I’ve been doing some sums following a conversation last week with Daniel and John Band. Tesco, as is well know have just announced “their fantabulous corporate profits”:http://news.bbc.co.uk/1/hi/business/4435339.stm . They have “639 stores in the UK”:http://www.ethibel.org/profile/uk/tesco_en.html (OK that figure is a couple of years old), and a UK turnover of £29.5 billion. This gives us turnover per store of just over £46 million. UK higher education has, according to “HESA”:http://www.hesa.ac.uk/ , a turnover of about £15.5 billion and 171 “outlets”, giving us a turnover per store of just over £91 million. Chelsea football club — expected to win this year’s premier league — has “a turnover of £92.6 million”:http://www.givemefootball.com/display.cfm?article=4009&type=1&month=8&year=2004 . All of this gives us the useful equation of
1 average university = 1 top football club = two branches of the leading supermarket.
Make of that what you will.
{ 18 comments }
des von bladet 04.12.05 at 5:53 am
I am not a student, although I have been, and I follow the foopball – allez les bleus ! -on the wireless for free. But I still eat.
There’s a moral in there somewhere, for sure.
Chris 04.12.05 at 6:01 am
Not sure what the moral is, Des, but next time I hear a top university suit justifying his or her salary on the basis that they help run a multi-million pound business I may well reach for some points of comparison ….
des von bladet 04.12.05 at 6:09 am
I was thinking more along the lines of “Mmmm… food”, but there is that too. Perhaps we should cap our suits’ salaries at the Peter Kenyon level.
Chris 04.12.05 at 6:12 am
And if adminstrators get paid at the Peter Kenyon level, then surely academics should seek parity with Frank Lampard.
John Quiggin 04.12.05 at 6:14 am
Turnover for retailers isn’t exactly comparable with football clubs or universities – the ratio of value added to turnover is lower because the retail service is just the margin between wholesale and retail price. Assuming a 20 per cent average margin, I’d make it a university or football club for ten supermarkets.
Simstim 04.12.05 at 6:28 am
Chris: so you’re suggesting that Universities should only employ a football squad’s worth of academics? Or that if a V-C should be paid half a supermarket branch manager’s salary, then the academics should be on half a checkout-assistant’s wage?
dsquared 04.12.05 at 7:26 am
Turnover for retailers isn’t exactly comparable with football clubs or universities
True (and in football clubs, there are also material broadcast royalties and player trading P&L which don’t go into the turnover line). But one thing we do know from the empirical corporate finance literature is that managerial compensation is much more correlated with top-line turnover than any measure of profitability or market capitalisation, so I think Chris’s point goes through.
dsquared 04.12.05 at 7:28 am
Oops! My bad for not checking the links. Chris’s £92.6m figure for Chelsea refers to a Deloitte & Touche study of total income for the club, so it includes the Murdoch money (though probably not Chelsea’s massive deficit on player trading). So if anything it overstates the importance of Mourinho relative to a Tesco area manager.
des von bladet 04.12.05 at 7:32 am
So if anything it overstates the importance of Mourinho relative to a Tesco area manager.
Blasphemy! And also wrong: to paraphrase Baudrillard, fairydust isn’t cheap.
dave heasman 04.12.05 at 7:44 am
What it does show is that for all the hoo-hah professional sport in the UK is small business.
And, of course, incredibly badly run.
I think Man U have the highest trading turnover, about £125 million? Peanuts.
des von bladet 04.12.05 at 7:52 am
Ooh, Top Trumps!
What have you got, Dave Heasman?
des von bladet 04.12.05 at 7:54 am
Bah! It ate my nice link.
http://www.deloitte.com/dtt/press_release/0,2309,sid%253D2834%2526cid%253D40394,00.html
Luc 04.12.05 at 8:39 am
Those are last years figures, the newer give Chelsea a 143.7 m. figure.
But what’s three Tesco’s compared to my former local team, who have the backing of the entire Philips company?
They’d just have to finish off some Frenchies wednesday, beat the AC’s and then there’s no number off Tesco’s stopping them from the cup with the Big Ears.
Chris 04.12.05 at 8:52 am
Just thought I’d check the figures for rugby union. Leicester Tigers, the best-supported and most successful club in the UK, have an annual turnover of just £10 million. So 5 top rugby clubs = 1 branch of Tesco.
Tim Worstall 04.12.05 at 8:54 am
“But one thing we do know from the empirical corporate finance literature is that managerial compensation is much more correlated with top-line turnover than any measure of profitability or market capitalisation, so I think Chris’s point goes through.”
So Terry Leahy gets 171 times as much as a Vice Chancellor?
Chris 04.12.05 at 9:25 am
The average VC’s salary is “£144,420”:http://www.thes.co.uk/current_edition/story.aspx?story_id=2019838 and Terry Leahy gets “£3.76 million”:http://news.bbc.co.uk/1/hi/business/3624645.stm
so 26 times as much — but who said the relationship was linear?
dsquared 04.12.05 at 9:57 am
This actually reinforces Chris’s point; it looks like VCs are overpaid by a factor of 5. This seems to hold up down the line too; Tesco area managers apparently top out around £70k, and an area manager would presumably be responsible for more than two stores.
Nick 04.13.05 at 8:01 am
Just to put a little dent in the figures, the cover story on today’s Independent says that Tesco has 1779 stores, though I suspect much of the extra 1000 on Chris’ figure is all those Tesco Express stores that have been popping up just about everywhere since they went on a buying spree of small convenience store chains. (For instance, the shop – a Harts, IIRC – seen in 28 Days Later is now a Tesco Express)
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