Soccernomics

Introduction

Soccer, or football as it's known in many parts of the world, is undoubtedly the most popular sport on the planet. Millions of fans passionately follow their favorite teams and players, debating tactics, transfers, and managerial decisions. However, much of the conventional wisdom surrounding the sport is based on clichés, outdated thinking, and gut feelings rather than hard data and evidence.

In "Soccernomics," authors Simon Kuper and Stefan Szymanski set out to challenge these long-held beliefs and offer a fresh, data-driven perspective on the beautiful game. By applying economic principles and statistical analysis to various aspects of soccer, they provide fascinating insights that often contradict popular opinion.

This summary will explore the key ideas presented in "Soccernomics," offering a new way to understand and analyze the sport we love. From the economics of soccer clubs to the impact of managers, from transfer market strategies to the relationship between poverty and talent, we'll delve into the numbers behind the game and uncover surprising truths that challenge conventional wisdom.

The Business of Soccer: Smaller Than You Think

One of the most common complaints about modern soccer is that it has become "big business," with commercialization and money ruining the spirit of the game. However, Kuper and Szymanski argue that this perception is largely misguided.

Soccer Clubs: Not as Big as You'd Expect

When we think of top soccer clubs like Manchester United, Real Madrid, or Barcelona, we often imagine them as massive corporate entities. In reality, most soccer clubs are surprisingly small businesses. To put things in perspective, the authors compare soccer clubs to other companies:

• Manchester United, one of the world's most valuable soccer clubs, had a revenue of €689 million in the 2015-16 season.
• This is less than a tenth of the revenue of United Natural Foods, a US distributor of organic foods that isn't even large enough to make it onto the S&P 500.
• Most soccer clubs are comparable in size to a single supermarket, not a supermarket chain.

This comparison helps us understand that while there's more money in soccer than ever before, it's still a relatively small industry compared to many others.

Profit vs. Victory: The Unusual Nature of Soccer Clubs

Another key insight is that most soccer clubs are not run like typical businesses. In a normal company, the primary goal is to maximize profits. However, soccer clubs often prioritize sporting success over financial gain. The authors analyzed the behavior of English and Spanish clubs from 1993 to 2005 and found that:

• If clubs were truly profit-maximizing, they would aim for much lower league positions to reduce wage bills.
• For example, FC Barcelona would need to aim for 15th place in the league to maximize profits.
• Some clubs, like Athletic Bilbao, would be more profitable in the second division.

This analysis shows that clubs are willing to sacrifice profits in pursuit of on-field success, which is not typical business behavior.

The Resilience of Soccer Clubs

Despite often being poorly managed from a financial perspective, soccer clubs rarely go out of business. This is another unique aspect of the soccer industry:

• Clubs can cut wages and accept relegation to lower divisions if they face financial difficulties.
• Fans will continue to support their team even if the quality of play decreases.
• This is unlike other industries where consumers would not accept inferior products.

This resilience allows clubs to prioritize sporting success over financial prudence, knowing that they're unlikely to face the ultimate consequence of going out of business.

The Myth of the All-Important Manager

In soccer, there's often a cult of personality surrounding managers. When a new manager is appointed, there's usually a great deal of excitement and expectation. However, the authors argue that most managers have little impact on a team's success.

The Mediocrity of Most Managers

Kuper and Szymanski use the example of Claudio Ranieri to illustrate this point:

• Ranieri had a largely mediocre career before leading Leicester City to an unexpected Premier League title in 2016.
• The following season, Leicester's performance plummeted, and Ranieri was sacked.
• This suggests that Ranieri's impact on Leicester's success was likely minimal.

The authors argue that most managers are mediocre and that exceptional performances are often due to other factors.

The "New Manager Bounce" Explained

One phenomenon that seems to contradict this view is the "new manager bounce" - the tendency for teams to improve immediately after a managerial change. However, the authors offer a statistical explanation for this:

• Teams typically sack their manager when performance is at a low point.
• Statistically, performance is likely to improve naturally after an exceptionally bad run, regardless of who's in charge.
• This "regression to the mean" is often mistakenly attributed to the new manager's influence.

The Limited Impact of Managerial Transfers

The authors also challenge the idea that managers significantly impact a team through their transfer decisions. As we'll see in the next section, the relationship between transfer spending and success is weaker than many believe.

The Inefficiency of the Transfer Market

Soccer clubs spend billions of dollars each year on player transfers, but Kuper and Szymanski argue that much of this spending is inefficient and driven by fashion rather than data.

The Overvaluation of Superstars

One common mistake is overpaying for players who have recently performed well in high-profile tournaments:

• The authors cite the example of John Jensen, who Arsenal bought after he scored a spectacular goal in the 1992 European Championship final.
• Jensen's subsequent performance at Arsenal was poor, scoring only one goal in four years.

This illustrates the danger of basing transfer decisions on small sample sizes or exceptional performances.

The Importance of Age in Transfers

The authors argue that clubs should focus on buying players in their early 20s:

• Players in this age group are often undervalued compared to those in their late 20s.
• FIFA figures from 2013 showed that players aged 20-22 were 18% cheaper than those aged 25-28.
• Strikers, on average, peak by age 25, making early 20s the sweet spot for value.

The Role of Data in Transfer Decisions

Kuper and Szymanski advocate for a more data-driven approach to transfers:

• Clubs should rely less on subjective scouting reports and more on statistical analysis.
• Factors like age, performance metrics, and potential for improvement should guide transfer decisions.
• By using data, clubs can identify undervalued players and avoid overpaying for fashionable names.

The True Predictor of Success: Wages, Not Transfers

While transfer fees often grab headlines, the authors argue that a club's wage bill is a much better predictor of success than its transfer spending.

The Strong Correlation Between Wages and Performance

Kuper and Szymanski present compelling evidence for the link between wages and success:

• An analysis of England's top two divisions from 2007 to 2016 found that spending on wages accounted for 90% of a team's success.
• There's an almost perfect correlation between a club's salary bill and its league position.
• For example, Manchester United had the highest wage bill and the highest average league position, while lower-spending clubs consistently finished lower in the table.

Why Wages Matter More Than Transfers

The authors offer several reasons why wages are a better predictor of success:

• High wages attract and retain top talent.
• Players are generally paid what they're worth, and if they're not, they'll seek better-paying opportunities elsewhere.
• Over time, the wage market tends to be efficient, accurately reflecting a player's value to the team.

Exceptions to the Rule

While the correlation between wages and success is strong, there are occasional exceptions:

• Leicester City's 2016 Premier League victory came despite having only the 15th highest wage bill.
• However, such exceptions are rare and often involve a significant element of luck.
• In the long run, the relationship between wages and success tends to reassert itself.

The Growing Role of Data in Soccer

While traditional soccer analysis often focuses on intangible factors like passion and determination, Kuper and Szymanski highlight the increasing importance of data in modern soccer.

The Evolution of Data Collection

The use of data in soccer has come a long way:

• It began with Charles Reep's manual note-taking in the 1950s.
• Today, top clubs like Chelsea have databases with millions of data points covering thousands of games.
• Some clubs, like Arsenal, even measure players' fatigue levels during matches using advanced metrics.

Practical Applications of Data

The authors provide examples of how data is being used to improve performance:

• Sam Allardyce, while managing Bolton Wanderers, used data to optimize set-piece strategies, significantly increasing their goal-scoring from these situations.
• Data analysis has revealed the inefficiency of long-range shots, which score only 2% of the time in the Premier League.

Challenges in Implementing Data-Driven Approaches

Despite the potential benefits, the authors note that there are still challenges in fully integrating data analysis into soccer:

• Many clubs have data analysts, but struggle to apply their insights effectively.
• There's often resistance from traditional soccer culture, which values intuition and experience over statistical analysis.
• However, as the benefits become more apparent, data-driven approaches are likely to become increasingly prevalent.

The Influence of Politics and Industry on Soccer Success

Kuper and Szymanski explore the fascinating connections between a city's political and industrial history and the success of its soccer clubs.

The Era of Totalitarian Soccer

The authors highlight how political regimes influenced soccer success in the mid-20th century:

• From the late 1950s to the 1960s, clubs favored by dictators dominated European competitions.
• Real Madrid (supported by Franco in Spain) and Benfica (backed by Salazar in Portugal) won many of the early European Cups.
• In totalitarian regimes, clubs from capital cities tended to dominate due to concentrated resources and sometimes direct intervention from political leaders.

The Rise of Industrial Cities

After the fall of fascist regimes, the authors note a shift in soccer power:

• From the 1960s onwards, European Cups were dominated by clubs from provincial, industrial cities.
• Cities like Manchester, Barcelona, Turin, and Munich became soccer powerhouses.
• This shift coincided with these cities' industrial growth and influx of migrant workers, who found a sense of belonging through supporting local clubs.

The Return of Capital Cities

In recent years, the authors observe another shift:

• Clubs from major capitals like London (Chelsea) and Paris (Paris Saint-Germain) have risen to prominence.
• This is partly due to investment from wealthy individuals and international owners who are attracted to these global cities.

The Complex Relationship Between Poverty and Soccer Success

Kuper and Szymanski examine the intriguing connection between economic conditions and success in soccer, both at the national and individual levels.

Rich Countries Dominate Sports

The authors present evidence that wealthy nations generally perform better in sports:

• They use the example of Iceland, which invested heavily in sports infrastructure and coaching, leading to significant overachievement in soccer relative to its small population.
• Rich countries can afford better facilities, coaching, and support systems for athletes.

The Paradox of Poor Players' Success

While rich countries dominate, many of the best individual players come from poor backgrounds:

• Stars like Wayne Rooney, Zinedine Zidane, and Zlatan Ibrahimovic grew up in poor European neighborhoods.
• The authors attribute this to the "10,000-hour rule" - these players had more time to practice due to their circumstances.
• Poor children often spend more time playing outside, have less structured activities, and fewer alternative leisure options.

The Importance of Basic Necessities

However, the authors note that successful players from poor backgrounds still had access to basic necessities:

• They had adequate nutrition and healthcare, unlike many children in developing countries.
• This allowed them to develop physically while having the time to hone their skills.

Soccer as a Life-Saving Force

In a surprising twist, Kuper and Szymanski present evidence that soccer can actually save lives by reducing suicide rates.

The Suicide-Reducing Effect of Major Tournaments

The authors, working with Greek researchers, found that:

• Suicide rates in European countries significantly decline during major soccer tournaments like the World Cup or European Championship.
• This effect was observed in 10 out of 12 countries studied.
• For example, in Germany, there were 30 fewer male suicides and 14 fewer female suicides during tournament months compared to non-tournament years.

The Power of Shared Experiences

The authors theorize that this life-saving effect is due to the sense of community and shared experience that soccer provides:

• Major tournaments bring people together, creating a sense of national unity.
• Even when a team loses, the shared experience of discussing and processing the loss can be beneficial.
• This phenomenon is similar to observed decreases in suicide rates following major shared experiences like the assassination of John F. Kennedy or the death of Princess Diana.

England's Soccer Struggles: A Matter of Insularity

Kuper and Szymanski tackle the perennial question of why England, the birthplace of soccer, has struggled in international competitions.

Debunking the Foreign Player Myth

The authors challenge the common belief that too many foreign players in the Premier League harm the national team:

• Despite having fewer English players in the league, England's win rate has actually improved since 1995.
• The 70 or so English players regularly featuring in the Premier League are competing at an extremely high level.
• Playing alongside and against top international talent likely benefits English players.

The Home Advantage Theory

The authors propose that England's struggles are more related to their players' lack of experience abroad:

• Teams playing at home win 61.9% of international European soccer matches.
• British players are among the least likely in the world to play abroad, making them less adaptable to away conditions in major tournaments.

England's Actual Performance

The authors argue that England's performance isn't actually as bad as perceived:

• From 2000-2014, England's win percentage was 67.1%, just behind Portugal and ahead of Italy.
• Much of England's perceived underperformance in major tournaments may be due to bad luck rather than systemic issues.

The Dominance of Western European Soccer

Kuper and Szymanski explore why Western European countries have dominated international soccer in recent years.

The Network Effect

The authors argue that Western Europe's success is largely due to its dense network of soccer-playing nations:

• A visitor to the 2006 World Cup in Germany could reach about 20 countries within a 2.5-hour flight.
• This network allows for easy transfer of knowledge and quick improvement.

Learning from Neighbors

The authors use Germany as an example of how this network effect benefits teams:

• After a difficult period in the 2000s, Germany learned passing techniques from Spain and the Netherlands.
• They adopted the fast-paced style of the English Premier League.
• German clubs hired coaches from other countries, like Louis van Gaal from the Netherlands and Pep Guardiola from Spain.

The Evolution of Playing Style

This knowledge sharing has led to a convergence in playing styles:

• Top European teams now play a game where all players resemble passing midfielders.
• Specialization has decreased, with even goalkeepers expected to be proficient passers.

The Future of Global Soccer

In the final section, Kuper and Szymanski look ahead to the future of soccer as a truly global sport.

Soccer's Global Expansion

The authors note that soccer has only recently become a truly global game:

• The 2009 Champions League final became the world's most-viewed sporting event, surpassing the Super Bowl.
• Soccer is just beginning to take off in the world's most populous countries like China, India, and Indonesia.

The Challenge to Western European Dominance

As soccer grows globally, the authors predict challenges to Western European dominance:

• Countries like China are investing heavily in soccer development.
• The Chinese government has made soccer mandatory in schools and is building infrastructure and training coaches.
• Other non-traditional soccer nations like Japan, the US, and even Iraq are developing stronger soccer traditions.

The Potential for Change

The authors suggest that future World Cup finals could look very different:

• As more countries invest in soccer development, the pool of competitive nations will likely expand.
• This could lead to a more diverse and globally representative sport at the highest levels.

Conclusion

"Soccernomics" offers a fresh, data-driven perspective on the world's most popular sport. By challenging conventional wisdom and applying economic and statistical analysis, Kuper and Szymanski provide insights that can change how we understand and appreciate soccer.

Key takeaways include:

1. Soccer clubs are smaller businesses than many realize, often prioritizing sporting success over profits.
2. Managers typically have less impact on team performance than commonly believed.
3. Transfer spending is often inefficient, while wage bills are strongly correlated with success.
4. Data analysis is playing an increasingly important role in soccer tactics and player selection.
5. There are complex relationships between politics, industry, and soccer success.
6. Soccer can have positive societal impacts, including potentially reducing suicide rates.
7. England's international struggles may be more related to insularity than quality of players.
8. Western European dominance in soccer is largely due to knowledge sharing within a dense network.
9. The future of soccer is likely to be more globally competitive as the sport grows in populous countries.

By understanding these principles, fans, analysts, and even those involved in the sport can gain a deeper appreciation for the complexities of soccer beyond what happens on the pitch. As the sport continues to evolve, the insights provided in "Soccernomics" offer a valuable framework for analyzing and predicting future trends in the beautiful game.