"Money and Soccer: A Soccernomics Guide" by Stefan Szymanski

Discussion in 'Business and Media' started by mjlee22, Feb 6, 2016.

  1. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    I never got around to reading Soccernomics, but I just finished reading Stefan Szymanski's "Money and Soccer: A Soccernomics Guide", 2015.

    Szymanski is now an Sport economics professor at the U of Michigan. I really enjoyed this book because he presents soccer-related economic principles in a very accessible way, and his positions are backed up by 50-100 years of financial data that he has collected. The object of this book is to explain how a club's performance in a league relates to the club's balance sheet, and he also covers history that explains how things got the way they are today.

    To summarize 300 pages in a few words, some of the major points about Euro leagues, which have the Open system of relegation/promotion:
    • Regardless of size of the leagues, most have a small number of teams that dominate the league
      • On average, the dominant team won 1/3 of all the titles
      • Over the past 25 years, 79% of national championships have been won by the top 3 teams
    • Over time (i.e., a decade - does not apply to a single game), team performance can be predicted from the amount of money spent on players
      • In a game, the more expensive team was more than twice as likely to win, and the odds improved the more often the 2 teams played
      • Taken over a league season, where the higher salaried team is highly likely to win 2/3 of the time, that team is likely to win the championship
    • More dominance -> more fans -> more revenue. Merchandising = 30% of revenue in larger leagues
    • Since the start of the EPL only 3 champions have spent less than 66% above the league average wages
    Of course, if Leicester can maintain its form, it will be an extreme outlier in all of Stefan's stats.

    But basically, if you want to win the EPL, you need to spend more than everyone else - on average, 4x more. And even though the oligarchs and sheikhs are paying team wages that exceed revenues, it does not appear to be a financial problem (as long as they keep making up the deficit) and is likely to continue for a long time. In the long run, the value of the top clubs exceeds the negative cash flow.
     
  2. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    #2 mjlee22, Feb 6, 2016
    Last edited: Feb 7, 2016
    On the importance of Managers:
    • Most managers make little difference but a few have significant impact.
    • Stefan studied 528 English soccer managers who were in charge for 30 games or more, starting from 1974
      • 200 had a positive impact that was statistically significant and unlikely due to luck
      • 15 had a statistically significant negative impact
      • The top 20 produce an extra 0.5 to .75 points per game, or 30-50% performance improvement (average points per game = 1.4)
    • The median tenure of a manager has fallen to 1.5 years in the EPL and 17 months in UEFA's top divisions
      • Managers last 3 years in NFL and MLB, 4 years in NHL, little over 1 year in NBA and MLS
      • Most dismissals happen after a long bad run
      • The longer the bad run, the less likely it will change
      • The average replacement will be no better or worse than average, so there is very little risk the replacement will make things worse
      • In the EPL from 2001-2010, firing the manager resulted in a 50% improvement in points over the following 3 games
        • It's less likely the bad run will continue, so firing the manager appears on average to improve results, which is a phenomenon known as "regression to the mean".
     
  3. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    Stefan spends only a short chapter on comparing American major leagues (closed system) to Euro leagues (open system with relegation/promotion). He doesn't really advocate one over the other, he just notes that owners and fans of either system could probably not switch to the alternative.

    Basically, our Major Leagues are cartels, where agreements between companies in an industry restrict competition and increase profitability. Cartel members agree to a minimum price, do not compete in each other's territories, and do not hire each other's employees. Major leagues have avoided anti-trust action by way of the "competitive-balance" defense. Teams need an opponent and cannot provide a market without the cooperation of rivals. Rivals must also be strong enough for the game to be entertaining. This is why the NFL and MLS tout the beauty of the system, that any team can beat any other team on any given day.

    The outcome of relegation/promotion on the other hand, is a concentration of ownership in sports - for every 10 sports clubs there are 20 individuals who own >10%. Normal businesses have only 5 such individuals. Of course, in the EPL, the ownership is even more concentrated to a single owner. Concentration stems from "amenity value", the status of owning a sports team, followed by owning the best team in the league.

    This made me realize why the Galaxy and NYCFC are spending so much on players. They are willing to take the risks to establish themselves as the dominant teams and most recognizable brands in MLS.
     
  4. EvanJ

    EvanJ Member+

    Manchester United
    United States
    Mar 30, 2004
    Nassau County, NY
    Club:
    Manchester United FC
    Nat'l Team:
    United States
    I looked at how many coaches each NBA team has had in the last five seasons. Five seasons * 30 teams = 150 team seasons. There were 79 coaches (a coach counts more than once if he coached multiple teams), and 150/79 = an average tenure of 1.90 seasons. The average tenure could go down a little with coaching changes during the rest of 2015-2016 (I started with 2011-2012 so I did it for fewer than five complete seasons), but there won't be many of them. Given the average tenure I calculated, I'd like to see the author's data about NBA coaches lasting "little over 1 year."
     
  5. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    well, i tried to keep my notes short, and they are notes and summaries, not verbatim quotes. So maybe don't challenge him on my interpretation of his data...

    But in calculating the soccer stats, Stefan used data starting in 1974 and only coaches who worked at least 30 games for a team. To make the comparisons to American major leagues, I don't know if he used similar conditions. Also note that in the soccer time period he examined, there were actually around 2000 managers, so that's why he stipulated certain conditions, I presume to make the data more meaningful.
     
  6. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    oh, and note that Stefan cited median tenure, not average. He didn't want to use average because people like Alex Ferguson and Arsene Wenger skew the numbers too much.
     
  7. EvanJ

    EvanJ Member+

    Manchester United
    United States
    Mar 30, 2004
    Nassau County, NY
    Club:
    Manchester United FC
    Nat'l Team:
    United States
    I understand, but the research I did for the NBA was for only five seasons, so the teams with only one coach during that time wouldn't skew the numbers as much as your examples.
     
  8. mjlee22

    mjlee22 Quake & Landon fan

    Nov 24, 2003
    near Palo Alto, CA
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    FYI, the WSJ came out with a short article last week Feb-9-2016 about NBA coach tenure:
    More than half the NBA's "coaches -17- are less than 2 seasons into their current job. The average coaching tenure is now just 3.23 years, according to Stats LLC".

    So if more than half are under 2 seasons, that tells you the median is even less.
     

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