Gateshead v Oxford United - FA Cup First Round Replay

Whenever finance is discussed in football, it often comes down to the reasonable question “Which clubs get the most cash?”

That’s the heart of the matter. How much does each club get for being promoted to the top flight? For being in the Premier League? For finishing higher up the table? For qualifying for Europe? For being on television more often? For commercial sponsorships?

Is the distribution of this money fair? Unfair? Does it promote competitive parity? Or does it serve the interests of a small, wealthy few?

Tacitly implied of course in all this is that money–well, spending–equals wins, success, Premier League points. To which anyone who’s ever watched or talked about sport will say, “Um yeah.” And, in truth, there are very reliable models which reasonably correlate points totals with club spending on player wages and transfer fees in European football.

Yet I think too many of us assume that football clubs spend this money efficiently. Meaning, they neither under or over pay on transfer fees and wages in order to acquire the best talent on offer which perfectly suits both manager and the team. The assumption seems to be that, across all possible worlds, more money equals more quality, both in terms of individual players and the team as a whole.

Except Ted Knutson got me thinking today that many clubs, particularly in the Premier League, have barely scratched the surface in exploring efficient player recruitment. Writing in response to a recent column I wrote for 21st Club, Knutson touched on some interesting points. A sample:

Regardless of how much money they bring in, teams must become more efficient in how they operate, and in particular they have to become more efficient in getting the most out of their transfer budget and wage spending. Smaller teams that are trying to become more competitive almost can’t afford not to do this.

  • Diversify the responsibility within a football club to actual subject matter experts.
  • Spend more money on the staff that finds new players (by adding a statistical scouting and analysis
    department), and also money on the staff that develops new players. If spending on players is the greatest cost in your organization, you MUST make sure the money is used as efficiently as possible.
  • Start using numbers across your organization to provide data points that put everyone on the same page.

I’m going to be touching on some of these points for a future column, but the main thing I want to get across here is that, as I’ve mentioned before, the wealthy status quo, particularly in England, has led to some very lazy decision making on the part of club owners, executives and managers. The current TV rights deal in the Premier League for example simply dumps tens of millions of pounds into club coffers for simply turning up–there is nothing compelling them (ie market forces) to spend this money intelligently to compete, and so there is little stopping them from curtailing clearly inefficient spending practices (“He scored a ton of goals? Buy that guy”).

Anyone who’s ever read the Daily Mail knows this. For every stud in the transfer market, there is a dud. For every Gareth Bale there’s a Djemba-Djemba. Wages are markedly more more efficient (good players have higher wages than bad players) than transfer fees, but that shouldn’t be a surprise. Wages are augmented based on performance to retain good players. That’s not ‘efficiency,’ that’s just the invisible hand at work after the fact.

So what would happen if suddenly every club in the English top flight (or England for that matter) did away with the old play book in which long-term financial decisions were left to a manager who would likely be sacked in two seasons’ time–if they’re lucky? What would happen if clubs embraced standard business practices like risk management, exploitation of market inefficiencies, long-term financial and organizational planning etc?

Forget all the cultural red herrings about the “Americanization” of the game that would come with better run football clubs. Would the correlation between club spending and points totals remain the same? Or would better run football clubs help close the gap between rich and poor in the league table?

Remember, we’re not talking about producing and selling widgets, but winning football matches. In theory, a well-run club with specific player targets and a top-down collaborative approach may be able to achieve feats beyond their wage and transfer bill. If that’s the case, league competition would not necessarily be between rich and poor clubs, but well and poorly run clubs. And should one of those well-run clubs manage to make the Champions League one year and progress a little, while an erstwhile champion struggles to make the Europa League, well, football might have achieved something vaguely resembling parity.

Would it bridge the gap entirely? No. There will always be a Boston Red Sox and a New York Yankees, but perhaps there will be more wide-spread cost efficiency in line with ball clubs like Tampa Bay and Oakland. That may not be enough to shake up the existing order altogether, but at least to introduce a little more variance.

Comments (1)

  1. FC Porto – the most efficient club on planet earth.

Leave a Reply

Your email address will not be published. Required fields are marked *