revolutionary departures - has notably allowed HBL's booths a useful entree into the more rarefied reaches of leisure land. 'Five years ago, you would never have found games in fixed-site amusement parks,' observes HBL's mordant MD. 'They were seen as fairground products. It was only after a lot of hard selling that we managed to get into our first parks - Flamingo Park in Yorkshire and Rotunda Park near Folkestone - in 1993. That really helped our business to turn the corner.'

In the two years since, HBL has made its debut in such commercial Xanadus as Thorpe and Camelot Parks and has also won the highly lucrative contract to run Granada Parks' gaming concessions. Only one particularly recalcitrant British bastion remains unconquered, although it is also a particularly desirable one: the collective pleasure domes of the Tussaud Group, as yet unseduced by Batstone's corporate blandishments. 'It's always been that way,' notes Batstone, with an air of insouciant determination. 'Nobody's ever exactly gone (he mimes arms open as if in embrace). So we're just continuing to bombard them.'

Another antipathetic target for HBL's marketing fire turns out to be the Disney Corporation. Waving a letter from Disney pointing out, with an air of vaguely spinsterish distaste, that hooplas and Wiggly Wires do not fit in with the Magic Kingdom's long-standing tradition of raffine good taste, Batstone tautly observes that 'they're morons. The average turnover on games in parks is £1.20 per visitor, and Disney gets eight million visitors annually. They could be making £2 million in additional profits a year if only they'd listen to us. Given what's happening at EuroDisney, I should think their bankers would be a little cross if one were to point this out to them.'

Whether or not the logic of Batstone's message is ever forcibly brought home to the leisure titans in question, the auguries for HBL's continued financial well-being would seem to be good. While Tommy Tugboat's moulded polymer construction cost £100,000 or so, the average capital spend on booths and the like is generally significantly lower. 'All a structure needs to do is show off the prizes on offer,' notes Batstone, suggesting that HBL's R&D budget may also be admirably lean.

Staff costs have, of course, risen 'remorselessly', and pilferage - despite tight money-handling controls - remains a worry. As might be expected of one who sailed around Britain on a seven-foot piece of fibreglass, however, Batstone's man-management methods tend usefully towards the immediate in this last respect. 'I man a booth myself over bank holidays,' says HBL's MD, meaningfully. 'Things do need constant attention in this business'.

In the meanwhile, Batstone is more than willing to bide his time. With his burgeoning corporate structure now bifurcated - First Prize Games, responsible for Wiggly Wires, Tommy Tugboat et al, is run by fellow-Oxonian Martin Fiennes, while HBL's arcade business remains under its MD's direct rule - he has no intention of getting out of his company's original business. 'Games typically pay back 75% of capital cost in the first year,' says Batstone. 'By contrast, arcades are a long, hard road. But the trouble with parks is that we don't own them. Arcades are a good backbone.' Nor is there any talk of flotation. 'We've already managed to grow without giving away any equity,' notes Batstone. 'To be frank, I don't think we'd be attractive to investors anyway. I think we'll probably just keep it in the family.' If this sounds tentative, it may be worth considering that the Batstones have just had their first child, a son born earlier this year. 'We've christened him Harold, after my grandfather,' says Batstone pere. 'Another HB.'.

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