Driving with a Dashboard
Statisticians don’t always make the best communicators. Baseball has had its Moneyball revolution, but in soccer the transformation is still in its first phase.
Soccer clubs are still run mostly by men who do what they do because they have always done it that way.
Some people may not want their emotional relationship with soccer sullied by our rational calculation.
In 1979, after Steve Daley became the first English player to be transferred for more than a million pounds, from Wolves to Manchester City (where he flopped), the British Treasury considered a tax on soccer transfers.
Simon cane up with our theory of soccer networks: that Western Europe keeps winning World Cups because the countries of this little region are constantly exchanging know-how with one another.
The Clubs
Gentlemen prefer Blonds
We want to say right from the start that the transfer system is evil. Workplace harassment is inevitable in a system that treats players as tradeable commodities.
The net amount that almost any club spends on transfer fees bears little relation to where it finishes in the league. By contrast, clubs’ spending on salaries is extremely telling.
Over the long run most soccer players earn what they deserve, at least measured by their contribution to winning matches.
Simon’s colleagues at the Financial Times ranked sixty-nine clubs from Europe’s biggest leagues by how well they did relative to their wage bills from 2011 to 2015. Atletico Madrid emerged from the exercise as Europe’s smartest spending club.
Soccer clubs need to make fewer transfers. A handful of wise buyers have consistently outperformed the transfer market: Brian Clough and his assistant-cum-soulmate Peter Taylor in their years at Nottingham Forest, Wenger during his first decade at Arsenal, and most mysteriously of all, Olympique Lyon.
New managers waste money.
If you buy player because of a good tournament, you are judging him on a very small sample of games.
Stefan and Guy Wilkinson argue that the best way to allocate a club’s transfer budget across eleven starters:
- Best-paid player and number two: 25,76 %
- Three: 18,41 %
- Four, five, six: 9,80 %
- Seven, eight, nine, ten, eleven: 0,14 %
Clubs will pay more for a player from a “fashionable” soccer country. The most fashionable are Brazilian.
If there was one club where almost every penny spent on transfers bought results, it was Forest under Clough.
Three rules:
- Be as eager to sell good players as to buy them.
- Older players are overrated.
- Buy player with personal problems at a discount. Then help them deal with their problems.
The combination of agent, data analyst, and player had become an independent force in the transfer market.
Relocation (moving to another city or country) as the industry of relocation consultants call it, has long been one of the biggest inefficiencies in the transfer market.
From 2002 through 2008, Lyon ruled French soccer. In 1987 Jean-Michel Aulas, a local software entrepreneur with the stark, grooved features of a Roman emperor, became club president. In Aulas’s view, rationality in soccer works more or less like this: if you buy good players for less than they are worth, you will win more games. Lyon’s rules of transfer market:
- Use the wisdom of crowds.
- The best time to buy a player is when he is in his early twenties.
- Help your foreign signing relocate.
- Sell any player if another club offers more than he is worth.
Full list of main secrets of the transfer market:
- A new manager wastes money on transfers; don’t let it.
- Use the wisdom of the crowds.
- Stars of recent World Cups or European championships are overvalued, ignore them.
- Both superstars and weakest links are overvalued: your top three players matter most.
- Older players are overvalued.
- Certain nations are overvalued.
- Center forward are overvalued; goalkeepers are undervalued.
- Gentlemen prefer blonds: identify and abandon “sight-based prejudice”.
- The best time to buy a player is when he is in his early twenties.
- Sell any player when another club offers more than he is worth.
- Replace your best players even before you sell them.
- Buy players with personal problems, and then help them deal with their problems.
- Help your players relocate.
The worst business in the world
Most clubs make losses or meager profits and fail to pay dividends to their shareholders. They are chasing glory, not riches.
The world earns more from soccer than the soccer industry itself does. Generally, the soccer people got exploited because people in other industries understood business better.
Over time, soccer clubs have found new ways of making money. It took clubs long time to realize just how much soccer was worth to television.
Soccer clubs never seem to have thought of spending money on their grounds until the Taylor Report of 1990 forced them to. They did up their stadiums, and bingo: more customers came.
Soccer clubs are classic late adopters of new ideas.
Asked why failed players often become good coaches, Mourinho said, “More time to study.”
Match results (like daily movements in share prices) are a random walk, and only after many observations can you start to see the trend.
In business you control everything, you can do whatever you want in football, but it’s up to the eleven guys on the pitch at the end of the day. The second thing is you have a very local bunch of shareholders – called fans. Consumer activism in this industry is extreme.
Clearly, winning games is not the route to making money. If a club finds new revenue, that can help it win matches. As A. T. Kearney said, you could even argue that soccer clubs are nothing more than vessels for transporting soccer’s income to players.
Safer than the Bank of England
The notion that soccer clubs are inherently unstable businesses is wrong.
In 1923 the English Football League consisted of eighty-eight teams spread over four divisions. In the 2021-2022 season, eighty-five of these clubs still existed (97 percent).
Soccer clubs found an ingenious way to survive insolvency: a trick called “phoenixing”. Every English football club is a club but also a public limited company. You can dissolve the old company and create a new “phoenix” company.
During the economic crisis, UEFA – for decades a sleepy organization to wake up. By 2009, UEFA was ready. A set of regulations called Financial Fair Play was introduced.
UEFA estimates that the aggregate lost profits of European soccer caused by COVID-19 will be around 6 to 7 billion USD.
Football is more than just a business. No one has their ashes scattered down the aisle of Tesco.
A decent business at last?
The Glazers have shown how profitable a soccer club can be.
The most lucrative thing that ever happened to the soccer business was television. Television began boosting soccer’s revenues in the 1970s, but the big leap happened in the 1990s.
Despite the losses, Abramovich inspired the era of billionaire “sugar daddies” in soccer.
In the 1990s clubs were allowed to “amortize” the cost of transfer fee over the life of a player’s contract. For the financial year 2018-2019, Premier League clubs reported total revenue of 6.8 billion USD and operating losses of 566 million USD. But they also reported amortization charges of 1.7 billion USD.
The new investors think soccer has the potential to capture foreign markets in a way that American sports don’t.
Sugar daddies are good for the soccer economy for one big reason: the cash they inject supports other clubs.
Super League
April 18, 2021, the launch of the European Super League.
In some ways the Super League simply imported into soccer one of the dominant ideas of our time: neoliberalism. The idea that every activity must be run for profit. European fans don’t think that soccer is a business. Every club in soccer’s pyramid, right down to the lowest level of amateur leagues, has a stake in promotion and relegation. End this system, and you kill hope.
The interests of owners will often clash with those of fans, and in the long run, rich people tend to get what they want.
Unbanned
Only in 1991 did FIFA agree to organize a women’s World Cup. The event was staged in China. In 1996 women’s soccer became an Olympic sport.
When women’s sports aren’t banned, they can generate roughly equal interest among fans.
Need not apply
In 1978 Viv Anderson became the first Black man to play for England.
The careers of the Black players averaged more than six years, compared with less than four for the whites.
The data showed that clubs with more Black players really did have a better record in the league than clubs with fever Black players, after allowing for wage spending. That was in 1970s and 1980s. In 1990s the Black players were on average already paid what they were worth to a team.
Do Coaches matter?
In 2005 Trevor Philips, head of Britain’s Commission for Racial Equality identified that there were a lot of Black players on the field and none in the dugout. In 2022 only QPR in London was run by Black mans.
The history of management is littered with guys appointed as messiahs and sacked as losers a few months later.
The median survival time for head coaches in the top two professional tiers in Germany, France, Spain and Italy from 2001 through 2015 was just 350 days, according to economists Alex Bryson, Babatunde Buraimo, and Rob Simmons. In 2020 the average tenure of departing CEO of companies in the S&P was 7.8 years.
The idea of “great man” that makes a change is still present in soccer. The message from our data is that great managers are rare.
Marko Tervio the Finnish economist find out that firms often have limited incentives to invest in finding rare talents if their ability is only revealed on the job, because than they will sell themselves to the higher bidder. The outcome is underinvestment in finding talent and overinvestment in “mediocrities” – employees who are not terrible but most likely not as good as untried market entrants.
Most soccer fans will probably recognize this pattern: some managers find job after job in which they are OK but not great.
Usually after the managers is sacked, a team’s performance does tend to improve briefly. Sue Bridgewater explains that by the fact that average club earns 1.3 point a match and the sack comes at the lowest point in the cycle which is usually below 1 point a match.
Isaac Newton, Liverpool, and the Moneyball of Soccer
Data analytics persuaded Liverpool to hire Klopp. They also lobbied Klopp to sign Mo Salah.
Soccer recruitment should aim to find players who will play well together. They are looking for covariance, which measure the relationship between two different elements. Liverpool is committed to analytics. Its owner, John Henry, became a billionaire using analytics to trade commodities markets.
In 1996 Opta Consulting in London began collecting match data for the English Premier League. The broader problem with the early data was that they mostly measured a player’s interactions with the ball. But the average player had the ball for only a little more than a minute per match. What was he doing the rest of the time.
In 2003 Michael Lewis published Moneyball. Billy Beane enabled the cash-strapped Oakland A’s to perform better than many richer clubs. Billy Beane was getting interested in soccer.
In 2011-12 season Arsenal bought StatDNA, a sports analytics company based in Chicago that had been consulting the club.
For now, soccer’s nearest equivalent to Billy Beane’s Oakland A’s is the little West London neighborhood club Brentford FC. Mathew Benham gained his understanding of soccer analytics while working outside soccer. As well as running Brentford, Rasmus Ankersen and Benham are chairman and owner of Midtylland in Denmark.
Here are three methods Brentford uses to do that:
- Take the road less traveled. Brenford searches more intensively for talent in lesser leagues, where a player’s potential is sometimes overlooked.
- Perfect techniques that other neglect. About one-third of goals don’t come from fluid situations at all.
- Listen to the wisdom of the diversified crowd.
The Economist’s Fear of the Penalty Kick
By one estimate, Terry’s penalty cost Chelsea 170 million USD.
Economists Pierre-Andre Chiapport, Steven Levitt and Timothy Groseclose stated that penalty is a real-life example of game theory. Penalty is when what I should do depends on what you do, and what you should do depends on what I do. The penalty is a “zero-sum game”: any gain for one player is exactly offset by the loss to the other side.
Suppose that the good kicker always chose the same corner for his penalty (game theorists call this a “pure strategy”). Pure strategies don’t work for penalty taking. The essence of good penalty taking is unpredictability. So mixed strategy. People in real world don’t follow mixed strategy a lot.
To maximize the chance of scoring, an imaginary penalty taker would have to hit 61.5 percent of his kicks to his natural side and 38.5 percent to the other side. The keeper’s best strategy is to dive the kicker’s natural side 58 percent and the other side 42 percent. This was calculated by Ignacio Palacios Huerta.
The Suburban Newsagents
Winning the European Cup was in the beginning the domain of the capital cities of fascist regimes like Madrid and Benfica. By 1970s their dominance was eroding.
Instead of Western capitals, provincial Western European cities dominated the European Cup in the Champions League. Barcelona, Munich, Manchester, Turin.
Why factory towns became soccer towns. In 1878 a soccer club started in Manchester. Newton Heath later became Manchester United.
In 1888 when the English Football League started, six out of twelve founding members came from industrial part.
With industry came people with people came football.
The beginning of the end for small towns was the day in February 1979 when Trevor Francis became soccer’s first million-pound man.
In the Champions League, the midsize cities are now finished.
He Zipf’s law according to George Zipf that can explain almost everything. The difference between population of two cities is the ration between their position. 1 and 2 is ½. 99 and 100 is 99/100. Law of proportional law is not a good condition for small clubs to become big.
At last, being in a capital has become a strategic asset to a soccer club.
The Fans
A Fan’s Suicide Notes
By now, the notion that soccer prompts suicide has become truism.
700.000 people die by suicide each year.
Fewer people kill themselves while the national team is playing in a World Cup or European Championship.
Social cohesion is the key phrase here. This is the benefit all fans feel. The pulling together saves people from suicide, not winning.
Happiness
Rob Baade presented a paper: The Sports Tax. Public investment in stadiums does not provide a good return.
Study after study shows the same thing: hosting sports tournaments doesn’t increase the number of tourists or full-time jobs, or the total economic growth. Added to all this are the host’s costs.
Most of the stadiums that South Africa built for the tournament are now white elephants. The country never had any need for them.
Sports tournaments almost always cost more than forecast.
Hosting is finally going out of fashion. Most people now agree with Rob Baade: hosting doesn’t make you rich. But it can make you happy.
If people gain a lot of happiness after hosting a tournament, they seem to lose a little happiness in the run-up.
Football versus football
The word soccer was coined at Oxford University sometime in the 1890s, and it remained a common name for the game in Britain until the 1970s.
In 1884 a nine-year-old boy named Charles Miller embarked on the SS Elbe in Brazil and set off for England. In 1894 Miller returned to Brazil with a leather ball and a set of rules in his luggage. He set up the first Brazilian soccer league.
After the British Victorians spread their games, sports experienced a century of relative stability.
Soccer in the US became an unlikely beneficiary of feminism. Many soccer moms and dads are glad that soccer is not a big professional American sport like basketball or football.
The NFL looks a lot like the Champions League.
David Forrest and Robert Simmons found out that the people who care most about competitive balance are television viewers. The spectators at the ground tend to be the hard core: they simply want to see their team win.
It turns out that a thrilling title race does little to improve attendance.
In soccer, as in war, the underdog tends to try harder.
Many people feel that inequality becomes unfair when it is bought with money.
Are Soccer Fans Polygamists?
Fever Pitch is the most influential soccer book ever written, and an important source for our image of “the soccer fan”.
The Argentine variant: “You can change your wife – but your club and your mother, never.”
We know there are, broadly speaking, two types of soccer fan: the Hombys and the sod-that-for-a-lark floating punters.
Arsene Wenger talking about fans: “Soccer has different types of people coming to the game. You have the client, who is the guy who pays one time to go to a big game and wants to be entertained. Then you have the spectator, who is the guy who comes to watch soccer. Then you have two categories. The first is the supporter of the club. Then you have the fan.”[1]
Countries
The Curse of Poverty
The fact show that the world’s poor people and poor countries are worse at sports than rich ones.
In the research authors ranked countries: US, USSR/Rusia, Great Britain, Germany (including West Germany), Brazil, Italy, France … But Norway is the world champion per capita, followed by New Zealand.
China started to climb the Olympic medal list once their economy took off.
To win at sports, you need to find, develop and nurture talent. Doing that requires money, know-how, and some kind of administrative infrastructure.
There is 10.000 hours rule and 15.000 USD rule – the minimum average income per person that a country needs to win anything – if you are not Brazil.
Core beats Periphery
To be rural is to be isolated. Networks give you contacts. And better networks are one reason why some countries are richer than others.
In the Western Europe for centuries now, the Continent’s interconnected people have exchanged ideas fast. The scientific revolution happened here for a reason. And so is now the spread of the soccer game.
Berla Guttman, holocaust survivor, was one of the best coaches in the 1950s and 1960s. He said that if he saw something good in soccer, he stole it immediately.
Guardiola used the same “theft” metaphor about ideas that belong to everyone, and he has stolen as many as he could.
Western European soccer is a passing game played by athletes.
Soccer seems to have a quality that enables it eventually to conquer every known society. However, for a century after Victorian Britons began spreading the game, Asia and North America remained almost immune.
But from 1990s, new countries embark on globalization wave. And they hire European coaches to teach them the latest in soccer.
Koreans played in 2002 World Cup under Hiddink and reached semifinal. As the only country outside North America and Europe.
There is only one way to play good soccer: combine traditional Italian defending with German work ethic and Dutch passing. This is the European style.
In the long term, Western European dominance still looks unsustainable. But then we called catch-up once before, and we were wrong.
Why England still loses – but nowadays only just
England was known as perennial underachievers on the world stage. But than England expectations collapsed and they started to win more often.
The English players accounted for only about 37 percent of minutes in the Premier League. The switch from local league to mostly foreign one can be dated to 1995, the year of the Bosman ruling.
In any international match, these three factors hugely affect the outcome:
- The size of the nation’s population.
- The size of the national income.
- The country’s experience in international soccer.
England is number ten in above categories. Linear regression is method used in the estimation.
England is not an exceptional soccer country that ought to be ruling the world. England performs like a cheap battery. The style of game, high tempo, low possession is not the best for the second half of the game.
Germany leads the was in making professional soccer classless.
Four reasons why England isn’t beating the world:
- It’s just midsize moderately rich country without superior soccer experience.
- Its national team tend to play like cheap batteries.
- It had bad luck.
- The English male professional game excludes almost the entire population outside the working class.
The winningest of all England managers is Capello.
Tom Thumb, The Best Little Soccer Country on Earth
Between 2000-2021 the best winning percentage in soccer games was in the hand of Spain. Brazil is second.
Croatia is the top in the overachieving countries. Countries from Middle East like Palestine, Jordan and Syria are also performing well.
Worst underperformer is India.
The Future, The Best of Times – and the Streaming Service
Soccer is now, by a large and constantly growing margin, the planet’s favorite game.
The decline of TV and the rise of streaming and social media may actually benefit soccer.
This sport will live forever, but we doubt it will ever become a good business.
[1] In the book on page 305
