"Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan
Statistical analysis such as this blog not withstanding, one of the beautiful aspects of soccer is the artistry of the game. What many non-fans see as 11 guys simply kicking the ball back and forth waiting for the one lucky strike that leads to a goal, soccer fans see as a beautiful ebb and flow of strategy leading up to a well deserved goal. Sometimes the desire for beauty on the part of some fans can lead to disdain for those of us who would like to apply some numerical analysis to the game we love.
One area where all fans can agree such analysis would be of huge benefit is in the cloaked nature of club finances and player wages/transfer fees. With the rise of global clubs, global ownership, and the money that comes with both there is a growing need to understand how they influence the competitiveness of our favorite clubs. The league that shows the greatest need for such analysis is the English Premier League. No league best represents the global success of soccer over the last 20 years,
and the worst financial excesses.
Luckily, a timely book entitled
Pay as you Play: The True Price of Success in the Premier League Era by Paul Tomkins, Graeme Riley, and Gary Fulcher provides all the data we could ever want on transfer fees paid and earned by every club in the history of the English Premier League. Beyond compiling a (largely) complete history of transfer fees, it also provides insight into the authors' own method for translating past fees into current, soccer-inflated fees, as well as various measures for compiling each team's individual transfer payments into squad and starting XI costs. The culmination, a 300-page definitive tome on the finances of England's top flight of soccer, provides invaluable insight into the economics and associated results of Premier League soccer. After reading this book, it is quite clear that there are numerous impacts felt on the pitch from the financial decisions by the clubs' leadership (although the book deliberately leaves some of those conclusions up for personal debate). We can have our own opinions about what this book means for English soccer, but their is no debating the facts presented by the authors. Quite simply, it is a must read for anyone concerned about the health of the sport in its home country, a reader's favorite club, or the league itself.
Why Transfer Fees Matter One might question why transfer fees matter in examining the state of English soccer. After all, studies like those in
Soccernomics contend there is little correlation between transfer fees paid and the team's success, and rather a much better correlation between a team's annual player payroll and league placement. First, after reading both
Soccernomics and
Pay as You Play, I would contend that the
Soccernomics method for analyzing the impact of transfer fees on team performance is incorrect (see my explanation several paragraphs below), while the
Pay as You Play method of analyzing transfers lends itself to a more correct analysis. Thus, I would reject the conclusions of
Soccernomics.
More importantly, the authors routinely point out the small roll that home grown players, those who came up through the squad's reserve team and academy systems, play in English Premier League sides. Most squads were averaging in the low single digits (2-3), with the number dropping precipitously below 1 by late in the second decade of the League. Thus, the bulk of a team, and especially the starting XI, will be made up of several years worth of transfers and their impact will disproportionately affect the team's fortunes in league finish position and continental competitions. Getting the best bang for one's Pound in the transfer market is critical to realizing the team's goals.
New Variables to Help Understand Club FinancesPerhaps the most critical contribution of the book is its ability to compile the vast majority of transfers completed in the history of the 18 year league, and then translate them into a current price. This is done by creating the Transfer Price Index (TPI) for each season, which allowed the authors to create the Current Transfer Purchase Price (CTPP) database which translates every transfer into a 2010 soccer price. I say "soccer price" because the authors correctly surmise that inflation in soccer transfer prices far outpaced the traditional inflation rates which are averaged over a generic basket of goods. Studying the specific marketplace requires a specific inflation factor, and Tomkins, Riley, and Fulcher provide a huge service in creating this metric, making comparisons over the years and between squads much easier.
Note that the costs are all listed in British Pounds - this is English soccer after all!Two other metrics that the authors created out of the inflated transfer fees were the total squad cost (Sq£) and the average starting XI cost (£XI). The prior can be thought of as how much the entire squad, even less productive transfers who have been relegated to a reserve squad, cost to assemble. The latter can be thought of as how expensive the average starting team cost the club, while dividing the £XI by the Sq£ gives a good idea of the team's utilization of the transfers for which they have paid. The benefit of using the
Pay as You Play approach to transfers is that it helps you understand the long term effects of managers' and club's transfer policies on the squad's costs and helps provide better analysis of correlation to team performance. This is superior to previous approaches that have attempted to use only the previous year's transfer fees in judging current team performance, ignoring the realities that many transfers may see limited playing time in their first year on a squad or may take longer than a year to fully integrate into the starting XI and thus have a limited first year impact.
One cannot understate the amount of work undertaken to compile such a data set and post-process it into the TPI, CTTP, £XI and Sq£ metrics. The authors have done EPL fans and statisticians a great service, with all kinds of subsequent analysis now possible. Some possible questions that can now be addressed include:
- What has the spread in financial expenditures on transfers looked like thoughout the years?
- What has been the impact of increased transfer fee expenditures on likelihood of finish position in the EPL table?
- Which managers were the best over- and under-achievers given their expenditures?
Luckily, the authors attempt to answer these questions and many more in the analysis that takes up the bulk of their book.
Four Ways to Analyze Transfer FeesThe book uses the CTTP database and it's associated metrics to look at transfer fees from four different angles, the highlights of each I have summarized below.
Part 1 - The Price of Success:
This section of the book provides a good overview of general trends in EPL transfers. If one is primarily interested in the long term league and manager trends, they need only read these nine chapters chock full of outstanding analysis to get such an understanding A few of the lessons learned include:
- Arsene Wenger's reputation for punching above the belt doesn't really apply to his championship decorated first decade, but does apply to the silverware bare years since.
- No matter who was in charge of Newcastle, they always set new standards for punching below the belt
- Sam Allardyce is very deserving of the title of "Best Manager for Punching Above the Belt"
Most fascinating to me was Chapter 4, where it appears the authors utilized Graeme Riley's background in the financial word to apply financial market metrics for measuring market concentration and oligopoly to the EPL. The findings confirm what we've long suspected - the long term trend is towards concentration of silverware to the top spenders and increase of the disparity within the league. What looked like a oligopoly of the Top 4 in the early to mid 2000's (the height of EPL dominance in the Champions League) has now grown into a gulf between the Top 8 and the Bottom 12 (with 75% of the £XI concentrated in the Top 8).
Part 2 - The Clubs:
Another unique aspect of
Pay as You Play is it's use of a myriad of authors to provide unique insight into each club's expenditures and performance. That's right - Tomkins, Riley, and Fulcher reached out to over 40 journalists, bloggers, and season ticket holders to get their take on the CTTP numbers for each squad. Want to know how a Portsmouth supporter feels about their team's recent success and subsequent financial crash? It's in the book. Want to know how someone can defend Chelsea's championships that were largely bought? It's in the book. The whole section is a fascinating read of informed opinions, and the associated team CTTP data to go with them.
Part 3 - Eighteen Seasons - 1992-2010:
Combined with Part 2, this part of the book provides an excellent overview of the growth of the Premier League, and is a must read for the newer fan like myself. It not only provides a different set of summary statistics than the other parts (year-over-year growth or decline in CTTP, maximum and average values for £XI and Sq£), but it provides commentary as to why (difference in squad/starting XI costs due to promoted/relegated teams, an Abromovich spending binge, Alex Ferguson reacting to another Arsenal championship, etc.). Whether you're a newer fan of the EPL or have been there since its inception, it's a must read to provide historical context to the longer trends in transfer fees.
Part 4 - The Main Managers:
One of the consistent themes the book attempts to address is which managers made the most of their expenditures, and which made the least. In this part of the book, the authors focus on key managers throughout the history of the Premier League and gauge how they've done in the transfer market. They not only look at their purchases, but also look at their sales and see who came out ahead and who was far under water. The lesson: don't get into the transfer market if you want to flip players for a profit. Of the 11 managers studied, only 1 made a profit, 1 came close to breaking even, and the other 9 took huge losses. I won't spoil any of the conclusions in this section, and will leave it up to the reader to get a copy of the book to have some of their suspicious confirmed and many of them challenged.
Conclusions I have spent a lot of virtual ink on reviewing this book because I think it is that important to the study of the finances of the English Premier League. Over the next decade I expect its data to be the foundation for studying the effectiveness of UEFA's Financial Fair Play Rules' in leveling the playing field and stoping the financial absurdity of the last half decade. Like any good authors should, these three have set themselves up beautifully for a second edition of this book.
The book is also important for another reason: it provides us with a rich, needed data set that is ripe for a multitude of further statistical study. While the authors have done an awesome job of summarizing the results of their findings and analysis, I have been able to come up with nine additional analyses that could be performed on the CTTP data set, and I am sure others could come up with many more. That's not a knock against the authors, it's a complement. The CTTP database is the gift that should keep on giving. The biggest challenge in sports statistics, especially when it comes to soccer, is generating a good data set to analyze. It's the most resource intensive part of any statistical analysis project, and can generate a "garbage in/garbage out" situation if one is not careful. The authors of
Pay as You Play have helped eliminate that big first hurdle, and they should be commended for it.
Finally, while the authors stayed away from drawing too many conclusions in the book (they must really like that Moynihan quote and want you to form your own opinions), I will not do the same. Quite simply, the data in
Pay as You Play confirms that ludicrous financial behavior on the part of owners and managers is destroying the overall competitiveness Premier League. No Chelsea supporter can look anyone in the eye and seriously argue that Abramovich didn't buy those Championships. I can't wait to see how Chelsea's fans react when UEFA rules prevent Abramovich from simply buying more championships when his aging team starts falling apart. Hicks, Gillett, and the Glazers have hogtied their clubs for years due to their financial failures. And the worst part is that this bad behavior has forced many of the less wealthy clubs to follow suit and charge off the cliff of financial oblivion. I chafe under our
domestic league's salary capped franchise arrangement, but what the EPL has experienced in the last decade is at the opposite end of the financial lunacy spectrum.
I love my Gunners, partly for Wenger's refusal to indulge the lunacy of the last half decade, and I love the EPL. I just hope UEFA's new rules help correct a situation where literally only the biggest spending clubs (note: not necessarily the richest) have a shot at reasonable success.
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