Why bank CEOs aren’t like football managers

By Felix Salmon
August 4, 2009

John Varley is surely unhappy about the reception given to his latest pearl of wisdom:

On Monday John Varley, chief executive of British bank Barclays Plc, said the priority for him and his top investment banker Bob Diamond was to field the best team possible.

“That in a sense is exactly the same as a football manager, if they are going to win. Our obligation is to ensure we pay appropriately to attract and retain the best people,” Varley said.

Amid all the snark about whether or not Barclays could sell shirts with their stars’ names on the back, however, I think an important point is being lost here, by both Varley and his critics: football managers are paid only a small fraction of the money that they’re forced to shell out to their stars.

Yes, there are occasionally star traders who make more than the CEO for a year or two. But if a bank was really run like a successful sports franchise, its executives would in general be paid a single-digit percentage of what the top earners were getting. And I suspect that the amount of public ire directed at banks’ executives would be much lower if they didn’t pay themselves hundreds of millions of dollars not for making money, necessarily, but just for managing the people who make the money.

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