First, I would like to thank Zach Slaton not just for creating the various models I used yesterday but also for devoting hours and hours of his time explaining the model to me. Zach (along with Arseblog) also then helped in the editing of the final piece. I know editors rarely get any credit but I felt like it was due considering that I both needed a fact-checker on the piece and that Zach crafted one of the best paragraphs of the article. Zach is a great guy and I can’t recommend you follow his blog on Forbes enough.
Second, we are already planning a follow-up article because of the many questions you all asked yesterday. One thing that I can explain is how it’s possible that three teams can all have a 95% chance of winning the League using the Total Team Value (TTV) model and how it’s possible that a team can spend hugely (Man City) and not win the League.
The thing you have to remember is that this is a correlative model. We typically associate spending money with cause: I own a car because I spent the money to buy it. In football we do the same thing and you will often hear people say things like “Chelsea bought the Premier League”. Which may be true, but since I wasn’t there to see the title actually purchased from Richard Scudamore’s cold, dead, fingers I can’t say that it was.
What I can say, however, is that spending astronomical amounts of money correlates with title-winning teams. Let’s go back to the car-buying analogy. Is it possible to spend Yugo money and get a Porsche? I’ve seen it done so, I’m going to say yes. But if you want to get that Porsche, your odds increase with the more money you are willing to spend.
Now, in the case of the Premier League title, Arsenal are looking at trying to buy a Bugatti Veyron while spending the money it would take to buy a Porsche. Can it be done? Sure. It’s been done. Twice in 20 years.
I initially thought that no team had ever won the Premier League title and spent less than 3rd place on Total Team Value but Zach corrected me on Twitter about that. Most people’s initial reaction is to guess it was Blackburn Rovers who won the League without being in the top three in spend but they were 2nd in TTV when they won in 1994/1995 and came in first the very next year. It was actually Manchester United’s 1995/1996 and 1996/1997 teams who pulled off the feat coming in 6th in TTV in 1995/1996 and 5th in 1996/1997.
Becks, Giggs, Scholes, Neville, Brown, and Butt all came through United’s academy at the same time and formed the core of those title-winning sides and for those who remember the 90s you’ll recall that those two title winning sides were referred to as Manchester United’s “Golden Generation”. In a sense, Man U’s Golden Generation vindicates Arsene Wenger vision. Keeping a core of six young players together, battle-forged, and ready to compete has proven to work, once. But Fergie is asked semi-annually when his next Golden Generation is due and he keeps insisting that it’s just around the corner. And unlike Arsenal, while Fergie waits for that second Golden Generation, United are spending huge to keep their title hopes alive year in and year out.
There’s a lot more to say on this topic but suffice it to say that there are differences between Arsenal’s academy in 2012 and Man U’s academy circa 1996: spending in the League has changed drastically; player power is a wave that has all but washed away the power of managers and academies; and Arsenal don’t pursue academy players in the same way that United did.
I’ll leave you with this thought. 18/20 of the Premier League titles have been won by teams who were in the top three in TTV. The other two were won by the 6th and 5th most expensive teams. Even if we don’t account for the insane changes brought about by the arms race between Chelsea, Man U, and Man City — and the fact that the disparity between 6th place in TTV and 1st place in TTV in 1995 and 6th place and 1st place in 2012 is much bigger — we can still say that 90% of the time, a top spending team has won the League trophy.
Spending the money correlates strongly with winning the title but it’s not causal. Therefore, spending XX amount doesn’t guarantee a title nor does spending YY amount mean that it’s impossible to win the tile. It’s all about the odds. If you want to get a Bugatti Veyron, the odds get better the closer you get to the retail price.
Hey Tim,
I am truly interested in what your thoughts might be on the academy situation differences between 1995 and now. I say this because I believe that what you have uncovered using TTV is dead on, but that the model doesn’t actually evaluate “value” as well as we’d like. As I said yesterday in my comment, I don’t think this is a great secret to Arsene. I think he’s exactly aware of what your conclusions prove, it is just that his goal has been (maybe always but certainly since the building of the Emirates) to build TTV through the academy.
The academy is supposed to be a “value generator” because academy players cost proportionally fractions of a superstar signing, and are much much more likely to increase in value than decrease. The opposite is true of most major signings – if you sign a player for market value at his peak performance, you have no where to go but stay level or go down. Arsene’s “secret” to competing in the TTV market has been to build value by creating Aaron Ramsey’s, Jack Wilshere’s, Cesc Fabregas’ and others. The idea is to take a load of coal and hope that hidden in there are a few diamonds – or the footballing equivalent of those “pickers” shows where they buy an abandoned storage locker and gamble on its contents being worth more than the auction price.
In theory, I have had no quibble with this approach. Arsenal CANNOT compete with the oil barons/Abramovich’s, so we need some other technique to build TTV other than pump in cash from a benefactor. The academy seemed a sensible way to do that. I believe that was also Arsene’s assumption. But, if you are right and there are significant differences in how academies work that might undermine the use of an academy to build TTV, that would actually be a ground shaking article for me, because, in conjunction with your and Zach’s work, it would actually demonstrate that the current Arsenal project is doomed to fail. Which really would be a seriously hard truth to swallow.
So, when you get around to it, I want to read the article on the academy you allude to.
Cheers,
Jon
Jon,
My gut reaction is (based on the very scant data I’ve seen) is that building value via the academy is A) not really a viable option and B) not actually what Wenger is doing but is just a PR thing they tell us.
If you look at Arsenal’s academy how many “Golden Generations” (5 or more players) has it every produced? I’d say maybe one in the last 20 years. Wenger has produced a large number of professional footballers but how many has his academy produced that you would call world class? One? Two (if we count Cole). A club has to make six, or five, all at once, to have a Golden Generation and beat TTV by the level that Man U in the 90s did.
I also think Wenger knows this. He is not relying on the academy players to do this alone and instead is pursuing a modified version: buy young when they are cheaper, try to hold on to them and build a Golden Generation that way. The problem is that he underestimated the pulling power of teams like Man City. Which is why he bemoaned the loss of Cesc and van Persie. Remember how he said last year that they were supposed to be playing together now and competing for trophies together? Instead they have/are left/leaving.
As it stands, I have long stated that this club will not be able to hold on to Jack Wilshere once he has an exciting year at the top level. I suspect that will happen this year and the next summer, we will see the stories about how Real Madrid or someone is willing to spend huge sums to take Jack.
I also disagree that Arsenal can’t compete financially with Chelsea and Man City. Arsenal are the biggest team in the biggest market in the biggest league in the world. The revenues they generate are astonishing in pro sports terms but they could (and it looks like they are trying to) do more. The level of corporate sponsorship at Arsenal is simply not good enough and in many ways that level is tied to the fact that Arsenal can’t seem to get over the line in terms of winning trophies. If spending correlates with winning trophies then it goes to reason that spending would increase the revenue which would increase spending which would increase revenue, ad nauseum.
The implications here are obvious for our players and for the core values of the club.
Really glad Arsenal have fans willing to dig and spend some serious time trying to figure out ‘the truth’, no way I could have trawled through all that, kudos.
It’s interesting to see something in figures which you can only usually intuit through observation and gut feeling, shows you that finances have been important a lot longer than we realise, not that money has ever really been irrelevant imo but something to think about anyway.
Tim, keep up the good work!
Zach’s column dated May 2nd, 2012, quotes :
“Our working group has been lucky enough to exchange data with Stefan Szymanski, which has given us access to a complete list of Premier League club wages for every club in every season through 2009/2010″
These statistics can only come from the Financial Reports. That to me is a ?, query. Every EPL team plays 38 games and have a 25-man squad!. 3 or 4 clubs will have Champions League Football, and 4 (?) Europa League and the differences are already apparent.. We know that a long mid-week European trip and then a match on an away game, does cause upsets! The model refers to £XI, which I assume means the top 11 players. Total Team Value does that include the under-age players that are not in the 25-man squad? Quicksand!
Zach writing about Cesc last year, said he had been an Arsenal fan for 2-3 years? Tim, please guide him.
In the same article Zach writes:” I am extremely grateful to Prof. Szymaski for his willingness to share his data. It is part of a much larger data set he and his research group will use to study more than 40 years of English soccer from multiple economics angles”..
Salary information comes from Szymanski via. the Companies House NOT the club’s publicly released Financial Reports.
Maybe you’re unlikely to get a Bugatti with Porsche money, but with Volkswagen money you can get a Porsche look-a-like. I once bought a ’68 Karmann Ghia, removed the bumpers, replaced the headlights with those from a ’60s Porsche, replaced the wheels likewise. Everyone thought I drove a Porsche Roadster. Man I was cool. Except that I still had the original sewing machine engine and mechanical parts.
Now, I think there’s an analogy here… Uh… Oh, yeah, it’s that we’ve been convinced for a long time that Arsenal is a sweet James Deanish Porsche coupe, but in reality it’s a Volkswagen modified on a budget to look like one. A ’68 Karmann Ghia is a beautiful car. But it’s not a ’55 Porsche Roadster.
When? When will Arsenal buy me the car of my dreams?
The world is too wide for your shrunk shank
Or too narrow for my inflamed bone?
I get the impression you’re a spleen half full kind of guy.
Half full of a foul humor.
Precisely. Pleased you got it.
I’ve been a long time reader of your blog, but I’ve never really been one to chime in on the comments. I just had to say these last few entries are by far the best thing I’ve read on here. You’ve done a great job of taking some fairly complex stats and breaking it down to it’s basic level. Cheers to all involved!
I’ve also been wondering about something you touched on briefly, which is how the power has clearly shifted to the players and agents rather than the clubs. Any intention of digging into that? It’s certainly an interesting discussion when you consider how that has changed greatly alongside the influx of cash. It’s hard for me to say at this point, considering the painful RVP (as well as last years) saga, but I do believe players should have a say in where they play. It just seems that more and more players are holding their clubs over a barrel in order to force their hand. There are actually many parallels in the US right now with the NBA.
You may pay a player gobs of money to perform for you on the pitch, but one thing you can’t buy is their loyalty. And when they decide to leave we always deride them, because clearly they’ve left for the money. Yet they almost always say they’ve left for the silverware. Well, if I’m reading everything from your last post correctly, those two things are clearly not mutually exclusive. So they may leave for the trophies, and by consequence get paid a ton more. The other side of course is that they may leave for the money, and wind up with a title (fucking Na$ri).
Great articles but a bit frustrating as a Gooner. I just don’t see us competing with the transfer fees and salaries that are being offered by Chel$ki and Manshitty. We might level out somewhere in the top 5 in TTV but will never reach their valuations as long as they have the sugar daddies.
Chel$ki have already bought two players this summer over our record transfer fee and if rumors are even remotely true are looking for more. Their idea of an academy is to buy 20 year olds for more money than anyone else can. The idea that we could have bought any of these players if we would just have offered another million pounds is ridiculous, they would just have made another higher offer. We can not win a bidding war and will therefore lose these “top players”. It is sad, but it is reality.
We are a selling club when it comes to our top players because the player will want more, whether it is money or trophies, which you have shone in these articles, usually go hand in hand.
Barcelona and Real have built dynasties on these principals for years and Chelsea and Manshitty are only bringing it to England. No one ever batted an eye when the best gravitated to either barca or real Madrid and the same appears to now be true with these two.
Unless financial fair play has any bite, this will be our place for years to come. I do not hold out any hope. FIFA and uefa are too corrupt and negligent to truly enforce any real rules against the power clubs. ( FIFA admits that officials took millions in bribes, I am shocked!)
Thanks for answering the Blackburn question.
Tim
The quality of your content continues to hit higher and higher standards. Thank you for your excellent work
Perhaps Arsenal can’t afford the £120m investment. Fair enough, I’ve seen the numbers and I agree that would be a huge leap for this club. If you believe that, then you have to agree that Arsenal are just plucky little upstarts who can’t afford the Yaya Toure’s of the world (much less the three Yaya’s that £120m represents) and as a result we should enjoy the 3rd place finishes as they actually represent Arsenal punching well above our weight.
And that idea that we are punching above our weight doesn’t matter whether you believe the TTV model or Szymanski’s wages only model.
Tim, Yaya Toure actually tried for Asenal, but Wenger thought he wasnt good enough. We could have had him when we had his brother.
Tim, you seemed a bit put off by my post yesterday, fair enough. No offense was meant. I think your point here is exactly the conclusion I came to as well, and anyone who has been paying attention since Soccernomics came out has come to. No matter which you like, they say basically the same thing. Arsenal are punching way above their weight and it is unrealistic to expect league titles without huge investment. Of course, investment is a subject that gets pretty personal as well.
T-Town, what I read about Yaya was that he was in the pipeline to become an Arsenal player as soon as he got his work permit, but he got tired of waiting and moved on (this was when he was at Beveren if I remember right… anyone else remember this one?)
What is the correlation between being an Arsenal player or an ex-Arsenal player or Arsenal academy graduate and winning the league in your respective division?
Isn’t it just Ashley Cole?
And Nasri and Henry
Ah, now I know what van Persie meant when he said he disagreed with the club’s direction…
http://www.football-shirts.co.uk/fans/official-arsenal-201213-nike-away-kit_16412?
Wilshere looks about 6’2″ in that shot.
I remember with great fondness and a buck load of nostalgia, my father driving our family on vacation in our tiny white Yugo while listening to that same Fleetwood Mac casette every summer, with me and my sister crammed in the back seats reading comics. That was all we could afford, but fuck, were we happy.
It’s the same thing for me with Arsenal.
Many thanks to Tim and his associates for slicing and dicing through some of football’s mysteries with these two superb posts. Like WindyCityArse I’ve have been a regular reader though not a comment machine. This blog is one of the most inspired and worthwhile reads on our favourite subject matter to be found on the interweb and this two-part post is a superb reason to keep coming back during this mega interlull.
It’s hard to keep the flame burning as a gooner of late – these meticulously researched numbers confirm why, with the car analogy an excellent one. The clubs and Arsene’s statements have misled us to an extent but these numbers do not lie. Of course when the season kicks off, optimism will flood in and we’ll believe that in a game of 11 vs 11 we have a great chance of success. But we know Groundhog Days will come again.
I wonder Tim, whether you think the club and Arsene have access to this sort of analysis in a different form? I suspect that even if they do, they’re not in agreement on how to proceed, as evidenced by some of Arsene’s comment. The “you cannot claim to be a big club and sell Nasri and Cesc together” confirmed for me a deeper dissatisfaction felt by the manager and a willingness to identify with what fans think. Mr Gazidis does not manage this trick as well, despite his honourable efforts at the AGMs.
And as well as wondering how many players we are or were away from a title, it is also baffling to me how our transfer policy has changed over the years. We’ve seen great success with drafting experienced Premier League players, such as Sol in the past and Mikel now. Why don’t we do it more often? Why haven’t we gambled (please just once) on smashing our transfer record on a “marquee player” as opposed to Gervinho, Walcott and Arshavin who simply do not fit the description? Surely players of the 7-12 million pound range are just as much of a gamble and we have the resources to absorb a one-off loss?
In the same way that we have leveraged Arsene’s 120 million pounds of value, we also leveraged RVP’s glass ankles for a breakout season knowing any slip would have meant disaster for us (and surely RVP felt that too). How much longer can Arsene’s magic hat keep our heads above the waterline that is 4th spot?
The calibre of RVP’s replacement, if one comes at all, will tell us much, because if people keep calmly asserting that Gee-rouu and Poldi can replace a player they were supposed to partner with, I will eat Arsene’s magic hat. I don’t much care whether his divine left foot and spider-webby ankles become Mancles or trot out for La Vecchia Signora next season. When he goes get top dollar and just for once, replace one of these guys that leaves pound for pound. For once.
I don’t think we can replace them “pound for pound”, and I think every relevant party in world football, from the players, to the agents, to our rivals, knows it. something is rotten at the heart of our club, and that we sit where we do at the end of every season is a minor miracle. i hope this changes, but it will be a large scale shift away from the status quo we’ve occupied since the end of the 2008 season…i wonder what the catalyst will be?
My thanks to Tim for getting this data out there. I can sometimes enjoy the numbers too much, losing the context with less numerically inclined readers. He not only understands all the numbers, but also tells better stories with them than I do.
Now on to a couple of comments…
Readers are correct to observe the 95% number is a bit… discounted by the number of teams now spending those levels of money (Chelsea & Man City, with United further behind). Not every team that spends that much money has a 95% chance of winning the league. As Tim does point out, one of those teams has a 95% chance of winning, and the results back this up with the 18/20 teams coming from the Top 3 TTV’s each season (with nothing outside of the Top 2 since Abramovich took over at Chelsea).
As to NotOverTheHill’s observations, the £XI is actually the cost of the starting XI in that match in terms of Current Transfer Purchase Price (CTPP, another TPI metric). CTPP = the current day value of that player’s transfer fee. The TPI is a labor of love of Mr. Graeme Riley that contains:
1) The original transfer fee paid
2) The CTPP to put all transfers fees in current day value
3) Every stating lineup for every match in every EPL season
Amongst other things. Yes, he is obsessive. This data then allows us to construct the cost of the two starting XI’s. We translate this into a cost advantage or disadvantage for each team in the match (example – Chelsea’s £XI for a match being £250M & Arsenal’s being £100M give’s Chelsea’s m£XIR for the match as 2.5 and Arsenal’s being 0.4). We then note which team is playing at home, and then feed that into an Ordinal Logist Regression to predict the odds of each club winning, drawing, or losing the match. So, RVP or Cesc being bought cheap manifests itself as a low £XI for Arsenal, a low m£XIR for them, low predicted win and draw percentages, and thus a lower expected number of points earned in the match.
Therefore, we can judge how much academy players or low cost players contribute to any team and how much added or less value a manager extracts from them.
In simpler terms, think of the TTV metric as the total resources (salaries + transfer value) available in the squad. Think of £XI as a measure of the resources deployed in an individual match. Both are important to a club’s success in a 38 match season with two domestic cup and one international cup competition thrown in.
Finally, if time allows this summer I want to enhance the models available via the TPI. The challenge with the £XI, TTV, and m£XIR models is that they have data lag challenges. The TTV requires salary data, which is released 6 months to a year after a season is completed. The £XI and m£XIR models require starting lineup data. Thus, neither can be used as a predictive tool.
What we do have relatively close to the beginning of the season (once the transfer window closses) is the squad value in transfer fees (Sq£ in TPI-talk). I could build an ordinal logistic regression around this metric, estimate the impact of Sq£ on match outcome, and then simulate the season (say 10000 Monte Carlo simulations) to give a more accurate likelihood of the season’s outcomes. That would give raw percentages for the likelihood of each team’s finish positions from a financial standpoint. Keep in mind that there are 760 unique events in a season (2 teams * 380 matches) and at 10,000 simulations that’s 7.6 million data points. It’s not impossible. Others do it. It’s just a good bit of work outside of my day job. I’ll see if I can get it done, as it would be a fascinating study.
Oh, and a quick note on why academy talent doesn’t play out any more. It’s because there’s always a bigger fool willing to pay your academy player more than what you’re willing to pay him. As I said at the close of one of my TPI posts, the reality is that the football world is perhaps the finest example of our ruthless internationalization of all things business related. You can’t hide academy players from those who would buy them. Clubs like ManCity and Chelsea have teams of analysts with data quantifying how much they’re worth on the pitch, how much you’re paying them in salary, how much others are willing to pay them in salary and transfer fees, and whether or not they’re willing to trymp those offers. The story gets even worse for non-sugar daddy clubs when such clubs aren’t constrained by rational economuy behavior.
Just as no one spends their entire career at a single employer any more, soccer players rarely spend their entire careers witha single club. Thus, if they don’t get picked off while in the academy they inevitably get picked off in their twenties once they do well in the first team. Take your five or six job employer changes over a forty year career and compress it into a 10-15 year soccer career, and now we understand why trainees staying with the team who brought them up is a rarity. The market is so open, so free flowing, and so efficient that this is now the norm – players will go where the money, and the money will find the players that it wants.
Thanks a lot for the two previous posts. If you need help with dirty-work (data extraction/simulation etc.) I would love to help. I am sure other numerically inclined gooners would as well.
>>>> SHOCKING NEWS <<<<
We interrupt this program to let you know that in the most surprising revelation in recent memory, 2 senior FIFA officials, including the previous President have been taking bribes, Just UNBELIEVABLE.
Right.
Yes. So not shocking. As I referenced above. I have little faith that financial fair play will change much of anything as uefa and FIFA are too corrupt and negligent to force the power clubs to do anything. And if they do, what’s to stop a new European competition from forming and allowing the big $ clubs to participate and do whatever they want. Uefa will back down if faced with not allowing Barca, Real Madrid , manure, Manshitty and Che$ki participate. FFP will evaporate.
Kudos to a well researched and succinctly presented article. I had always felt that we were no longer able to compete for the EPL title – despite what the bulk of the fans expect. We ARE punching well above our weight and the key is Arsene Wenger