All the great debates about sports take place in bars. Which is funny because bars are the only place where you can’t talk about politics or religion, and in many ways sports fans are more political than most political parties and more religious than many religions.
Like religion, sports have gods and devils, saints and demons, and other assorted dualistic expressions of the culture. The gods of football are folks like Collina, who we believe is the infallible referee whom every player loved. The devils of football are just as broadly described, they are the evil money men who have come to till our perfect pastures with their giant corporate land rapers. Our players are our saviors and our goats; sometimes both in a single game. And among the punditry, which is the priest class if you will, there are dogmatists and iconoclasts. Gods and devils, saints and demons, priests and heretics, we’ve got them all.
But these dualisms are only good for fantasy and for painting broad strokes, they don’t serve us very well when dealing with reality. Which is why we like dualisms; reality is messy and hard to explain.
Some folks, though, want to explain reality.
In their groundbreaking work, Soccernomics, Stefan Szymanski and Simon Kuper did exactly that. They reached into the darkness of English football finance and using huge reams of data showed that, in fact, money can buy you love, at least in the form of a league title. Specifically, Kuper and Szymanski showed that there is a correlation between wages and league position or as he put it in his column on Forbes after Manchester City won the League: “Money buys success- it’s not a very exciting observation, but one that I have always believed to be the fundamental truth about football. There’s a very clear correlation between wage spending by football teams and league position (read Soccernomics if you want to see some of the evidence).”
Kuper and Szymanski’s idea that wages correlate with league position has actually become dogmatic in its own way. People not only believe that wages correlate with league position but that wages should determine, or come close to determining, league position. Once this idea passed into dogma the Arsenal priesthood then used it as a stick to beat Arsene Wenger with; Arsenal have the fifth highest wage bill as of the 2010/11 season, therefore the club should be more competitive. Or at the very least, simply overhauling the wage structure will create a more competitive team. After all, the argument goes, Arsenal’s wage bill is only £30m less than Man U and they are in the title hunt every season.
Another dogmatic belief among Arsenal supporters and pundits is that Arsenal are perennially just one player short of the squad needed to truly compete for the title. “If only Arsenal would buy that (fill in the position) that they have needed for (fill in the years) then they could win the title” is a refrain that I’ve heard so often that it’s become tinny.
And then there’s the last, and probably most pervasive of all Arsenal’s dogmatic beliefs, that Arsenal don’t buy titles. That Arsenal never were a big spending team and that they didn’t buy players, they made them. It’s a slogan that’s so ingrained in the Arsenal collective unconscious that there’s even a tee shirt for sale in the team shop with a quote from Arsene Wenger “We don’t buy superstars, we make them.”
I know a guy named Zach Slaton who writes for various publications including Forbes.com where Stefan Szymanski is also a contributor. Zach is probably a genius. He’s also a Gooner. And like all really bright people can’t read a book like Soccernomics without challenging some of their conclusions.
For example, when I read this quote from Soccernomics, I simply accepted it as fact:
In fact, the amount that almost any club spends on transfer fees bears little relation to where it finishes in the league. We studied the spending of forty English clubs between 1978 and 1997, and found that their outlay on transfers explained only 16 percent of their total variation in league position. By contrast, their spending on salaries explained a massive 92 percent of that variation. In the 1998-2007 period, spending on salaries by clubs in the Premier League and the Championship… still explained 89 percent of the variation in league position. It seems that high wages help a club much more than do spectacular transfers.
But when Zach read that same quote he knew that it couldn’t be right and he set about proving that it wasn’t.
His first bombshell post on the topic was provocatively titled “Soccernomics Was Wrong: Why Transfer Expenditures Matter, and How They Can Predict Table Position”. In that article, Zach pieced together data that showed Premier League teams were using fewer and fewer academy players (down from 24% in 1992 to just 8% in 2010) which meant that they were more reliant on transfers to fill the slots on the field. Then, using the inflation adjusted transfer fees from the book and web site Pay as You Play he created a model which accounted for every team’s transfers in the Premier League era, and using the average of each year’s dataset showed that team success was correlated to how much their players were worth in terms of transfer fees paid. Teams worth the average amount finished mid table, teams that were worth higher multiples (2, 3, or even 4 times the average) finished higher up the table.
Zach was right enough that as soon as he published the article, Stefan Szymanski contacted him as you can see in the post script if you read the article linked above. And not only that, but the latest version of Soccernomics contains a section addressing many of the points made in Zach’s article. They may publicly disagree still, but the work that Zach put out there is recognized as significant .
Simply getting the attention of one of the authors of Socernommics via a provocatively titled blog post wasn’t the end of this experimentation with Premier League financial data. Working together with Paul Tomkins and Graeme Riley, Zach wanted a comprehensive model, something that encompassed both transfers and wages and was adjusted for the inflation caused by teams like Man City and Chelsea splurging on huge transfer fees and giant pay packets. So, he asked Stefan Szymanski if he could use his database on wage data built from public filings with the United Kingdom’s Companies House (think SEC filings for publicly traded companies in the US). Szymanski agreed, and combined with the inflation adjusted transfer data from Pay as You Play, the team created a new model called TTV or “Total Team Value” and its cousin mTTV or the “multiple of the Total Team Value”. Don’t get too scared by these acronyms. The multiple is just that: a multiple of a Team’s Total Value compared to the median team value. If Everton are worth £200m in TTV and are an average team and Chelsea are worth £800m in TTV then Chelsea have an mTTV of 4. Pretty simple, right?
The amount of data that went into the TTV model and, most importantly, the quality of that data is mind boggling. This isn’t just some dude on the internet speculating on player wages or pulling transfer numbers off Wikipedia, this is professional work compiled with academic rigor. And using that data and analysis we can actually tear down some long held beliefs.
Using the TTV model, Zach created this chart of Total Team Values for the first ten seasons of the Premier League. To make the data work within Excel’s line graph function, Zach has coded each Premier League season per the year in which the second half of the season occurs (the inaugural 1992/93 season is coded as “1993”, the second as “1994”, and so on). As you can plainly see, in the early years of the Wenger era Arsenal were one of the top spending teams in the Premier League, ending that decade in nearly a dead heat with Man U with a total team value just over £300m in today’s Pounds (remember, adjusted for Premier League inflation). You can also see Chelsea’s early ambitions mapped out as well, doubling in value from a below average value team in 1997 to a team with a TTV multiple of 2 by 2002. This correlates with the years where they were competing with big clubs like Arsenal for trophies, with the Blues narrowly missing out on an FA Cup in 2002 when Freddy Ljungberg glided past a young John Terry as he made one of his trademark stumbles.
The point is that Arsenal were a buying club in that era. They held the British transfer record when they bought Dennis Bergkamp for £7.5m and they also had the highest paid player in the form of Sol Campbell who was on £100,000 a week after leaving Tottenham. It’s not that Arsenal were exactly like Man City and Chelsea – the club got good deals, spent wisely, and sold for a profit – but the fact remains that Arsenal were the second most expensive team in the land.
The other point here is correlation: the more that a team spends on players, the greater their chance of winning the League and other trophies and the greater the difference in their spending than the rest of the League, the greater that chance of winning the League grows. The investment that Arsene Wenger made in buying ready-made players and greatly increasing those players’ salary in those first few years at the club correlate to the club competing for and ultimately winning trophies.
I once had a heated argument in a bar over this exact topic. I was a new Gooner and by 2002 the mythology that Arsenal were not a buying club was already one of my well-worn arguments. He was an Everton fan and when I told him that I was an Arsenal supporter he said “Great, the Yankees of Football.” This was heresy as far as I was concerned. The Arsenal I knew and loved didn’t buy trophies! We argued for hours that night, with him bringing up transfers in and me bringing up transfers out. In the end, we simply disagreed and I walked away believing that he was an idiot and holding on to the belief that Arsenal were never a big spending club.
A belief I held until I saw Zach’s data. When you look at Total Team Valuation, Arsenal were undeniably one of the top spending teams during that early Wenger era. Yes, the club got players like Henry and Campbell on the relative cheap, but they spent money – spending that was on par with Man U. Arsenal might not have been the Yankees of football (Man U was) but neither were we the Oakland Athletics as I had been led to believe. Arsenal were the Red Sox.
And then Abramovich happened.
We often talk about how much money Abramovich spent on players since taking over at Chelsea, but the full extent of his rapacious purchasing of players is often lost in the abstract. Instead we need to step back, compare his spending to other teams and to see it in inflation adjusted money, an inflation that he caused in that mad rush to build a team from virtually nothing.
At a time when Arsenal and Man U were leading the League with a TTV around £300m, Chelsea came in and blew the doors off everyone. In one year, they doubled in value. The next year, their TTV was more than Arsenal and Liverpool combined.
It’s important to remember that Total Team Value is basically a measure of how much money it would cost for an owner to put together that exact team and pay them their wages for that one season. Just the team, mind you. By 2007 Abramovich’s Chelsea would have cost £800m while Arsenal was declining, and by the next season would drop below the £300m for the first time since 2002.
So if the model is so good and Chelsea so far above everyone else in terms of TTV, why didn’t they win every year? One answer is the manager. Arsenal and Man U have been blessed with managers who add hugely to the value of the team. According to another one of Zach’s models, Arsene Wenger has averaged 16.8 points per season above what the TTV model suggests that he should and believe it or not, Fergie is actually better at 18.2 points per season above his model.
The reason Abramovich and now Mansour need to spend so heavily is that because among the Premier League elite teams the competition for players is so fierce and the differences between them so small that just spending money isn’t enough to ensure success. To compete against managers like Wenger and Fergie, teams have to spend loads of money and also have to have a good manager — as Chelsea comically found out this season when Andres Villas-Boas dragged them down into 6th place.*
What is worrying, though, from an Arsenal fan perspective is that the Gunners have gone from the second biggest net spend team in the League in 2002 to the 6th biggest net spend team in the League in 2012. This is dangerous for the club because our fans still believe that we are a team that should be competing for trophies and yet, statistically, when you look at the history of teams with a similar mTTV to where Arsenal is spending right now, Arsenal actually have a 75% chance of finishing out of the top four. It’s only Arsene Wenger’s remarkable ability to outperform that explains the reason why the club has had Champions League football every season under his tenure. Which also explains why Wenger is basically untouchable as far as the board are concerned: he is the human equivalent of adding £100m in players according to this model.
Which brings me to what will almost certainly be the most controversial section of this article: how much does Arsenal need to spend to compete with the top three TTV teams?
Look, it’s a model. Predicting the future with statistics is very dangerous and some say foolish. Not only that, but Chelsea couldn’t literally field £800m in piles of £100 notes and expect to win the title. You have to purchase smartly, you have to have a good manger, and you have to have a lot of luck. The model also doesn’t require that you spend the exact same amount as Chelsea and Man City. In fact, to achieve a relatively high level of competition a team like Arsenal could invest relatively modestly and be competitive. Arsenal don’t need an £800m team to compete.
You also have to remember that unlike in 2002, the Premier League is not a duopoly of Arsenal and Man U: there are three teams at the top of the spending table who all have around a 95% chance of winning the League. Obviously, they can’t all win, so that means that in a normal year they will occupy the top three spots for themselves, leaving the remaining teams fighting it out for 4th or lower.
But still, I was curious, so I asked the question of Zach. What would it take for Arsenal to have a similar percent chance (95%) of winning the League that the three big spenders (Chelsea, Man U, and Man City) currently enjoy?
The quick answer was £215m. That’s the amount of money it would take in transfers and salaries to get into that 95th percentile. That’s if Arsene Wenger didn’t add anything to the team, which we know he does – 16 points per season over his career which has dipped to 14 points lately, which is around £100m in value. That means that if Arsenal wanted to get into the 95th percent, in the Total Team Value model, with Arsene Wenger at the helm, they would have to spend somewhere around £120m.
Zach’s team have created a compelling model, and if the model is correct, then the amount of investment required to get Arsenal back to the top of the League is not simply just to buy one or two players but upgrades on a lot of players. It has to be a sum of quality players that totals £120m worth of upgrades. There are no devils or saints behind that number, just vetted statistical models. Where the club finds such money will certainly involve some discussions that will go well beyond the heated rhetoric of political or religious debate, and will require a few saints and many more devils if Arsenal is to build itself into a championship contending team again.
I can already see how the bar argument over what I have presented here will be divided: is a one off investment of £120m “sustainable”? The TTV model doesn’t answer that. This is just about dealing with the reality that Arsenal were a spending club and that in terms of Total Team Value, the club has stagnated since the last title while the other three title-challenging clubs have exploded in value. Is any of this sustainable? Buy me a beer some time and we’ll chat. But if you want to know what I think it would take for Arsenal to be competitive in next year’s title race, truly competitive, I believe in Zach’s model.
£120,000,000
*I can’t wait to see what he does to Tottenham.
P.S. Zach Slaton not only contributed to this post in creating the model but also in editing the final article. Follow Zach on twitter @the_number_game and his blog of Forbes.
Spot on. Excellent article, Tim.
“…found that their outlay on transfers explained only 16 percent of their total variation in league position. By contrast, their spending on salaries explained a massive 92 percent of that variation.”
Am I the only one who spots an obvious flaw in this quote from Soccernomics?
The two models are calculated separately. There is some error, as in all stat models, and there is some overlap in variance explained. But it won’t add up to 100%.
Transfer fees and wages are highly correlated. To give you an extreme example, if one of the variables in your model was Number of Points, it would obviously explain 100% of the variance in a team’s league position. So if Wages explains 92%, does that mean that a model using those 2 variables would explain 192% of the variance? No.
Excellent article that cuts straight through long held beliefs
Thanks for letting me help out, Tim. It was a true pleasure, even if the picture the data paints isn’t so pleasurable.
Ladies and gentlemen, we have the answer to life, the universe and everything in it : £120,000,000.
Great article, should send it to Arsene and Gazidis! Doesn’t it just prove what we many of us believed all along the last few years that if we had just supplemented that side that contained our excellent then youngsters of Cesc, RvP, Clichy etc. which some experienced players such as a Xabi Alonso and others of that ilk, that we would have had a very good chance of winning the league or CL?
Of course, Arsenal spending £120m isn’t the sole answer. Chelsea, Man U and Man City are also desperate to keep winning. Were we to spend that kind of money upgrading, one or all three teams would just spend £150m to ‘compete’. That’s why we shouldn’t contemplate the huge risk of ‘going for it’ because who is to say it will ever be enough?
This is a very good point. There are other difficulties as well.
1. there are a finite number of players every year. That’s why Chelsea couldn’t just bump up to £800m in the first year. Could both teams spend £300m? They could but are there £300m worth of top top talent? I kind of doubt it. Could four teams spend £600m? I seriously doubt it. So, yes, maybe you’re right that they would just outspend us but at the moment, Arsenal and Arsene Wenger are actually saying that they won’t even bother trying.
2. the assumption is that the current squad value will stay the same. Theo Walcott is Arsenal’s most expensive player according the the TTV model. Losing him and RvP would mean a huge hit to Arsenal’s TTV. If they leave, they will need to be replaced, PLUS £120m in new value.
And therein lies the difficulty with these pure extrapolations from statistics alone.
You assume that squad ability stays the same too.
Buying players is one thing but settling them is another. Players improve (one hopes) over time. This can be discern in particular in recent seasons with Song, Kocielny who following shaky starts have started to become very strong players worth much more than we first paid for them.
Another prime example is RVP. We paid what 2.75m for him and he has been in and out of the squad with injuries but we all know where is value is at all of a sudden over an injury free season.
The statistics only take into account the cost of buying players and the salary paid.
They don’t take into account the improvement of players within a squad over time. That’s what we’ve been about to some extent although I do agree that there should be a healthy balance with some ready made capability brought in (Arteta for example who is another one that has does sterling work for but has not cost the moon)
Now when you begin to dissect the value of Fabregas to us (which I see is being attempted at further down) you start going into a lot of subjective valuation. 500K and the capability he brought is not easily reflected in the statistics bourne out of the charts.
But he does at to the dogma that we have been about “developing players” which is indeed the draw that brings talented players into the team despite our uncompetitiveness against these richer teams.
Becasue we are stagnated at such a stable and high level (CL qualfication over 15 seasons), we are seen as a team that will increase to stock/visibility of players with ambition coming in.
That does not prevent us from being the feeder club that we are in danger of becoming necesarily but it dow add to our competitive index and offers value added over and above what we are prepared to pay.
Wages could be an area where we may be a little more competitive as we have been one of the higher paying task masters in recent years but even there, it will be hard for us to keep up with the petrodollar clubs
who can offer 250K a week over our ‘paltry’ 130K. We are changing the wage structure to offer more competition but we will delude ourselves if we think we can directly compete.
I’m not saying that we should not be moving up the scale in terms of price paid for players or wages but there is only so much room if we are self reliant against a petro dollar club.
Rather I feel we must accept that this sort of pressure will be there and that we will have to concentrate on our soft advanatges and reinforce them to effectively offer value and thus competition for signature.
That means we have to leverage on the fact that we are a development club but one with a good chance of wining a title. If you want to take an alternate take on the trend at the moment, Montpellier and Dortmund have shown what could be done with frugal budgets against more lavishly funded clubs.
1)We need to ensure that we continually attract good talent (hence the importance of a minimum standard of finishing 3rd) and are able to enhance their careers whilst offering them a chance to compete on the highest stage.
2) We also need to prevent leakage to direct competitors in the PL. Wage improvement may help to a certain extent but also the timing of when we sign players. Eg. Wenger bought both Podolski and GIroud as they are entering prime age (which indeed seems to be where the market offers better value for players as Chelsea and City concentrate on renewal and the younger end of the market). We tie them down to 4-5 year contracts and they are with us for their best years at very least.
But we must also ensure that we flex a bit of muscle and prevent our big players (if they have to leave) from going to the direct competitors. This end of the distortion created by the power of the petroclubs spending muscle is not reflected within the statistics as bourne out.
No. The model doesn’t measure anything other than cost to build the team. The fact that there is a strong correlation and that some teams do better or worse shows that players outperform/underperform their value. More specifically, it’s an indication that a manager is able to outperform what the model predicts your position would be if nothing changed.
This is where people need to realize that a manager can be bad, and waste the money and a manger can be good and get greater points per season from less investment. In Wenger’s case, he get’s 16.8 more points (which can be attributed to exceptional judgement in developing players like Song or Koscienly) that’s almost 100 million according to the model.
So, the model basically proves that the most valuable asset in our team is not any of the players but Wenger. I wish Tim could have made this more explicit, to those that criticize Wenger for being a liability.
95% chance winning cost = £215m (TTV)
After adjustment for Wenger over performance = ~£120m (wTTV: wenger adjustment factor)
Therefore, Wenger value = 215m-120m = ~100m
So, the stats show that Wenger is worth +100m, which sounds like an asset rather than a liability as some sections of the fans claim
I wish Zach could enlighten us by comparing him to Dalglish or AVB. Who can be demonstrated to have been a liability to their club by underperforming.
If you want some of my statistically-driven commentary on AVB at Chelsea, see this post:
http://www.forbes.com/sites/zachslaton/2012/07/04/why-villas-boas-will-be-under-more-pressure-at-spurs-than-chelsea/
As for Dalglish, he was simply phenomenal in his caretaker roll. See last third of this post:
http://transferpriceindex.com/2011/06/the-impact-of-xi-on-match-outcome/
Sadly, he greatly underperformed in his year as full-time manager. I am working on a post at the TPI website that will look at his 2011/12 performance (amongst others). Let’s just say it was one of the worst versus financial expectations outside of the relegated clubs.
Loved the AVB remarks lol
Brilliant post. In a world of transfer nonsense and hysteria, this cuts to the chase and actually helps explain things. Thanks much.
Top post, Tim. Stellar stuff. And Zach, too, who I will now go and read more of.
While it seems unlikely that we will go and do that, like you said, it’s spending smartly that matters. I also feel that the inflated prices paid in the transfer market in recent years is finally abating – witness quality players going for much lower prices than they did, even last summer.
Witness: Podolski, 10m. Giroud, around the same (albeit due to a buyout clause). Kagawa, solid component of two-time Bundesliga champions, some 17m? The hottest new thing in football today, Hazard, going for 32m. In yesteryears, that would’ve been 50m (see: Torres). Even M’Vila, who may move to Arsenal in a transfer quoted at some 17m tops, was being quoted at around 30m last summer, was he not?
The transfer market madness seems to be cooling now. Whether that’s due to FFP coming in or other reasons, I don’t know. But if that coincides with a period of higher spending by Arsenal (which some say will happen now that we’ve paid off most of the stadium debt), then we may see positive changes. Not enough to win the league, mind, but a good start.
…but apparently Brazilian youngsters still pull 30GPB. looking at you che$ki & manure…
Excellent analysis, Tim, as always. The caveat regarding predicting the future with Statistics is, I think, especially apt in this case. My gut feeling is that we’ve probably hit, or nearly hit, the leveling off area where increasing the value of the team will no longer lead to as much of an increase in the likelihood of success, as there are only so many “high value” players in the world to go around. Getting the most value out of the “not-so-high-value” players is exactly where managerial talent comes in. Fortunately, Arsenal has that in spades.
Your article, this morning: Mindblasting
Tim and Zach,
Excellent work all around. I have only one thing to point out, which maybe has already been thought of, but maybe not. Strictly speaking, we do not need to spend 120 million pounds to be competitive – we need to increase the Team Total Value by that much. Spending that doesn’t necessarily equal that value, because the “value” of players is subject to change, and that quite rapidly. For example, we paid whatever millions for Squallaci, but I don’t think anyone would argue that he’s retained that value. Meanwhile, we spent $500,000 on Cesc, and look at his “book value” now. Or RVP. Or Adebayor. Etc.
It’s the same with our new signings. Suppose in dreamland that Olivier Giroud hits the ground with a nuclear explosion and scores 30 goals this season. His value will go up to the near 35 or 50 million or whatever range. In fact, this has often (though not always) been the Wenger secret – buy cheap and get better value than the market suggests.
So, I don’t actually think we need to spend 120 million. We need to spend less than that, and have Wenger magically find extra value in the players we do buy so that they work out to about 120 million.
That still seems like we need significant investment, and of course itself assumes that it is still POSSIBLE to identify cheap talent that explodes in value in a short time frame. Which it may not be given how our scouting efforts are being pirated by other clubs. That has been Wenger’s strategy for a long time by relying on youth and the academy – because those players can massively increase in value for almost no, or at least little, cost. So that is what we need – one signing to treble his value, two superstar youth players to explode in value, and some investment in the squad. Isn’t that what Wenger has been trying to do for 7 years now?
Other than that small quibble, brilliant, if saddening, work.
Cheers,
Jon
Jon,
You’re actually on to something with this comment. My brief response is that the “extra” value of getting Cesc for £500k is already accounted for in Wenger’s 16.8ppg difference over his Arsenal career. What the TTV model does is use very reliable transfer data and extremely reliable wage data and then adjusts it for the inflation caused by Chelsea and now Man City NOT on what the player is worth when sold. Thus, Cesc was never worth more than a few million in the valuation of Arsenal. Which is a significant reason why Arsenal are overachievers.
Arsenal still need to hold on to their players and invest significantly if we want to get into the 95% range of winning the title. Even to get into the 75% range of winning the title would require an additional £40m of investment.
40 mill would basically translate into the “we’re just short of 2 or so world class players” belief, no?
the thing with statistics is, like Jon alluded to, that it can’t include the human component. getting henry on loan gave us a tremendous service, but there isn’t any factor “boost of spirit”. I do believe that we’re just about 2 players short of having a big big shot at winning a trophy. The thing what makes supporting our team so stressful is that we can sometimes beat the likes of milan, or chelsea, but then succumb to sunderland in the next game. this is why i really rate a player like Arteta. buying players that have great mental strength (lol), who ideally have won things and have great personality would have a positive knock-on effect on the whole squad (titi
), and this isn’t possible to measure in numbers (or if it is, please do, that’d be amazing). I’d be in favor of getting in a proven experienced winner in this summer, but who could fit that description AND be affordable?
Very interesting artical indeed.
You can see the widening gap on the charts as with league position vis-a-vis us and City. United.
However you can only extrapolate so much with statistics.
It won’t explain how Liverpool who have consistently spent more or have the higher TTV has slipped in recent years out of the CL for 3 seasons and are placed just below Everton. Clearly spending does not necessarily mean success. For that matter despite their CL win, Chelsea are slipped to 6th.
As you mention, the human variable is a very large chunk of it as can be discern by recent success on the continent with Montpellier and Dortmund.
The other thing is the issue of high spending club.
I’m of the opinion as well that we have been a spending club but I think what differentiated our approach earlier on is that rather than pay for the one big marquee name (in essence putting the egg in one basket), we had tend to spread the investment out.
Therefore, we didn’t spend beyond our normal threshold (whatever that is …nominally 15m quid which is what we spent on Arsharvin) for an individual but got good value spending money efficiently on players who would improve under us and add to the overall ethic of the team.
Hence the ” we don’t buy players we make them ” tag. Which to many extent holds true.
However the problem for us in recent years (post Abramovich) as can be discern by the chart is that the market for players has altered considerably :
1) An increase injection of petro dollars has meant that pricing for players has quite obviously been considerably affected (inflated) and more importantly, there has been a shift towards power into the hands of players/agents consequently.
2) The market knowledge for players has also become more flat since Arsene’s early years with many clubs now proficient with their own scouting network and every other emerging talent on the radar because of the internet and other social media accelerators (not to mention agents are now more savy with the media). This has inflated the pricing of younger players which has seen Wenger move toward older players now to get good value (as the market has shifted with the money clubs concentrating on increasing their youth content in some ways to satisfy FFP)
As another often ill conceived dogma would illustrate, many believe that we are not an ambitious club because we are slave to a model that seems antiquated and (frankly) dogmatic as we refuse to pay over 15m for players in this day and age.
They cite the Mata case last summer as prime example. 22m and we could have got him is the cry. What is conveniently swept aside is the fact that had we gone into the market for him, the price would not stay static. Chelsea’s infinitely stronger non football money will afford them the ability to keep in the race as the price pushes into the mid high 20s, something we could have ill afford to do since we had gaps to fill and our money had to be more eeficiently spread around the squad (seperate argument being could we have done with slightly fewer additions and one better quality player in last summer?)
On that note, the fact that we did spend 55m quid last summer on 8 players and 24m this summer on two quality ones does serve to reinforce the fact that we do spend when need be but that we spend efficiently to get good value and spread the investment across the team.
So I woulnd’t get too hung up about statistics as usual although I do think it does illustrate the fact that the widening gap particularly between the haves : Chelsea, City (Petro dollar), United (success + income) over us at the moment.
But as Liverpool amply illustrates, it isn’t a clear recipe for success either.
What we do need to do is spend wisely.
24m for two top strikers in Europe is a very good price which affords us resource to compete for a couple more signatures down the line if need be.
There may be reason to up the threshold somewhat from our previous max of 15m to follow the market somewhat but for eg.@17.5m, is a purchase of MVila really as effective as that of Capoue @9.5m (half the price!) with added improvement in contract to Song?
These are all factors beyond the hard black and white of statistical analysis that have to be weighed up carefully.
120m quid for us is thin air. Conisdering the 100m deducted from the orginal 220m that was ostensibly required is in itself a subjective evaluation, I would rather draw the conclusion that we are unable to compete with the petro dollar clubs regardless at this point.
We spend sensibly on what the team needs. That is the bottom line. Whilst we have paid high wages (and to our detriment when we got it wrong with the youth products), we are not in habit of spending on star players since Bruce Rioch bought Bergkamp.
There have always been pressure from money clubs frrom the time the Galacticos put constant pressure on us to pry away Viera to the current landscape.
The issue now is that they are at our doorstep.
and I believe that is the other side of the coin for us in terms of ensuring copetitiveness in the current PL, that we cease subsidising the success of clubs like City by selling on our assets however ‘unwanted’ to them.
Here’s where the club should flex a bit of muscle and dig their heels in. With prize assets going out for whatever reason, ensure that they go offshore and not to City, Chelsea or United.
We don’ t need to take the biggest chunk of change in this instance.
I don’t think I have a problem with us losing players so long as we develop new ones and we have proven resilient at that (bar several mistakes). It’s part of the fun IMO of following our club in that we are always in it and stagnation at a high point affords us the capability to bring in hungry talenetd players eager at a shot at the big time.
But we must stop leakage to title challengers in our league. That is something the chart and statistics do not speak of and something we have to readdress quickly if we are to push upwards fort he title again.
For once, I’m comfortable with not being any great shakes with statistics. Not dissing the work at all. I’d have to have a much much better understanding for me to do that. The conclusion seems grim enough. 120m+ pounds is a wide gap. I look at it as a gap of 19 points, 12 of which were opened up before October. A situation where conceding 1 goal less in 5 matches can lead to 10 extra points, where fewer injuries, and a few penalty decisions going our way can make all the difference, both in terms of the quantifiable, and the intangibles,
I pass no judgment on the statistical model worked out. I’m sure it’s brilliant, and I understand the logic of it. I just struggle to see the gap as so wide as that. Maybe it’s just the optimism of a new season getting to me. But I see us fighting for the title, and challenging for trophies. With some luck, even ending up with silverware.
While we were third place, it was by quite a large margin (19 points). Not quite La Liga (39 points between 1st and 3rd), but still large nevertheless. There will always be aberrations, but I think the numbers are honest in their suggestion that we’re a few stars shy at the moment of realistically competing for the title. Problem is that 5 years ago, I would’ve thought we were 1 player away. Now I think we’re 2-3.
I am not arguing with the odds. I think we can beat the odds. Why do I think this? Because the margins are smaller than the 19 point margin, or the 120million cash injection would make it appear. A last minute winner gets you two extra points. A non given penalty potentially robs you of 3. Over 7and a half months last season, we lost only 7 points on ManU and City. Despite ALL the stuff we went through in January and end of season. I think we aren’t as far as it seems.
I confess I don’t really understand statistics. But I like to think I have a fair understanding of the game. Money helps almost every team in every sport. But money can be beaten. That is why we watch the game after all..
I think what Tim, the chart and the stats means on team value and the 120 millions is how a team could compete in x years of time. Not just a one time efforts, which lead to the French league case. Stats is mean to describe a series of events, not just a one time events. Of course we could win the PL next season, but the odd is again us and if we stretch it further, it will lead to a smaller odds. That is why it is important for us to increase our revenue. That could be achieve by stadium development, overseas exposure, and success on the pitch. In the end, i think that is what this post trying to tell.
Brilliant piece, thanks for sharing. I think Jon above touched on this, but I think Wenger’s greatest value to the club these days is finding and luring reasonably priced players to come to Arsenal and perform above expectation. He’s definitely had many more hits than misses, which thankfully isn’t lost on many supporters. Another consideration, again along the lines of Jon’s thinking, one could hope that TTV would increase also from players becoming more valuable or even showing tangible on pitch improvement from playing with stars. Better players can often bring out more of what could be labelled latent talents in the players around him. Cesc made others better (or often appear better). At this point, I think as Arsenal fans we’re all pining for that one big purchase in the middle, a new Cesc or a new Bergkamp, to really bring the flavor out of the whole big steak here at the Emirates.
Bl.a. Bl.a. Bl.a. Bl.a…… à lot off shit article!
If you’re addressing the article directly, it should actually be “blah, blah, blah, blah…a[no accent marks!] lot off, shit article!” now i don’t know what you mean by saying “a lot off…” but i’m pretty sure it’s an insult to the article. you can usually tell if someone is swearing at you, or mocking you, even in a different language, and i wouldn’t be surprised if the article interpreted this as an insult (along with the fact that you called it “shit,” pretty unambiguous) Two things can happen now: if the article is a coward, it will pretend it did not understand the insult and will carry on along its business as if nothing happened. OR if the article feels your insult merits a response, possibly an aggressive one. I’d go with the latter, as this article seems to be quite strong on facts and quite decisive in its conclusion (no willy nilly vagueness.) in which case, I think you may have a problem coming your way, mister, in the form of a strong statement! be ready, and be well!
When gooners say that Arsenal have never been a buying club, they don’t mean just the early Wenger years, they mean throughout Arsenal’s history.
I agree with ArseChicago. A very good player wouldn’t just have a high value himself, he would probably help others too. Partnerships matter in football; RvP probably made Walcott look better than he really was last season (in terms of figures at least).
I agree about this post on the value for money as a base to predict the competitiveness of PL clubs. And i thought that Wenger, as an economist, would certainly aware of this. The most important part about this post is the charts (Tim and Zach charts) and the branded figure of 120 millions with Wenger. But i would say that the key points in this discussion is how much contribution is money on sustainable competitiveness.
I think that Wenger already seen this, hence the plans to increase revenue through stadium development. Then when the oligarch came and destroy Wenger plans to dominate PL, the overseas revenue become a priority, hence the traveling to other continent. I thought that the combine revenue of stadium and overseas would make us close to the brandied figure of 120 millions.
When we talked about overseas revenue, it is hand to hand with success on the pitch. Now, when Tim said about the dogma of “one player short” and “we never buy titles”, i don’t believe any of that dogma. But i do know that these thought exist, especially on the most optimistic Gooner around. I just feels that Tim picture it as a majority view it. I would say that on the “buy titles”, the argument should be what categorize buying titles. If Tim said of the dogma that Arsenal only need one trophy to open the floodgates, then i would inclined to believe it more. The condition is, of course, if we could maintain our performance in the league. Trophy with our performance maintained would be a measure of success and it will lead to increased revenue, which might take us closer to the brandied figure.
I do think that the brandied figure is being consider if the market to be as it is. That is why i could see why Gazidis and co. desperately try to hang in FFP. It is to drop the requirement to get that 95% figure. Although the figure itself could be argue. Do we need to be that close to win the trophy? Are the league trophy the be all end all. Finally, i would like to suggest on Zach or Tim or both, to take the analysis on another level, which is the level of the world table. At the end, i want to say i really appreciate the work of Tim and Zach for this delicious serving. Thank you.
Great article Tim and excellent use of the data (thanks Zach) to cut through some misplaced beliefs and highlight gems like Wenger’s value. It does seem like we’re 1 marquee and 2 good players away from getting back in the running – you seem to imply that it’s more players than that, but between wages & transfer fees I think you’d get to £120m very quickly in today’s market.
It makes you wonder if anyone (Tom Fox) at the club has made the business case for doing so. After all, there is a potential return on these investments beyond supporter sentiment – improved performance may help the club maximise value as it renews and extends commercial deals in the coming years. Surely, Arsenal must know the incremental value of league position as it pertains to commercial deals? If not at the clubs, then the sponsors must have a value of what they’re paying for. Clearly, fanbase is also a significant factor, but it would be amazing to contrast the investment needed (i.e. this article) and compare it to incremental values in TV money, commercial deals, and merchandise sales due to improved performance. Somebody at the club must have at least a basic understanding of these relationships, and it’s hard to imagine it not coming out in favor of investment; which begs the question of what is the unknown factor that is keeping them from making such an investment?
Makes sense to include transfer spending as an explanatory variable. Possibly one more variable to include is investment in the youth/junior/reserve team set up. Anecdotally, Barcelona and Arsenal have done well with that. I don’t think this investment is entirely reflected in current salaries (as someone pointed out, Jack Wilshire’s TTV contribution would likely have been higher if Arsenal were to acquire him in the transfer market). However, the stock value of the investment will still have to be converted to a flow measure for the period in question. I leave that to you geniuses
Great work and data, but as some have pointed out, if anything it proves some of the opinions that were already out there, but adding the quantification and data behind it:
- We need to buy
- We need to restructure the wage structure allowing for a wider pay range
- We are X to Y players away from a trophy: X appears to be 3. Y appears to be 4 or 5.
You add that up, along with the Wenger factor, our youth academy, it adds up to the 120M or whatever that number is.
So none of this is anything new we didn’t know, but now we know why we know what we know…
and obviously the X to Y players are so called near world class players already, so they add up to the 120M
Note that quality isn’t cheap regardless of age. I was surprised at how much we payed for the Ox, and now we know he is worth every penny of it.
Isn’t the value of a player a very relative thing in regards to the transfer fee being paid?
I mean, Torres and Shevchenko both count for a whopping 10% of the TTV of Chelsea, and they both contributed almost nothing to the team’s success.
The question is, are these players skewing the model or are they the exemption that proves the rule?
I think this kind of question is why salaries is viewed as a more accurate reflection on team value. When you use salaries, the true value of player can be measure, as the case of Chamberlain and Denilson. The improvement of Chamberlain lead to the reported will get an increase of wage which added to team value, and the decline of Denilson lead to decrease of wage, which applied by loaning him.
You can’t even fathom how much I cut out to get this post down to 3,000 words. I might need to write a follow up post.
Excellent point!
“[Wenger] is the human equivalent of adding £100m in players according to this model.”
===
Best line ever.
Anyway, thanks, Tim. I’m glad guys like you (and Zach, and many of the posters here) are around to digest and explain the numbers that both support and contradict in surprising ways our most widely held beliefs about Arsenal.
I know a professor who uses Soccernomics for a freshman seminar. I shall send him a link to this post.
And by the way, this post could put to shame 90% of the people that write about football and Arsenal. Brilliant and mind blowing.
I just want to add a couple of things.
1. This article was about another 4,000 words before I cut it down to the usable size it is now.
2. The numbers in Zach’s first link (the bombshell article) show a decrease in the reliance on academy players and that is a key reason why you can’t just rely on salary data. Arsenal, for example, used just one academy player per starting XI two years ago and that number has been declining, even for Arsenal.
3. Salaries might not be the best measure of player value because they aren’t a market measure. They only measure what Arsenal value a player at and not what other teams might (more objectively) measure a player’s value at. Thus Arsenal pays Denilson £60,000 week but as we see, his transfer value is nil.
4. Everyone remembers the great buys that Arsenal got (Cesc) but a lot of people conveniently forget about all the duds that we paid for (even small transfer fees add up) and paid them a good salary only to have them go bust. How many Cesc’s have we had in the last 6 years? How many Walcotts? How many players have sat out an entire year without playing a single game (Rosicky, Djourou, Wilshere, Ramsey, etc etc.). I’m not blaming them, just saying, we tend to think only of the good buys and ignore the ones that didn’t work out.
I see.. I thought that on point 3, Arsenal already seen that Denilson value is dropping, hence the loans. When he was given the £60.000, his value might not be as far as we seen it now. Van Persie salary might get more than £200.000, but his transfer might only be as much as 15 millions. Until now, no club could get Squillaci not because they couldn’t get a transfer fee, but because Squillaci value’s to them is not as high as what he get in Arsenal. Chamack is on a free, but he get a huge wage because his value at the time is measure in wage.
I just want to conclude that for team’s value, salaries might not be the best measure. I agree on Tim and Zach regarding measurement of team value. But salary might be a true measurement on how much the player worth at that moment.
This is a great article. But I don’t think statistical approach will give us satisfying answer when it comes to predicting the future. I do think it needs more tools. Howefer, statistic is a good start since it can capture the past.
We can not spent 120 mil and guarantee a success because other team will respond to our spending. It means that our act will cause another team to act. And when we spent 120mil, may be it’s not enough since chelsea and city very likely will spend more due to their unlimited resource to compete. But there are also human factor (coach, think of wenger, fergie, and don’t forget pardew) and luck (injury, referee, etc) that play an important role. Availability of top players, FFP (yeah, I know, we’re stil unsure), and homegrown players can be the boundaries.
Come to mind that game theory can be deployed here. System dynamics, anyone?
Tim, does the 120MM include “likeanewsignings”?
Fantastic stuff, gentlemen.
Great article, very clearly written and interesting conclusions – though as some have pointed out in previous comments, there are dangers in using statistics alone to ‘prove’ anything.
I would argue with one small point: three teams can’t possibly all have a 95% chance of winning the league at the same time, because that would surely mean they would win it 19 times out of 20? And all three (or even two) can’t win 19 out of 20.
I now await some statistician telling me I’m wrong . . .
The club that was top three in TTV has won the Premier League 20/20 times.
What about Blackburn? What was their TTV when they won?
Agree that the wording may have been a bit ambiguous. It means that the top 3 spending teams collectively have a 95% chance of winning the league, i.e., there is a 95% probability that the league winner will come from the top 3 spenders.
120m figure implies that we’re suddenly more competitive in the transfer market and financial stance. it probably also means we can go further in the bidding process for players like mata or alvarez last season, or alonso few years ago, or m’vila this season. it means that we can afford to swallow some of the risk associated by paying 5-10 above market value for a player that’s perfect fit for Arsenal’s needs at a given point in time.. it also probably means that we can move up a category into the hazard/gotze/neymar league, knowing full well that we can afford a one time purchase of 30-40m if we are absolutely positive that it means we’ll get a top deal ala bergkamp to arsenal.. it also means that we can afford their wages..
speaking of… the 120m is a bump in the budget that we operate on top of the 300m. so it doesn’t have to a one time boost or summer spree like chelsea or man city have conducted. it’s an increase in the long-term financial muscle and the risk aversion associated with the debt situation of the club.. so we’re probably looking at an increase in the wage budget which means 1) we can afford to hold on to our star players by giving them better wages and 2) as earlier, we can afford to go after and pay players one echelon higher than we currently have.
that figure doesn’t have a direct relationship with one summer’s transfer kitty all that much actually. when we do business, even back in the glory days, we sell players for good value to raise money.. if we kept selling without buying the TTV would just keep increasing beyond the 120m…
Great article. I agree with Phil – spending the money doesnt automatically put you in the 95% probability of winning title – that seems impossible. Buying players is like an arms race – people buy in order to not lose rather than to win. I hope Zach’s model includes competition effects as well – I am off to read and digest it now.
Name the team which won the Premier League with a 4th highest Total Spend or lower.
Just one.
In 20 seasons.
Man Utd is 650 million in debt. So the model is not sustainable!
while we’ve been haggling over the future of our captain in typical histrionic gooner fashion, Chelsea has signed Hazard, Marin, and now Oscar. United has signed Kagawa. Let’s get this over with, and sign some midfielders ourselves!
Tim,
Your articles are always different to others and not just opinion based. Thanks for all your efforts.
I think there is merit in your article. I think that you could be as close to the truth as anyone ever has been.
I’d love to know your thoughts on this……..
If I had the reigns and 120 mill the first thing I’d do is buy three players to add a) experience b) leadership c) players who had won trophies. I would hope that these players would give the current team the belief that they lack in post February.
I’d buy Lucio ( free), Seedorf … Pre-Botofogo.. (free), Phil Neville ( cheap or free) and Schwarzer (cheap or free). I’d imagine that I’d need 5 mill max to add these qualities to the club.
I’d then buy David Villa to add the superstar factor that the fans crave!
So I suppose my question to you is… Would this 30 mill outlay not fill Arsenal’s true ‘needs’?
maybe i’m just misreading, but how can 3 to 4 teams all have a 95% chance of winning the league?
That’s what I said. And they can’t. But I assume it means that if 3 teams are on ’95%’ that means they will finish above all the teams not on 95% (or at least they will 95% of the time), but you can’t predict which of the three will be first, second or third.
Outstanding piece.
FFP has proven to be less of a deterrent to “overspending” than most thought. The reality of putting real money towards transfers is a challenge to the build from within and supplement with youth policy that has ruled at the Emirates under Wenger.
AW is doing what he has to do given the resources he has been given to work with. Let’s hope that there is a change in the attitude of ownership.
It is not spending the 500 five hundred million gbp. The tactical part of the gunners need to be changed as well.Wenger’s one dimensional style is aheaven sent for sides like MU/Chelsea/Hu/wigan.The gunners may may have 98% or 99.99 % possession and fifty shots at goal.
As we all know goals win matches.Until the gunners can finish off the chances created,they will still be vulnerable.How can a side not hold on to a two or even four goal cushion is unfathomable. If it’s only for one seasonor two,it’s tolerable But this has been going on since Wright was in goal. It’s criminal negligence of the highest order.
Let’s examine the 8-2 massacre.If the Fm has elected to play anti soccer,it would not have been so humiliating . The gunners would still lose buy by a respectable score.The — onus is on the fm.
Really interesting, I’ve read similar stuff for baseball but never soccer. Now I need to dig into this stuff, thanks!
The stats don’t imply that we go spend 120m on 3-4 players it says you add 120m in upgrades this is what would give us the 95% chance of winning the league alot of people are looking at it wrong.
if we spent 120m in upgrades with an avarage of 10m on 12 players plus the fee’s we recived from each sale the squad of 25 would be stronger this would gives us a bigger % chance of winning.
so if we sold Ramsey for 8m and spent 18m on his replacement = upgrade.
So if you pick out another 11 squad players and did the the same the squad would be120m stronger.
Stronger squad = better chance of winning.
As the stats prove arsenal have downgrade over the last many years.
Great stuff as ever you and Abloggs are the wenger and ferguson of the arsenal blogging world
A couple points:
1) Wenger’s 100 million value is also the academy value, because he’s been here for so long and made the academy system that we have. Same with the new med facility, really all the improvements to the club that have come in his time show up in that number. Hopefully some of these will carry over and help Wenger’s eventual successor be an overachiever as well… but probably not 100 million worth.
2) To everyone who seems to have been converted to the idea that transfer value is more important, it’s not. Wages are still a better predictor, by a wide margin (about 20%), a point which Zach concedes in his article. As Zach points out as well, transfer value and wage value are highly correlated (expensive transfers have high salaries), so it is hard to separate them. He started by stating that he thought soccernomics may have detected the transfer fee effect in the wage data, but since the wage data is so much more highly correlated, it is much more reasonable to conclude the opposite.
3) Even the MTTV model only accounts for 71% (which is still very high) while the wages only model was stated to be at 89%. Again, it looks to me like the wage effect is the most important.
4) The vast value added by Fergie and Arsene could well have a significant impact on all this. If Fergie and Arsene are adding 35 points per season, I’d be interested to see how that affect the wages vs. MTTV comparison. With two prominent outliers, who both pay good salaries to players on relatively low transfer fees, that could go a ways to explaining the gap between the wages v. MTTV models.
5) The last couple summers strongly demonstrated the importance of wages. Nasri and RVP (likely) leave for higher wages. Chamakh comes on free, Gervinho and Podolski come for low fees, but all on significant wages. Chamberlain shows promise, gets fat new contract, same with Jack, and now likely Kos as well. As stated in Zach’s piece, wages are much more adjusted to the actual performance, where transfer fees are static.
6) As someone above pointed out, if three teams are spending at a rate your model says gives you a 95% probability to win the league, then the model is wrong. Even if Arsenal joined the club, they’d still only have a 20-25% probability to win. But I got the point of the article.
7) Even if you’re like me and think MTTV is a fancy way of being less accurate than just looking at wage data, there is no question Arsenal have fallen out of the group that can reasonably expect to win the league. If you’re like some and don’t care at all about what statistics tell you, you can still read the writing on the wall when all your best players leave for money… Like Tim keeps saying, next year it might be Jack. You have to pay enough to keep the talent you’ve spotted for cheap. That is the big change that has happened at Arsenal, and it is the challenge which will define whether Arsenal can be truly competitive until Arsene retires. After he retires… it’s a whole new ballgame.
I think saying “Even if you’re like me and think MTTV is a fancy way of being less accurate than just looking at wage data,” is unfair.
The TTV model shows us more explicitly what the differences are in net spend between teams. That’s important because it’s often difficult to grasp how big the chasm really is.
And the second thing the TTV model does is allows me to explain, with just slightly less accuracy than using wages, that just buying one or two £15m players earning £95,000 a week probably isn’t enough. According to TTV, which is a highly correlated model, Arsenal need three £30m players, earning £190,000 a week if they are going to break into that group of three teams who each have 95% chance winning the League.
But most importantly, I don’t have access to the wage data. So, while you can complain about TTV being less accurate and you would be right, you wouldn’t have known how far off Arsenal really are without TTV.
But if you’d like to discount the whole endeavor over a few points. Please, feel free. Just remember, Arsenal are now 5th in salary as well and unless we spend some of the money that we will save when we get rid of Arshavin and van Persie we could even be 6th in that metric. Exactly where TTV puts us.
James -
If you look at the Soccernomics data it has two advantages from the way it was studied, not because it’s any more “accurate” than the TPI TTV data. First, it is taken over a shorter time period, so it avoids excursions like Chelsea’s cheap squads at the beginning of the Premier League that morphed into the colossus they are today. Second, the number of data points is much higher than in the TTV model. By including data from the top two tiers of English football the Soccernomics data set has 58 data points. The TTV model has only 45 given the number of clubs who have participated in the Premier League. Assuming no large excursions in the additional data points in the Soccernomics model, the fact that it has more samples should raise its R-squared value.
From a statistical point of view, neither model is much better than the other. They both have statistically significant correlations in predicting league finish position, and as was pointed out it is also shown that the two metrics are highly correlated to each other.
Now we get to one of my main goals of statistical analysis: to explain the world as it is. As such, a club can’t agree to a wage with a player without buying his rights from another club. Thus, to describe the world accurately we must include both the cost of the transfer fee and the wage the player is paid. To me, the TTV model is better because it explains the total cost of operating a club and paying the players. That introduces some unexplained variation (hence the lower R-squared value), but it still passes all statistical tests for significance and squares with reality. Otherwise, why would City and Chelsea spend so much on transfers if they didn’t translate to championships?
How does one calculate someone like Adebayor’s impact on TTV, after all his transfer payment is on City’s books (therefore increasing their TTV that way), and part of his salary on Tittenham’s (increasing their TTV by virtue of his salary)? Would you remove his transfer value completely off Manchester City’s books because he did not play for them last season?
Yes, I am curious about this too. How does loaning etc. work.
You are right in your assessment. If a player doesn’t show up in the squad and is loaned the entire season, they don’t show up in terms of transfer fee on the owning club’s books. The club paying the loan fee will have it show up in the wages total.
for the big change to happen at Arsenal, and before you can possibly add any more competitiveness to the team, be it 120m or whatever, firstly there has to be a clear winner between Usmanov and Stan. The power struggle, battle, behind the scene just needs to be resolved soonest before fans can actually see a winning trophy.
And as a belated thought on the RVP contract debate, I think what happened before the July 4th ‘updates to fans”, there’s really NO CONCRETE OFFER on the table for our captain. I mean no offer from other clubs that is acceptable to either party. When AW and the board comes to discuss future contract with RVP and his agent, its like a card game, you don’t show, not even a hint, what you hold at hand. They can bluff all day but I don’t think AW/ IG know about what RVP/agent know (about any outside offer) or vice versa. So they play hardball, or I would think AW played hardball, RVP was desperate, hence the update announcement.
*** The “heart” value (also referred to as “character” and “mental stwenf”) also add points to the mTTV. When we play like we played Man City at Emirates, we bring the non-quantifiable elements into the model. And that my friends, makes us pretty likely to win the title this coming season. RvP or no RvP, we can score with Poldi and Giroud. Come on you Gunners!
nice article, but how did you not know arsenal were one of the biggest spenders in the league for years? hardly a secret.
Way to complicated for my brain I think and the comments too! I did watch moneyball though to show how nearly it can be done without mass spend. Basically good players cost money squad players don’t.
Curiously Chelsea fell in the league because AvB wasn’t allowed to do what he wanted which was put down John Terry, Lampard and co, I think he’ll do well at the spuds
Tim, Fantastic!!! I like it, BUT?
The wages and salaries given in the all the Financial Reports are for ALL employees, including Directors. We are not told how many executives are not included in the Payroll System. We have to delve deep into the Financial Reports to find out who the Sub-Contractors are. The size of stadium matters and of course, the location of the club, which will effect the pay scale of the Administrative side of the game. Did the researchers deduct the Directors’ fees? Those are detailed. Did they deduct the Managers salary? By admitting to using the Financial Reports as a source of the salaries, the data has a fatal flaw!
Going to Portugal, there is one club in which the salaries of the players only, are disclosed. What is the % of the wages bill, have the researches allocated to the players only? We are not told.
Brilliant article! Informative, and clearly well researched with a (relatively) simple outlay and explanation.
I have a couple of queries/discussion points…
Firstly, I think it’s important to note that as has happened over the past 20 years (but to an even greater extent in the last five or so years), there will be inflation caused by the continued big spending of Man Shitty and co.
So there’s a chance that the £120m figure cited in the article may actually no longer be enough by the time that kind of money becomes realistically available to Wenger.
Whatever your opinion on Wenger, the board, Gazidis and whoever else, it’s plain to me that he simply doesn’t have £100m + at his disposal (or isn’t allowed to spend it if it does exist) without offloading players at the same time.
Although obviously it’s pretty difficult to predict a) What the inflation rate will be like over the next few years (with Liverpool spending more, QPR getting bought out, and others determined to get back to a competitive level) and b) when the necessary money will be available.
So not a criticism of the data or research at all, just an observation!
Secondly, am I right in thinking that the TTV model accounts for both market value of players (e.g. Stewart Downing is technically worth £20m odd) and their wages? So the £120m wouldn’t have to be spent purely on buying eleven superstars, but could also be used to bolster current player wages – like giving RvP a raise, for example…
If true, that sort of destroys the myth that Arsenal will get nowhere if they don’t spent all of the money on transfers of Neymar and co. they will never win anything!
Fantastic work both of you, thanks!
Perhaps it would be better to let Tim respond, but I’ll take a crack at clearing up some of these misunderstandings:
1. Yes, inflation could certainly increase, in particular if another EPL team gets bought out and funded by a benefactor (e.g., oil baron, oligarch, etc.). The £120m number corresponds to what it would take to be “competitive” today.
There are several conclusions one can draw — as you note, that kind of money is not available to Arsenal today. Therefore, based on the statistical model, Arsenal is highly unlikely to win the league as long as its TTV falls outside of the “top” tier. One could therefore conclude that we need to just “hang in there” and hope for the best.
Another conclusion could be that Arsenal should seek significant investment (e.g., Usmanov) to have a much improved shot at winning the league.
Keep in mind, of course, that these are only correlations. Yes, we can win the league without being one of top spending clubs, but it is highly unlikely.
2. TTV accounts for transfers and wages. Yes, the £120m could be used to increase wages, but realistically one would be hard-pressed to spend that whole amount in one year on raising player wages. It is presumed that wages are, to a certain degree, a “market” metric. As pointed out in the comments, it is not a pure “market” metric, as it is more an indication of how a particular team values a certain player. Nonetheless, there is some “market” efficiency to wages, as a player can go to a different team if he perceives he is not receiving his “market” wages.
If Arsenal were to raise RvP’s wages to, say, £150,000 a week, that would represent £7.8m in annual spend. If we assume he earns half that amount now (just an assumption — don’t know exactly how much he earns), then the incremental increase in TTV is only £3.9m.
The reality is that you would be hard-pressed to get to £120m of incremental spending through only wage increases. This presumes of course that the wage increases are rational and follow a “market” reality. Also, £120m would hardly be able to buy “11 superstars.” As a hypothetical example, if we assume a “superstar” is £25m of transfer fees and on at least £125,000 a week (which is higher than the current “peak” salary at Arsenal), that would be an incremental £31.5m increase in TTV, which means that £120m would buy you 3-4 “superstars.”
Keep in mind also that the £120m is incremental. If you sell a player, you will still need to replace the TTV of the player that was sold (and therefore only the proceeds in excess of the player’s current TTV will count toward the incremental £120m).
Hey Tim,
Great article, really enjoyed the read. I’m wondering how this translates to the other leagues. Obviously it’s a huge task, so I can’t expect the same thing, but I think it’d be interesting to look at say, La Liga, or Ligue Un. Obviously in Spain we’ve seen the rich clubs win pretty much everything, but look at France this year. Do you know what Montpellier’s spending and value would be compared to the rest of the league?