Soccernomics Summary

Why do some soccer clubs succeed while others fail, and what does that reveal about the way the game is played, marketed, and understood?

Soccer Clubs Are Surprisingly Small Businesses

Most people assume modern soccer clubs operate like major corporations, but this isn’t the case. Soccer clubs, even the most famous ones, function on the scale of small local businesses. Manchester United, one of the most successful clubs, has lower revenues than a US distributor of organic food, United Natural Foods, which isn't even a major player in the American economy.

Soccer teams lack the traditional business model. Instead of focusing on financial gain, most prioritize success on the field, funding expensive squads even at the cost of profits. A statistical analysis covering English and Spanish clubs between 1993 and 2005 revealed that clubs pursuing victory over financial security spent significantly more than they earned. Their aim was glory, not growth.

Because of their size and financial practices, soccer clubs rarely face serious financial ruin. If a club struggles, it can cut its wages, get relegated to a lower league, and continue to exist. This stands in stark contrast to other industries where underperformance leads to collapse, as in the case of companies like Ford or other major manufacturers.

Examples

• Costco warehouses averaged $159 million each in sales in 2016, far exceeding the average $25 million revenue of top-division European clubs.
• Barcelona would have to aim for 15th place to optimize profits, its true financially "ideal" position.
• Relegated clubs like Athletic Bilbao avoid going bankrupt by slashing wages and redefining their finances.

Most Managers Have Minimal Impact

Managers are often viewed as miracle workers, but the truth is, most don’t make much difference to a team’s success. Claudio Ranieri, hailed for leading Leicester City to an incredible Premier League title, was an unsuccessful manager for most of his career, demonstrating that managerial excellence is rare.

The quick rise in performance after a managerial change isn’t necessarily due to the new manager's brilliance. Statistical analysis shows that poor performances—often attributable to bad luck—eventually even out over time. This natural tendency, called "regression to the mean," means a team on a bad streak will usually improve, regardless of the coach.

The idea that managers greatly influence team performance is further undercut by the randomness of their success. A coach may excel for one season and falter the next, showing how unpredictable their impact truly is.

Examples

• Claudio Ranieri went from winning the Premier League with Leicester in 2015-16 to being fired the following season.
• Manchester City improved under Roberto Mancini in 2009, but analysis suggests they would have done so even if Mark Hughes had remained.
• Regression to the mean: teams like Manchester City often recover after a poor streak, irrespective of changes in leadership.

Transfer Spending Isn't a Recipe for Glory

Soccer clubs love spending vast sums on players. In 2017 alone, $4.71 billion was spent globally. Yet analysis shows that transfer spending doesn't significantly correlate with a team’s overall performance.

Superstar players are frequently overvalued, especially following high-profile matches or tournaments. Clubs often make emotionally driven decisions, chasing fleeting glimpses of brilliance rather than consistent results. Data shows clubs should instead focus on younger players, as they represent the best return on investment, both in athletic achievement and financial value.

Despite these insights, clubs continue to overspend on transfers, driven by trends and pressure from fan expectations. Younger players, aged 20 to 22, provide much greater value than older ones, but few teams commit to this strategy.

Examples

• John Jensen's transfer to Arsenal in 1992 occurred after one standout goal, yet he scored just once during his entire four-year stint.
• Players aged 20-22 are 18% cheaper than those aged 25-28, yet statistically offer similar performance levels in key areas.
• The 2013 study on striker performance found most peak between the ages of 23 and 25.

Wages Are a Better Predictor of Success

Strong teams correlate more directly with wage levels than transfer spending. Rich clubs win more often because they can afford to pay higher wages, which attract the best players in the world.

An analysis of English soccer from 2007-2016 showed that the teams with the highest wage bills consistently outperformed their rivals. Leicester City, with the 15th-highest payroll in the league during their title-winning season, was an exception. Even their success was largely driven by luck and poor seasons from traditional powerhouses.

Over time, clubs that spend more on wages find greater and more sustainable success. While some anomalies may occur in the short term, data proves that in the long term, higher wages attract better talent and yield consistent victories.

Examples

• Manchester United, with the largest salary budget, consistently placed near the top of the league.
• Data shows a nearly perfect correlation (90%) between wage spending and league position.
• Leicester City’s 2015-16 win had an unusually small goal difference of 32, highlighting the role of chance.

Data Is Becoming Central to Soccer

Soccer clubs are starting to embrace data to optimize tactics and player selections. From tracking individual player performance to analyzing set-piece strategies, data is transforming the sport.

Pioneers like Sam Allardyce used data as early as the early 2000s to refine match-winning tactics, emphasizing the importance of set pieces. Today, teams like Arsenal and Chelsea rely heavily on advanced metrics to make decisions. For instance, Arsenal even purchased a data analytics company, StatDNA, to help evaluate players.

Despite the growing reliance on analytics, many traditional approaches to the game remain. For example, players frequently attempt long-range shots, even though data clearly shows only 2% result in goals. As data use becomes standard, teams are expected to play smarter, reducing low-percentage decisions.

Examples

• Chelsea’s database contains over 32 million points of data across 12,000 games.
• Arsenal’s StatDNA measures player fatigue by analyzing foot-ground contact during sprints.
• Sam Allardyce’s Bolton Wanderers scored 50% of goals from set pieces through tailored data strategies.

Soccer’s Growth Mirrors Industrial and Political Shifts

Soccer’s success isn’t confined to athletic skill but often mirrors a city’s industrial and political history. In the 1960s, soccer was dominated by clubs backed by authoritarian regimes, like Franco’s Real Madrid or Salazar’s Benfica.

Later, Western Europe’s industrial revolution birthed a golden age of soccer in places like Manchester, Dortmund, and Turin. Fans, many of them industrial workers, strengthened communal bonds through the sport. Capital cities, seen as elite and detached, took a backseat to proud industrial towns.

As cities grew wealthier and globalization spread, capital cities like London and Paris began climbing the soccer ladder. Teams like PSG and Chelsea are now global brands, backed by massive investment and international fanbases.

Examples

• Real Madrid dominated the European Cup in the 1950s under the patronage of dictator Franco.
• Industrial hubs like Dortmund, Barcelona, and Munich have won most of Europe’s major titles since 1963.
• Cities like Paris and London are reversing old trends, with clubs like PSG becoming international powerhouses.

Poor Players Thrive; Poor Countries Struggle

Rich nations dominate global sports because of their resources, but poor neighborhoods often produce the world’s best players. Players like Diego Maradona and Cristiano Ronaldo grew up in hardship, allowing them the time and drive to master their craft.

This is explained by Malcolm Gladwell’s "10,000-hour rule," which highlights the importance of relentless practice. Young, poor Europeans spent countless hours playing street soccer, honing skills in environments that demanded ingenuity and persistence.

In contrast, players from regions like Africa often lack the nutrition or health services needed to excel. While passion and raw talent are abundant, these countries lack the infrastructure that wealthier nations like Iceland now invest in youth development.

Examples

• Didier Drogba and Diego Maradona both grew up in impoverished areas before becoming stars.
• Iceland’s soccer investment allowed it to qualify for international tournaments despite its small population.
• Endemic poverty in certain African regions limits access to training, diet, and medical support.

Soccer Fosters Unity and Reduces Isolation

Soccer does more than entertain; it brings people together, often saving lives. Studies reveal that suicide rates decrease when major soccer tournaments are held. This shared cultural event boosts morale and creates a sense of collective belonging.

This trend isn’t confined to winning nations. Even when a team performs poorly, fans find comfort in shared disappointment and the communal experience of watching games together.

Similar patterns can be seen outside sports. Events like Princess Diana's death temporarily reduced suicide rates, showing how connected experiences can alleviate feelings of isolation.

Examples

• German suicide rates dropped during major tournaments, preventing an estimated 44 suicides.
• Shared experiences after events like John F. Kennedy’s assassination helped communities grieve together.
• Latin American nations such as Brazil find national pride in soccer, strengthening their unity.

Soccer’s Future Is Global

While Western Europe dominates soccer today, the future lies in its global expansion. Countries like China, India, and the US are rapidly investing, building new leagues, and fostering local talent.

China, for instance, has introduced soccer into schools and plans to host and win the World Cup by 2050. Similarly, the US is cultivating a stronger soccer culture through Major League Soccer and hosting international events.

As newer markets develop infrastructure and talent pipelines, Europe may see its era of dominance decline. In its place will emerge a truly global sport, shaped by diverse cultures and players.

Examples

• China’s $220 billion investment in soccer includes training 50,000 coaches and building artificial pitches.
• The US is steadily growing its national soccer program and domestic league presence.
• Japan's recent World Cup performances showcase its fast soccer development.

Takeaways

1. Analyze data instead of relying on intuition when assessing team performance and strategy.
2. Watch wage spending, as higher payrolls strongly predict long-term success.
3. Stay open to international collaboration and new ideas to improve your team's tactics or operations.