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Fires Should Matter

Take towers for example. When a tower is burning, regardless of how badly it's burning (1% or 99% damage), the only effect is a miniscule drop in PO (and I do mean miniscule). What should happen is for damage to reduce the number of men a tower provides to the walls, perhaps up to 50% less. We can't have it reduced to 99 or 100% less men because then defending even one flank would be impossible and be too much of a disadvantage. But burning towers should be a considerable disadvantage to the player rather than a negligible one.
Similarly, Guardhouses and Taverns suffer no penalty for being on fire / damaged. Apparently, it causes the guards and spies no bother at all to be engulfed in flame, because just as many of them go about their business whether they are burning or not. The number of guards and spies should be reduced proportionally to the damage of the building in which they reside. For example, a level 2 guardhouse normally supplies 10 guards. If the guardhouse had 50% damage to it, it would then only supply 5 guards -- until it was repaired.
With so many of the recent updates providing an advantage to the Defender (up to 40% survival rate, little penalty for open gates, smaller attack size, etc.), these simple changes could help to redress the imbalances that presently exist.
While I'm on the topic, the price for Open Gates is clearly insufficient. After, perhaps, the 4th time the gates are opened on a castle in one week, the price in rubies should increase exponentially. Another option is to grant a +100% LOSS to resources when Gates are Open. So not only does the attacker gain double the resources, the Defender would lose double the resources. Unless the developers want Open Gates to be used twice daily per castle (as it currently is for many players), something needs to be done.
These 2 minor changes would really help to balance the game and slow/halt the mass exodus of "vacations" that seem to be taking place at the moment.
Comments
However, players who are constantly attacked and set on fire, with nobody to help them are about 10x more likely to quit the game with this.
No. You can have fires at 100% but they will not be destroyed. (I know this because I had a building at 100% damage.) It's probably just a commander.
This is part of a larger complaint though, is it not? Your issue of being constantly attacked and losing is the problem, not whether or not the fires themselves reward the attacker enough to warrant the cost of attacking. You need to figure out a way to stop being constantly burned.
I would suggest that if the alliance you are in right now allows you to suffer to such an extent, then it is not worth being in. If you're not in an alliance, then your problems are of your own making, as joining an alliance is an essential part of the game.
I agree this is a bad idea.