Is it fair to compare bankers with footballers?
Bankers are not averse to comparing themselves with footballers in justifying lavish pay packets, and both are guaranteed to prompt public outcry over seemingly 'obscene' wages. Inspired by an article asking whether Citi's $100m trader Andrew J. Hall might be better off as a baseball player (and the start of this season's Premier League campaign) we're asking whether such parallels are really viable.
In terms of wages/revenue ratio, football clubs are more generous. Italy's Serie A spends the largest proportion of its revenues on players' wages (68%), followed by Spain's La Liga (63%) and then the Premier League (62%), according to figures from Deloitte.
Bulge bracket investment banks, meanwhile, typically allocate 50% of revenues to compensation. This year, it looks like it could be slightly smaller.
Analysis of year-to-date compensation ratios within a sample of 8 investment banks by top Wall Street pay consultancy Johnson Associates puts the median at 47%.
The Premier League shelled out 1.2bn in wages in the 2007/08 season (the latest figures available), which represents a record increase of 23% year-on-year. This looks like going up again this term with Manchester City offering ever-more inflated salaries.
Similarly, after very positive investment banking revenues in the first half of 2009, the smart money is on a bigger bonus pool this year.
Johnson Associates' projections for full-year investment banking bonus pots are all positive, with the lowest increase tipped to be around 5% more than 2008 and the maximum 60% greater.
Within the Premier League, Chelsea has the biggest wage bill at 172m in 2007/08, or 63% of its 268.9m revenue. The club has 40 players in its squad meaning an average payout of 4.3m.
However, obviously this isn't divided equally, with the club's two biggest earners - Frank Lampard and John Terry - expected to take home around 7.8m each annually in wages this year (though total earnings including sponsorship and endorsements were 18m and 16m in 2008, respectively according to Forbes).
Goldman Sachs is expected to be the most generous investment bank this year, based on first half accruals.
But, according to Andrew Cuomo's report, a very small percentage of these will be above $1m.
Assessing individuals becomes even less like comparing apples with apples, mainly because banks don't disclose this (yet).
However, David Beckham was the best paid footballer last year and earned $46m, according to Forbes (although Cristiano Ronaldo will provide stiff competition in 2009).
This obviously pales in comparison to Hall's $100m, the truly astronomical figures earned by hedge fund managers and the likes of Roger Jenkins, who is believed to have secured 40m at Barclays last year.
But, compared to the 7m guarantee offered to RBS's new "rainmaker" Antonio Polverino and other packages rumoured to have been handed to top bankers, it seems they're very much (ahem) on an equal footing.
