Monday, 3 August 2020

What even is money anyway?

The other day, I was reading Games Workshop's annual report. Because I am a nerd. Then, I came across this statement.


Games Workshop is obviously doing really well for itself at the moment. They made over £70 million after tax, and paid £47 million of it out to their share holders. But then I came across this gem...


The company paid their staff £2.4 million as a "profit share". So the "truly surplus" profit is nearly twenty times the amount of bonus the staff got. While there's a sharesave scheme, the £800,000 it cost the company this year isn't exactly breaking the bank either.



Obviously, staff are still getting paid, but the annual report doesn't list the whole total of payroll costs, so you can't directly compare how much money investors are getting compared to the people who are doing the work.

No doubt, people want to work for Games Workshop so they can use the competition to keep the staff costs down for all but the best of the best, skill wise.

Imagine, for a moment, that Games Workshop was a co-operative that shared it's profits with staff rather than investors. Staff bonuses wouldn't have been £1,000 each, but closer to £20,000 each (if the company didn't invest into the company more as a result.)

But now that the shares are issued and traded, it's not a genie that can be put back in the bottle. Games Workshop can't afford to buy back all it's shares and become a company - the cost is simply unfeasible now.

Our financial system is really weird, when you start to think about it.

12 comments:

  1. GW selling crap, for truly eye watering amounts. The wonder is how they get away with it?

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    1. It may not to be your taste, but the models they're putting out at the moment are both breath-taking and really clever stuff from an engineering perspective.

      The IP is something that a lot of people love and have loved for years. They are one of the biggest routes into the war-gaming hobby.

      The core mechanics of their game are definitely showing their age, and they are certainly hit and miss when it comes to the competitive play aspects of their games.

      They make money because they are very good at providing the models their fans like. They've identified their market and sell to it well. Just because you happen not to like it doesn't mean it's a bad product.

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  2. The sale staffs "share" of profits was one of the (many) reasons I left GW.
    I had shares at the time, and don't remember selling them back...i really need to look into that.

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    1. It turns out capitalism is terrible.

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    2. I agree but if they got rid of capitalism tomorrow, you'd still end up working for the man. Turns out human nature is terrible.

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  3. This is why I only briefly considered a career in the arts and then sold my soul to I.T. A Faustian bargain, but it seemed like a good idea at the time.

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  4. “Capitalism is terrible”, but centrally planned economies haven’t produced many (any?) gaming products. Economic freedom seems essential for this activity. GW employees are always free to start their own company and many have - some successful, some not.

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    1. I wasn’t really thinking of computer games, but ok. Two points - one you’ve had to go all the way back to 1984 for a single example. Second, the original post above (as I read it) is about those doing the work not getting much of the profit. The inventor of Tetris got almost nothing from it for over a decade until he moved to the US and founded his own company. If you think that moving to ‘collective ownership’ from capitalism is going to make remuneration fairer for those creating successful products, Tetris is a great example of why this probably won’t work out.

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    2. I'm not a huge fan of authoritarianism so don't think centrally planned economies are the right answer either...

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  5. I think that the fact that the operational direction of the company decided to reward staff with any bonus at all is laudable.

    One of the issues with selling shares is that the shareholders might gang up and replace this board with a more compliant (avaricious) one which does their bidding and turns the existing company into a much more commercial, less enlightened entity.

    Watching what happens with FW might be a good indicator of such a change (?)

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    1. Oh, certainly, within the system as it stands. But that in a co-operative making the same profits, staff would have been receiving about £20,000 apiece... The balance between capital and labour is hugely imbalanced these days.

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