Simon Kuper on Money

Dearieme points us to this Simon Kuper piece in the FT: Time to End Our Deluded Obsession with Club Managers. From it, we learn that

Stefan Szymanski, economics professor at Cass Business School, studied the spending of 40 English clubs between 1978 and 1997, and found that their spending on salaries explained 92 per cent of their variation in league position.

So far so good; that’s about what you’d expect. Managers improve the teams they have, who then climb the table, increasing the club’s turnstile and reward income, allowing them to improve the team, and so on until they hit the back of the queue represented by the clubs who did well in the early years of the Premiership and didn’t subsequently do a Leeds.

But if you read the article, you find that Kuper wants to brush aside the remaining 8%: his argument falls into 3 parts.

  1. “The team that pays most, wins”.
  2. But here is a list of managers who buck the trend. And most recently, Wenger and Hiddinck have bucked it by knowing things that the other managers and teams didn’t.
  3. “However, no such knowledge gaps exist in English football any more. Everyone in the game now has access to best practice. The Premier League is like a market with almost perfect information”. So we revert to part 1. and begin to loop around, and the team with the most money wins.

But 3. is self-evidently absurd. Kuper’s argument derails itself. Football always thinks it’s at the end of history, and then gets caught out completely by something left-field.

(Just within scouting, significant unevenness reveals itself even within the big four, where Arsenal’s knowledge of African youngsters is greater than Liverpool’s, Liverpool’s of Spanish youngsters greater than Manchester United’s, and Manchester United’s scoop on the Balkans and the Brazilians beats Chelsea’s. And that’s just scouting).

I don’t think Szymanski’s wrong, because he leaves room for such irregularities, and he leaves room for Leeds and Newcastle and Sheffield Wednesday and West Ham and the other members of that almighty host who paid the wages and bought the bullet.

In the very long run, it isn’t how much players are paid, it’s the size of the city divided by the number of its significant clubs, the optimal number of clubs being two. The city has to have been a major centre of manufacturing at some point in its history, and ideally will not primarily have been a port. Discuss.

Finally, and just for the sake of fairness, Simon Kuper is in my opinion alongside Jonathan Wilson as the best sports journalist in the UK. I own and reread all of his books. I don’t agree with him here, but I can’t even pretend to match his knowledge, experience, imagination and reach in his coverage of football.

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14 responses to “Simon Kuper on Money

  1. Not sure about your reference to “ideally will not primarily have been a port”. Many European port cities boast their country’s most successful or jointly most successful club: Glasgow, Liverpool, Marseilles, Lisbon, Gothenburg, and Piraeus spring to mind.

    I’m aware that one can find counterexamples to just about any hypothesis of this sort but it would be interesting to hear your reasoning for that.

    (PS I have no particular attachment to ports, let alone the club from the last-named on that list…)

  2. I suppose I’m asking, why not Bristol? Why not Portsmouth, or Southampton? But I don’t really like these hypnotheses at all, not when made to stretch over more than a few years at a time. What I disliked about Simon’s article – it must be the first time I’ve felt that way about something of his – is that end-of-history thing, that the game is now on a plateau and only money can hoist one side over another, as if all of the people in clubs behave consistently according to their market value at purchase. It’s the kind of thing Chris Dillow will punt into the air for discussion without staking anything more than a weblog post on it, just for discussion’s sake. He doesn’t like the cult of management, but I don’t think football management is the kind of management he doesn’t like, for all that it carries the same name.

  3. I’ve blogged about this as well. I suppose the interesting one is why not London – four of the biggest clubs in the country (Spurs, Arsenal, Chelsea, West Ham), a large working class population etc?

    I think the end of history thin is total bunkum. As I noted over at my place, even if there is perfect information (which I don’t think there is or can be), the great managers will spot things that others don’t. Hell, even decent managers do this (look at Bruce’s raiding of Central America or, slightly up the managerial ladder, Moyes’ eye for lower league players). The Big Four/Five could have bought Lescott, Jagielka or Cahill but they didn’t see them in the same way Moyes did. I’d take all four at Liverpool now but I’d guess Rafa would have to shell out a considerable amount more than Moyes paid for them…

  4. I assume the book deals with these questions, but:

    * How do they adjust for good managers attracting the highest paid players and making them better players?
    * Statistically a 92% ‘explanation’ allows how much in league position left to the other 8%? Even one league position can mean not being relegated, or being promoted.

    I think what they’re saying is players are perfectly rewarded for their ability level, and therefore 92% of league position is down to player ability (ie it’s not really the money, that’s simply a guide to ability – they aren’t saying if you paid Pub Team United £100k/week each they’d suddenly win the league) . Which isn’t that hard to believe really, surely the question is to what degree a manager can influence that ability?

  5. Matthew, yes: I’m assuming that Kuper is describing the whole potential ability of a manager to influence in that phrase “knowledge gaps” i.e. he’s viewing the effective manager as that one with access to a fund of knowledge that will, in time, spread to his rivals. I believe, however, that there are skills in the management of a system i.e. a set of players within the human set of the football club, that are not easily acquired and less easily transferred, and it’s these skills that I place in that 8%.

    This is more fun than I’d thought it would be.

  6. But what I’m saying is that if (as we are led to believe) 92% is down to player ability, and (let’s say) 8% is the manager, then doesn’t that risk missing out the part of the players’ ability that has been improved by the manager?

    In an extreme example, imagine eleven rubbish players get £500/week, and win nothing, and thanks to a very good manager they become brilliant players, who get £50,000/week, and win everything. This could easily show up as ‘100% of their league position was explained by their pay’, even though in fact it was all to do with the manager.

    Szymanski I am sure is aware of this and corrects for it, I should say.

  7. I wonder how one WOULD correct for that, in a not entirely-subjective way? Given that stats are still a real weakness of mine, I might not actually be able to follow what would be a perfectly acceptable method.

    Are we saying, then, that, in the £500 to £50,000 per week via managerial genius scenario, that the genius might get swallowed up in the 92%? Because adjusting for prices, that’s just what Clough did for John McGovern.

  8. Half the problem comes from reporting the statisticians’ technical use of the verb “explain” and letting the layman assume that it corresponds to his everyday use. You might as well argue that league position “explains” how big a salary a player gets.

  9. I’m VERY much the layman where this is concerned, Dearieme, and certainly feel the force of what you’re saying. (I must have learned a good half of what I do know from discussions of stats on blogs since ’03, and half of that by reading comments on here).

  10. Stefan Szymanski

    I saw your comments and thought I would explain what I did. In the book we don’t explain this is much detail, but I have explained the methodology elsewhere in print- in academic articles and in my now ancient book Winner and Losers: the business strategy of football. Essentially the data is taken from the accounts of football clubs and consists of the total wage spend. So this includes all employees. However, we can be fairly sure that most of the wages of a club are paid to the players. The salaries of players are largely determined contractually before the start of the season- the bonus elements are quite small, especially for the players that cost the big bucks. I even co-authored a paper once that tested whether causality ran from wages to position or from position to wages- the evidence suggested that it went from wages to position.

    The point people are making about the 8% is fair enough, but remember the 8% is distributed across all clubs. For example, if every club except one got exactly waht it paid for, then the 8% would all go to one club, whose managers would clearly be geniuses. But in reality most clubs are little above or below the performance line, and so no one is doing much better or worse than expected. I have examined these relationships for English leagues between 1970 and 2007 (before that wages did not explain the variation in performance very well, because the variation in wages was quite small) and the only manager who ever really stood out for me was Brian Clough. I agree that Wenger and Ferguson are great managers, but I think their skill lies in persuading the money men to back them and their investments, rather than getting better results than the resources would justify.

    The real sticking point is whether the successful managers are paid so much that their wages are explainign the variation in position. I just don’t think this is credible- managers are generally paid less than the stars, and it is their wages that make up for most of the variation in club wage spending.

    This might give you more ammunition to disagree, but I hope it clarifies what’s been done.

  11. John Terry's mum

    Surely the best thing the owner/manager a of mid-ranking club then should is double all his players wages, thereby making them twice as good.

  12. In all seriousness, JTM, didn’t something quite like that happen when Abramovich bought Chelsea? and wasn’t that the season they were robbed – arguably – by managerial errors of a place in the Champions League Final? Before Mourinho came in?

  13. What is to explain here? Is a model under which you have 11 players contributing an average of 8% each, a manager contributing the same amount as an average player, and 4% from other factors – is such a model really so counterintuitive?

  14. James Hamilton

    That’s quite a clarifying way of putting it, Dan; thanks. No, not so counterintuitive.