As we the fans have seen over the past decade or so, the valuation of football stars has sky rocketed to new heights, heights that too many fans, can never be reached. Nonetheless there seems to be a large correlation to big money spending and the outcome of that given player at a club. How much can we actually value a player? Clubs seem to be always spending money on the wrong transfers. For instance, Liverpool’s 60 million pound splurge on Jordan Henderson, Andy Carroll and Stewart Downing or Chelsea’s 50 million spent on Fernando Torres or my personal favorite Ricardo Quaresma astounding 30 million pound move to Inter, however in the past three years economists such as Simon Kuper have been trying to argue that the net amount spent on transfers bears little relations to where they finish in the league. While, on the other hand, spending significant sums of money on wages generally helps the clubs success rate.
Using the average league position in the Premier league compared to the relative wage spending there have been accurate results to Simon Kuper’s hypothesis over the past 15 years.
| Club | Average League Position | Wage spending relative to the average spending of all clubs. |
| Man Utd | 2 | 3.16 |
| Arsenal | 2 |
2.63 |
| Chelsea |
3 |
3.50 |
| Liverpool |
4 |
2.68 |
| Newcastle |
9 |
1.93 |
| Aston Villa |
9 |
1.60 |
| Tottenham |
10 |
1.34 |
| Everton |
10 |
1.41 |
| Middlesborough |
12 |
1.32 |
| Leeds |
13 |
1.70 |
| West Ham |
14 |
1.31 |
| Blackburn |
14 |
1.41 |
| Fulham |
16 |
0.92 |
| Southampton |
16 |
1.24 |
| Sunderland |
18 |
0.92 |
| Man City |
18 |
1.24 |
| Wigan |
19 |
0.59 |
| Wimbledon |
19 |
0.94 |
| Birmingham |
20 |
0.74 |
| Leicester |
20 |
0.88 |
Let’s use a manager I despise as an example. Rafel Bentiez during his time at Liverpool encountered a “host of poor overpaid players” as Carragher wrote in his biography. He was charged with the blame of buying Ryan Babel for 15 million euros, Jermaine Pennant for 9 million, Andrea Dossena for 10 million and my personal favorites Alberto Aquilani and Robbie keane for 25 million a piece. In 2008 Benitez signed Robbie Keane, at 28 years old (debatably his peak) for an astounding 25 million euros. Keane had never had a season where he scored over 20 goals. Six months after bringing him to Anfield, Benitez sold him back to Tottenham for 15 million euros. For all the spending Benitez did, many of his true stars were homegrown talents like Sami Hyypia, Steven Gerrard and Jamie Carragher.
In the six years Benitez spent at Anfield he spent a total of 164 million euros more than he received from transfers compared to Sir Alex Ferguson’s 40 million, yet in those years United won 3 titles compared to Benitez’s best 3rd place finish. The largest problem is that managers often pay for the name, not for the play, especially those that are new to a club and are desperate to make an impression.
Over the past decade football has taken to stats through the evolution of stats in US sports, in particular Baseball. Billy Beane, the Oakland As general manager commemorated in Michael Lewis’s Moneyball, who subjugated the failings of baseball’s player-trading market to turn the Oakland As into a consistent powerhouse in the American League, has managed to do so by spending the least money on salary in the Major League.
Beane has been so successful that the world has adapted his methods to suit there sport. From this Kuper has created golden rules how to approach the transfer market.
- A new manager wastes money on transfers: don’t let him
2. Stars of recent World Cups or European Championships are overvalued: ignore them
3. Certain nationalities are overvalued (Brazilians and Dutch, for example)
4. Older players are overvalued
5. Centre-forwards are overvalued; goalkeepers are undervalued
6. The best time to buy a player is when he is in his early twenties
7. Sell any player when another club offers more than he is currently worth
8. Replace your best players even before you sell them
From these 8 points there is one team that immediately come to mind, teams that make profits, win a lot of matches and produce great players right before they become superstars: Udinese
The line between playing a successful brand of football and running a profitable business is often a daunting task when anchoring a club, but in the case of Udinese, it has always been “bianconero”. Ever since taking over the reins of the Friulani over 25 years ago, Giampaolo Pozzo has maintained a clear vision on how the outfit would operate.
Their scouting system is vast and spreads over countless countries, but their focus has always been in both Africa and South America, continents with a vast number of unknown players such as the Kwadwo Asamoah, Mehdi Benatia, and Alexis Sanchez’s of the world. Pozzo has developed this connection buy hiring locals in foreign markets in order to tap into local talents. In addition, he has realized that a small market club like Udinese is never going to be able to bring the revenue of a European supergiant so he recently purchased Spanish club Granada in 2009 and more recently English side Watford to expand the system further. Players can now gain experience in vastly different footballing landscapes before moving back to Udinese a more matured prospect. He can take the most well rounded players who have gained experience across the world and therefore will be more appealing to potential suitors.
Over the past decade Udinese have netted close to €350m from players. In the last year alone the sales of stars such as Gokhan Inler (15mill) to Napoli, Alexis Sanchez (40 mill) to Barcelona, Cristian Zapata (13mill) to Villarreal, Sulley Muntari (13 mill) to Portsmouth and other amounting to over 150 million. Despite the sale of all there key players, the Friulani still consistently qualify for the Champions League preliminary round again last season, leapfrogging the likes of Inter, Napoli, Lazio and Roma.
Udine is a city of 100,000 in the misty mountains near the border of Albania and Italy. With crowds at the Stadio Friuli typically no more than 17,000, and the majority of ticket sales going to the local commune, Udinese’s game day money making is non-existent. As the Swiss Ramble, a soccernomics blog clearly states Udinese’s 2009-10 wage bill of €31m cannot compare with €230m and €172m at Internazionale and Milan. Only the club’s savior, Di Natale, has an annual salary over €1m; Sanchez himself was only earning €700,000 (he now earns 4 million with Barcellona.) Internazionale, Milan and Juventus, all finish the year with revenues of over €200m. At €41m, Udinese did not match a single Premier League club. Income from television accounted for €26m; Internazionale’s in there treble season was €138m.
Transfer Success
| Name | Bought | Sold |
| Pablo Armero | From Palmeiras 2010 Fee: €1m
|
To Napoli 2013
Fee: 13 m |
| Gokhan Inler | From FC Zurich 2007 Fee:c. €600,000
|
To Napoli 2012
Fee: 13 m |
| Kwadwo Asamoah | From Bellinzona 2008 Fee: c. €400,000
|
To Juventus 2012
Fee: 15 m |
| Mehdi Benatia | Free | To Roma 2013
Fee: 13.5m |
| Samir Handanovic | From AC Rimini 2008
Fee: 800,000k |
To Inter 2011
Fee: 16m |
| Mauricio Isla | From Universidad 2007
Fee: 550,000k |
To Juventus 2012
Fee: 17mill |
| Fabio Quagliarella | From Sampdoria 2007
Fee: 7.5 m |
To Napoli 2009
Fee: 18m |
Udinese has created the foundations for every club to follow. Never to they overspend on transfers. They always buy youth, build players and then sell them when they are worth more than there value. Although this is an incredible model teams such as Chelsea, Juventus and Barcelona have to adopt this model in order to create a winning model. Udinese will never be able to win with this team, but they sure are an entertaining team to watch when the Serie A season starts up each August.
I agree with Kavin’s argument on how a lack of silverware will hinder a team’s appeal. In this world of football, it seems like 2 types of teams have emerged: the developers and the winners. The developers (like Udinese) seem to have make quite the profit off of recognizing talented players and flipping them on the market. However, these players are in all likelihood being flipped at their peak – at the point where they will be able to do something great to their club or carry them to big titles. The winners are on the receiving end of this flip and seem to focus more on their starting 11 than developing further down the ranks. These clubs host the big name jerseys that take them to the EPL cup and Champions League finals. As soccer turns more and more into a business, the power of money grows with it. The notion that a EPL title cannot be bought was thrown out the window with Manchester City’s title run. Thus this sect of ‘winning’ teams is a part of the game and not necessarily bad as we get to see large numbers of superstars on the pitch at the same time when these kinds of teams clash.
I definitely do not want to take away from the original author’s analysis on how teams like Udinese are successful. Another club which is think is a better model is Dortmund. They are famed are on of the best clubs for developing players and never were that big of a name outside of Germany until last year when they broke into the Champions League finals. Unfortunately, they also sold their best player after the finals, but that was routine for the club who constantly raises and flips players. Perhaps with their recent success they have found an equilibrium to operate between spending and raising players. We’ll only truly see as the game progresses.
I liked this analysis of valuation of footballers since I wrote a similar piece to this concerning the Bale transfer compared to the fee paid by Arsenal to acquire Ozil. While teams such as Chelsea have relied on their financial power to acquire top level talent, in recent times they have attempted to follow the model outlined for Udinese to purchase young talent. Some of their top players, most notably Mata and Oscar, have been bought as youngsters in their early 20’s. Although it is important to find these types of talents who will grow into world class players, a team needs to have the Lampards and Terrys of the world who are leaders in the dressing room and on the pitch. Thus, it is appealing to adopt the Udinese and Arsenal styles of transfers, but the lack of silverware will take a toll on a team’s appeal. Moreover, it is difficult to take on the Udinese approach if a team has the financial power to spend. Managers and owners could not justify accumulating profits and not spending on players available on the market. Hopefully, teams such as Udinese can find ways in the future to hold onto their players and decrease the disparity that exists between cash strapped and wealthy football clubs in Europe.
This is a fascinating example of how looking at the numbers that aren’t quite as publicized can lead to an extremely different analysis and understanding of how things are really occurring. Especially looking at the transfers we saw this past window, with the huge acquisition of Bale, and other large transfers like Ozil, we will see how the transfer fee relates to success in terms of wages. After all, it does make sense that those players who are highest paid would be the best and as a result, have the largest positive impact on the results of the team.