Good-Bye Bob

So, Bob Diamond is gone. No period of notice, no delays. Nothing. I suppose they will have a team working out how many millions he should get in severance pay. Now Barclays have to find a new Chief Executive as well as a new Chairman. That will not be an easy task. The departing Chairman, Marcus Agius has agreed to stay on until a new CEO has been appointed. In principle, the new CEO — be it man or woman — probably needs to be a banker but which banker will take on the job, which banker can we say is untainted by the activities of his/her own bank to date and what sort of remuneration package will he or she want. One will hope that the new CEO is not an investment banker. Also, surely this is a moment when we should take a step down the road to paying bankers proper salaries, incapable of being shuffled away through a tax haven and at proper levels — with minimal or no bonuses attached. If the Governor of the Bank of England is worth only £300,000 per annum and the PM Less than £400,000 [including the £57,000 forgone by the current incumbent plus an allowance for perks of the job], why does any banker think he is worth the £20,950,000 paid to Bob Diamond last year? But they do. No matter how bad the slime floating the surface, no matter what damage they do to the world's economies, no matter how much money they need from tax-payers and customers to keep their banks afloat, no matter how incompetent they are shown to be, they still believe that they have levels of expertise that demand absurd levels of remuneration.

But the job at Barclays is a poisoned chalice. The new CEO will be in the limelight from day one. We still do not know all the facts about the rate fixing and its consequences. Is it still happening? How much is going to have to be paid in compensation? The new CEO will have to tell us what is to be done to stop all this chaos of casino banking, fixing Libor rates etc. The government has to help out on this one by introducing legislation to ensure some of the manipulation will become impossible. Also, there is the matter of separating High Street banking from investment banking — and doing it now, not in eight year's time. Will Hutton — who knows much more about these matters than I do — was arguing in The Observer on Sunday that the trillions of dollars tied up in derivative products, that are used to make buckets of money for investment bankers, serve no real practical purpose. This must become especially true if the calculations are based on the Libor rates, which most of the gamblers know is a fiction. I say a fiction because it seems now that almost every bank contributing numbers to Thomson Reuters were lying, either to boost the rate higher or to keep it lower — and also to let everyone think that a particular institution was finding it easier to borrow money than was actually the case. Yet it is these derivative products that can collapse and bring a bank to the edge of the abyss — and in some cases take them over the edge.

Appointing a new CEO at .Barclays will not be easy but the new Chairman should be someone above all suspicion — and not a banker. The Archbishop of Canterbury, perhaps?

I remember the name of the Barclays Chairman as being not quite Marcus Aurelius. Marcus Aurelius was the last of the Five Good Emperors of Rome and ruled from 161 AD to 180 AD. He is remembered now mainly for his Meditations — a collection of his thoughts directed to himself. This is a long work in many volumes but one or two quite Biblical proposals seem quite suitable for the Chairman of a bank to observe :

"When you wake up in the morning, tell yourself: The people I deal with today will be meddling, ungrateful, arrogant, dishonest, jealous, and surly. They are like this because they can't tell good from evil."

"In the end, what would you gain from everlasting remembrance? Absolutely nothing. So what is left worth living for? This alone: justice in thought, goodness in action, speech that cannot deceive, and a disposition glad of whatever comes, welcoming it as necessary, as familiar, as flowing from the same source and fountain as yourself."

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Is It Time To Say Good-Bye?

Thursday of this week was probably the hottest day this year so far — getting up towards 85ºF in Horsham in the mid-afternoon. But it was a hot day in ways that had nothing to do with the weather. The Bankers are in trouble again. And leading the trouble is our old friend — "time to move on" — Bob Diamond at Barclays. Only about 2 weeks ago I had a moan about the ridiculous salary that Bob Diamond pays himself but now a new scandal emerges. It seems that traders in Barclays — as well as other banks — were systematically lying about the interest rates they were paying to borrow money in order to [1] manipulate the Libor rate and [2] make lots of money for themselves. Libor — the London Inter-Bank Offer Rate is a a lending rate that is published each day and it is an average figure that has been compiled from data fed to Thomson Reuters. The data from each bank should be the actual rate that they are having to pay to borrow money on that day. It is now clear that over several years before the great crash — and after — Barclays traders manipulated the rate by lying — either to put more money in their own pockets or to hide money problems in the bank. These operations in massaging the interest rate involved Barclays traders and their mates in other banks. This happened in the Barclays Capital wing of their operations and at the time the man in charge of that operation was Bob Diamond — now CEO. The bank has been fined £291,000,000 by the regulatory authorities in the USA and in the UK. Not a huge sum for a bank the size of Barclays and the money will come from the pockets of their customers. Mr Diamond said that these lapses were down to the actions of one or two traders who were no longer with the bank. "I am sorry," he said, "that some people acted in a manner not consistent with our culture and values." I cannot agree. They acted completely in a manner consistent with their culture and values. Refusing to resign, Bob Diamond has said that he will give up one of his bonuses for this year. "What does this mean?" I hear your cry. I have no idea. It is something of a mystery trying to establish exactly how much Mr Diamond is paid and how it is calculated. Does his fore-going of the bonus mean that he will collect it later when things have quietened down a bit? Will he have to try to get by on only £10 million or so? After all his 2011 package amounted to nearly £21 million.

Barclays have now been fined and censured several times; they have directors under investigation for fraud in Italy; they pay their senior officers — including various investment bankers/traders ludicrous sums of money; they avoid tax; their shareholders get screwed over and over again while the bankers take away their pay in wheel-barrows. Yesterday, Barclays shares dropped by 16% — ie from next to nothing to a whole lot less.

This massaging of the Libor rate does involve other banks and more sludge will come to the surface in coming months. This scandal damages the reputation of the City of London and action needs to be taken to prosecute — if possible — making it absolutely clear that these actions will not be tolerated. It is even suggested that it is still going on! Banks have to be regulated. They cannot be allowed to carry on operating like vast casinos using our money to place bets to make buckets of money for themselves or, if it all goes belly up, we the tax-payers will bail them out.

Irrespective of whatever else floats to the surface, Bob Diamond cannot be allowed to carry on as though nothing has happened. What has been happening at Barclays is that all the wrong-doing, greed, incompetence and gambling that took place in the period before the Crash is now being exposed. Shareholders and the public in general are demanding action. Everybody is struggling to sort out the mess. The government, commerce, industry, everyone needs more cash to try to balance the books, yet the only group not have to shoulder any of the burden has been the bankers; one of the groups most responsible. Still, they carry on telling us about their expertise, their importance to the economy and why they should be paid such huge sums. Yet, every day we see only just how inadequate and incompetent they really are. The very people at the centre of the financial mess carry on regardless.

What next?

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The Falkland Islands Are British

Yesterday, in a wreath laying ceremony, the Falkland Islanders remembered the day 30 years ago when the forces of Argentina surrendered to the British forces and the islands were returned to the British. The wreath laying ceremony involved some of the veterans who fought on the islands all those years ago. Yesterday's weather was typical Falklands — cold and windy with wet snow coming down horizontally. Not many people live on this group of very isolated, wind-swept islands in the South Atlantic. Argentina has been claiming rights to Los Malvinas for donkey's years and they provide an easy diversion for governments in Buenos Aries when things are not going right — which seems to be most of the time. The islanders have stated over and over again that they wish to remain British and we should defend their right to their self-determination without flinching. The islanders have now announced their intention of holding a referendum to ask the inhabitants what they want — presumably the question will be the simple one "Do you wish to remain British? Yes or No!" Yesterday the President of Argentina, Cristina Fernandez de Kirchner, went to the United Nations to demand that Britain negotiate with her country about sovereignty over the islands. This piece of theatre was backed by advertising in British newspapers in which they repeated their claims about the Falklands on the grounds of decolonization. An anachronism, she said.

The islands may have been visited by Patagonian Indians many years ago — perhaps over 500 — but evidence suggests that the islands were first discovered and marked on maps by the Portuguese in the 16th century. In 1592, John Davis an English explorer arrived there when his battered ship, Desire, was carried there by wind and seas. For a time the islands were known as "Davis Land". The English visited again in 1594 and in 1600 it was the turn of the Dutch. Then the islands were visited by Captain John Strong in 1690 and he named the channel between the two main islands after the 5th Viscount Falkland, Commissioner of the Admiralty and later First Lord of the Admiralty, who had financed the expedition.

In the 18th and early 19th centuries various naval ships and explorers visited the islands and claimed them on behalf of France or Spain or Britain but in 1811 Spain packed up and left leaving the islands again almost if not totally uninhabited. The islands were then used mainly by British and American whalers and at times up to one thousand sailors were "living" on the islands. The Falklands were occupied by Americans, British, Spanish and Argentinian Spanish for the next 20 years — including an attempt by Argentina to establish a penal colony on the islands. Then in 1833 Captain James Onslow arrived with a request that the flag of the United Provinces of the River Plat be removed and the British flag be raised. Although the Spanish commander wanted to resist he did not do so because a large proportion of his crew were British mercenaries who were disinclined to fight against the British navy. Since that time the islands have been British and most — if not all — the inhabitants are settlers from Great Britain.

I was slightly surprised to read that Argentina also claims sovereignty over South Georgia and the South Sandwich Islands. At their nearest point, the Falkland Islands are about 300 miles off the coast of Argentina. South Georgia is about 1200 miles away and the South Sandwich Islands are even further, about 2000 miles away. The capital of the Falkland Islands, Stanley — and where almost everyone lives is on the eastern island and is over 400 miles from Argentina. To claim sovereignty over islands that are so remote from the mainland is absurd. Of course, Argentina thinks there will be mineral wealth — particularly oil — under or near these islands and thus there is money to be made — perhaps. For Argentina to go rabbiting on about de-colonization seems to me to be an extreme example of the pot calling the kettle black — or worse. The people who now inhabit and govern Argentina are of Spanish descent because Argentina was a Spanish colony. The native Indians have little say in government and in my experience when I visited that country, the natives were treated quite badly. That is many years ago and things may be better now. But nevertheless the primary population are descended from colonists and I suppose that any referendum would confirm that the people wished to remain a Spanish speaking independent country. If the inhabitants of the Falklands wish to remain British, that should be respected and we should not under any circumstances even begin negotiations with Argentina because that implies that they have a case. And, I believe that they do not!

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What Is A Diamond Worth?

I still don't know how much Bob Diamond at Barclays Bank is paid. It is a fascinating subject since the question and its answer is symptomatic of all our questions about bankers' pay. A report on the Citywire Money page today tells us that in 2011 about 25% of the CEOs in FTSE100 companies enjoyed remuneration increases of an average of 41%. This seems spectacularly good, when most of these companies performed rather poorly and, of course, we are all in this together. Bob Diamond was at the top of the list with what was described as a "total realisable remuneration" of £20,971.000 — which seems not too bad in these straightened times. But the total, apparently, does not include “deferred bonuses awarded in the year and the expected value of share options and other share plan awards in the year, but includes instead the amounts realised from LTIPs and deferred share schemes that vest in the year, plus gains on options exercised in the year. These amounts realised are from awards made in earlier years.”

So, is there more to come or next year will he only get £15 million? And, does this total include any amounts paid to clear personal tax liabilities in the USA? And how much will he have tucked away in share options for when he leaves? Assuming that Mr Diamond pays tax on all of this income — which is almost certainly untrue — then George Osborne's reduction in the top rate of tax from 50p to 45p will reduce his tax burden by £1,041,050. I know dear Bob — like the rest of us — was struggling to make ends meet and was anxious to move on from all the discussion about bankers' pay, but this is ridiculous. Is it any wonder that the coalition government is falling out of favour when nonsense like this is allowed to happen. Barclays Bank is a big company but its performance has been terrible. Its shares are worth little more than than they were donkeys years ago and are at only about 25% of their pre-crash values. Dividends are no good either. There are no very good reasons at all for investing in Barclays and I suspect that many leave their money there in the hope that one day the shares will recover their value. In the meantime Bob Diamond carries on paying himself buckets of money for his expertise. I suppose he must argue that if he were not so absolutely brilliant the company would be in an even worse mess. They could be in a Spanish mess.

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The Resurrection of Coal

We have a government at present that cannot take decisions. There is nothing odd about this; most of our governments cannot take decisions — and even if they do, they are probably wrong. This may be a cynical outlook coming from someone who does not have to make the decisions. Can I ask a question? What are we going to do to provide us with electricity in a few year's time? We have been humming and hawing about nuclear power for years. The last government and the present have sort of taken a decision to get EDF energy to build some nuclear power stations with German assistance but the contractors are slowly pulling out. The truth is that no one wants to build nuclear power stations any more. And they are quite right. I have been opposed to the building of more such stations for years. Why? Because they are unsafe and present us with a gigantic problem when they need to be shut down and demolished. It is an extreme form of the Titanic problem. This ship was unsinkable but it sank on its maiden voyage. The chances of a nuclear disaster are very small but that disaster could still occur within the next 28 hours. The possibility is small — but not nil — but the consequences are horrendous. That is not a scenario acceptable in any risk assessment.

It is claimed that nuclear power stations give no effluents, are clean and efficient. They are none of these. The first fundamental problem is — what happens if anything goes wrong? No longer can it be argued that nothing will go wrong or that new nuclear power stations will be safer. We need to remember Three Mile Island, Chernobyl and Fukushima. All of these were grade one disasters that needed massive evacuation of very large areas of surrounding land, towns and cities. After Fukushima it was thought at one stage that the whole of Tokyo may have had to be emptied. It was not, of course, but primarily this was due to the efforts of workers in the power station who allowed themselves to be subjected to horrendous levels of radiation in order to do the work necessary to subdue the reactors. The situation there is still not 100% safe and the reality is that the most contaminated areas will not be usable for a few thousand years. Chernobyl was even worse. Already many men who worked to contain that disaster are dead; Many more will die prematurely and like Hiroshima the knock-on effects of radiation will be felt in the community for years to come. If a conventional power station suffered a major catastrophic failure, emergency services and teams of engineers could get to work cleaning up the mess immediately and within a relatively short time the power station could be back in operation. There would be no nuclear fall-out to deal with; no land contaminated for a thousand years, etc.

Nuclear power stations present a frightening risk of terrorist actions and this introduces another inestimable factor — which would not apply to a conventional system.

But, even assuming all these matters could be overcome, there remains the matter of disposing of the waste. At present it is stored and so it will be for years to come until we can load it onto a rocket and fire it into the sun.

I read an article today which told me that last year coal was the energy source that provided for 30% of the world's energy — up from 25% just a few years ago. And last month Japan shut down the last operating nuclear power station. The government wants these stations to re-start but since Fukushima, every time a nuclear power station is shut down there has been substantial local resistance to it ever being re-started. This is not likely to change. Th beans and sandals brigade will oppose electricity generation with coal but they will oppose everything except — perhaps — windmills.

This country has problems with energy supplies as a direct result of continuously incompetent governments. We had about 400 years supply of coal buried under the British Isles. How much of that coal is now recoverable, I do not know. We mine very little of it because in the 1980s we had a prime minister, Margaret Thatcher, who shut the coal mines because she was determined to quash the coal miner's union headed by Arthur Scargill. She decided that we could generate electricity by burning natural gas. That was another disastrous decision. It is great to generate electricity using this premium fuel but it wasted a precious resource. We are now in the incredible position of generating about 35% of our electricity with coal and that coal is imported from the USA and Poland. Our own resource of North Sea gas is now almost all gone and we import gas from Norway, Russia and the Middle East. Sooner or later we will have to re-open the coal mines just as we are now having to try to resurrect our manufacturing industries — also chucked down the drain by various governments — with one notable exception. When Rolls Royce got into deep trouble in the 1970s, a Tory prime minister, Ted Heath, nationalized the company and kept it afloat until it could be re-privatized to look after itself again. It is now a thriving business and one of the most successful in Britain. When Mrs Thatcher was destroying our coal industry, we should have been spending money on research to be leaders in all modern methods of burning coal and dealing with carbon dioxide emissions. But we did not and we are not and, yet again, we will come to regret it.

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What Next For Europe

The euro crisis is in a critical state yet again as Spain's banks are losing more and more money and the country's debts get reduced to near junk status. There is an urgent need for some billions of euros to keep them afloat. David Cameron is urging leaders in the zone to get something sorted. Now Angela Merkel is talking of closer political and financial union. This is what all the Euro fanatics have always wanted and which the populace of every country in Europe certainly does not want. What the proposal will means in the present circumstances, I know not. It may just be another mountain of fudge. What seems to be the case is that this scheme will be imposed on the countries of Southern Europe by the Germans and the bureaucrats of Brussels. Somehow, they will have to cobble this together in some way that will allow them to do it without having to ask the permission of any electorates in any country of Europe. Already we have Greece and Italy ruled by imposed bureaucrats sympathetic to the euro and now we will see something similar for all other countries that do not fall into line. In the 1920s and 1930s we saw the development of fascist dictatorships grow across Europe and if we are not careful, something similar will happen again. Now, we are to have dictatorship of eurocrats. At every permitted election, countries will vote for more and more extreme nationalist parties that will rid them of the impositions of Brussels. And they will be quite right to do so even if the final outcome will be unpredictable. The politicians and their cohorts in Brussels cannot solve today's problems because they will not acknowledge the cause of the problems. That cause is the euro. The euro needs to go and every country revert to each of their own independent currencies. It will now be difficult to unravel the mess because the debts across Europe have been allowed to become so enormous. But the euro must go. If Greece finally dumps the euro they will have at least a 30% devaluation, which will make their exports cheap and will make the country attractive again to foreign holidaymakers across Europe. They have already written off 50% of the debt. They will have to do the same to the other half — one way or another. These actions will create jobs, will stimulate growth and over a period of say 5 years they will get Greece back on its feet. They still need to eliminate corruption, make pension age something realistic and ensure that everybody pays their taxes.

Spain is in a more difficult situation but they need a similar solution. They need to get people back to work and start the economy growing. Their problem is the magnitude of bank debts associated with over-lending on housing. Somehow, whatever happens, the banks will have to be bailed out and some more of the debts written off.

During the next few days there will be more discussion in Europe but whether the politicians will sort things seems little more than an outside chance still. And it would be helpful if Christine Legarde of the IMF could refrain from making comments about the Greeks not paying their taxes. She is very highly paid and yet pays very little tax to anybody. We are all in this together, I believe.

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A Summer Of Sport

I am not looking forward to many of the planned events for this summer. Today is Derby Day so the crowds will be piling onto the Downs around Epsom for one of the real highlights of the racing calendar. I know nothing about horses — in the horse racing sense — but hopefully all will go well and a good time be had by all. It's a bit cool and cloudy, though.

Next week-end we have the start of the football Euro 2012 internationals in Poland and Ukraine. These countries look like potentially very troublesome venues with their reputations for trouble with Nazi gangs and racists at football matches. It is said that expectations for the England team are at an all-time low. Perhaps this is because all too often the team performs badly. I am not optimistic about this year being any different but I wish them luck anyway.

This week-end the great Jubilee bash gets under way with flotillas on the Thames and Handel's Water Music etc. I suppose its OK but I am against all the other flag waving and hanging out the bunting and the extra Bank Holiday. It all has an air of forced jollity and probably somewhere it gives somebody the chance to make a lot of money. Still.it looks as though the rains will come this evening and damp things down a a bit. The Queen and HRH Prince Phillip are spending lots of time this year touring around the country visiting people at work, at play and in their own homes and giving the image of pensioners a boost. I think this is a better way of celebrating the 60 year reign. Still, all of it is getting the republicans all hot under the collar and that can't be bad.

But then we have the nonsense of the Olympics. This crack-pot money wasting extravaganza is preceded by the torch journey around Britain. I have already commented on this but a few days ago it reached the height of absurdity — literally — when the torch was borne to the top of Snowdon — which is, said The Times, the highest mountain in England and Wales. It could be one or the other but not both, surely. Is it going up to the top of Scafell Pike, which is, I suppose, by the same reasoning, the second highest mountain in England and Wales? I suspect that the answer is, No, because the top of Scafell is a rather more rigorous climb and the summit is not served by a railway line. The crowds of people and the press and TV all gathered on top of a mountain in Wales did seem to me to be one of the more bizarre events in this trundling of the torch around Britain.

Other Olympic News: Sponsorship is becoming an issue so daft that even the wonderful Sebastian Coe must be wondering if perhaps the whole thing is out of control. WI woman knits Olympic rings onto a cuddly toy intended to raise money for charity and is threatened with legal action by the owners of the brand image — presumably the IOC. Similar action is threatened against florists and funeral directors who put rings on their window displays for the days that the torch thingy passed through. One of the commercial sponsors is Visa and they have made their mark by banning all other credit cards from being used anywhere near the Olympic venues. They have removed all money machines that accept any card other than a Visa card and imposed a blanket ban on all other cards for any purpose. Crackers!

And, if you think all that rubbish is bad enough, you can go for a sit gown, mop your brow and buy a cheese and tomato sandwich for about £4.00 and then wash it down with Dutch lager at £7.00 per pint. Sponsors deny access to old-fashioned English beers. Will the Dutch have to watch events in their underpants because orange is not a permitted colour? It has happened before. If you are a "VIP" guest you will be ferried around everywhere in one the official cars — BMW, of course. The joy of the Olympics is, so they tell us, in the taking part. You can say that again!

Now, I will cheer up. Today the Isle of Man TT Week gets under way. That's something to look forward to and for the most part it is unhindered by the OTT activities of sponsors. I hope everyone enjoys the week and that no rider is killed or seriously injured. It has to be admitted that riding a motor-bike on public roads at speeds up to 200 mph can be dangerous.

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The End Is Nigh

For a long time, I have been anti EU. I believe that it is a vast money wasting bureaucracy that serves no purpose other than to give jobs to dead duck politicians. They love it, of course, because it gives them buckets of cash and an unrestricted access to a monster gravy-train with little public limitation. It is undemocratic and useless. Now, as yet more woe piles on woe in the euro-zone, the European Commission calls for more support for "sinner states". How much support? Already the debts are heading for infinity with, naturally, no end in sight. Now Spain is heading for the exit doors becoming less and less able to fund its debts. Giving them a big bung to tide them over will yet again only delay the inevitable, making the final denouement even more catastrophic than it is going to be. Spain cannot escape. The debt is going up and up. the economy is shrinking, the unemployment rate is 25% and rising. Income falls, expenditure increases and more money has to be borrowed. At root, no politician is prepared to admit that the whole euro idea was crackers and doomed from day one. The uncritical supporters of the great European dream always wanted a federal Europe but they know now that citizens of Europe will never agree to such a thing. So they wriggle; tell us that constitutions are merely updated treaties; paste sticking plaster in every new leak and lumber the whole world with the consequences of their maneuvers.

The report published today by the European Commission proposes that the countries of the eurozone should create a "bank union" under which all countries would stand behind the collapsing banks. The Commission said that they would consider relaxing Spain's deficit reduction targets — thus allowing them to acquire more debt. The markets are not impressed since the new scheme will be rejected by the Germans.

Has there ever been, in modern times a political monstrosity to compare with the European Union? The sooner is dies the death the better. Supporters want a vast single " country" to compete with America and China. It will never happen. Where necessary we should work together as groups of countries to make things like Airbus, etc.

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Goodbye And Good-Luck Jussi

After the revelations about costs in the Premier League, matters are more mundane in the lower leagues, where most teams live on the edge. Bolton Wanderers are spending a lot of time looking at the books. Now demoted to the Championship, they have immense debts and this summer there will be a mass exodus of players — almost all for money reasons. One of those probably leaving will be goal-keeper, Jussi Jaaskalainen. He has been with Bolton for 15 years, has played 529 games and has been a great servant of the club — saving them from many an embarrassment. But now he is 37 years old and after an injury at the end of last year, his place was taken by young Adam Bogdan. Jussi has not been able to get back into the side and negotiations on a new salary deal have not looked promising — presumably on the basis that he will be second string goal-keeper in a Championship club. I would like him to stay because of his record and vast experience but all the signs are that he will go to West Ham and back to his old manager Sam Allardyce. Sam has been well served by players brought into the West Ham side who were former players at Bolton Wanderers. So Sam takes West Ham back into the Premier League as Bolton Wanderers — whom he took into the Premier League 11 years ago — sink back down to the Championship. I think Bolton will struggle with a shortage of players and money and, I have to say, I am not over-confident about the abilities of the manager, Owen Coyle.

Still Jussi Jaaskelainen is still a good goal-keeper — and goalies last a long time — and I wish him luck in a new career with the Hammers.

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Buddy, Can You Spare A Dime?

A report is published today that tells us that in spite of the credit crunch and the squeeze and that "we are all in it together", the cost of wages paid to footballers in the Premier League continues to rise. The driving force seems to be the wages paid to the players at the top six clubs. Chelsea's wage bill rose by £17m to £191m — the highest in the league — but Manchester City's wage bill went up by a staggering £41m to £174m — which accounted for 114% of the club's total income. The latest report by accountants Deloitte suggests that control of wages "continues to be football's biggest commercial challenge." You can say that again. Wages, on average, demanded 70% of all club incomes but the most successful club in the league, Manchester United kept its wages down to 46% of income. In the 21st Annual Review of Football Finance Deloitte tells us — in a statement of the blindingly obvious — that pay discipline is needed "in order to deliver robust and sustainable businesses".

The business model for the Premier League is never likely to look anything other than something from Alice in Wonderland. The top clubs spend buckets of money on players and get quite good attendances at matches — 50,000+ — while smaller, less wealthy clubs struggle to get good players — the best are unaffordable — and to get enough income. Most of the top clubs rely on billionaire owners to fill in the funding gaps and this has the effect of pushing wages higher and higher. The problem is exacerbated by the stadiums. Most clubs have a stadium that will hold 30,000+ spectators — which they struggle to fill and which costs a fortune because it is hardly ever used. Most are needed for about six hours per week and for the rest they sit like vast beached whales gathering dust and occupying a lot of expensive space. New stadiums should be shared and should incorporate other things to dissipate the costs.

Overall, in 2010-2011 the Premier League recorded pre-tax losses of £300 million with only eight clubs making any profit at all. Manchester City may have won the Premier League title this year — beating their rivals at Manchester United on goal difference only — but at what cost. Manchester City posted a pre-tax loss of £82m, while Manchester United made a profit of £100m. Some difference. Is this what they call buying success?

Nevertheless, the Premier League is such a money spinner that six of the top clubs in Europe — in terms of money generation — are in the Premier League. They are, as could be predicted, Manchester United, Arsenal, Manchester City, Liverpool, Tottenham Hotspur and Chelsea. I don't think that ex-Premier League Bolton Wanderers are likely to get onto the list any time soon — unless, of course, they can find themselves their own Russian billionaire.

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