The table never lies…
On December 19th, The Economist newspaper published a thought provoking blog Competitive balance in football: Why the English Premier League has been turned upside down, which argued that the unpredictable nature of this season’s games and the remarkable performance of Leicester City in particular was not as a result of either the financial success or business model of the competition, but rather due to a mix of luck, skill and tactical innovation.
The piece is a great read, using the disparity between the performance and expectations of Chelsea and Leicester City to highlight the issues, backing this up with interesting data sources and noting that the season up to the 19th December 2015, had:
- the highest number of games won by underdogs, 26% according to bookmakers, compared to a previous high of 23%; and
- the lowest ELO score, an accepted measure for predicting sports’ outcomes, since 2003-4, suggesting the gap between teams has fallen significantly.
…and it is not because of the money…
The writer argues that the usual suspect when we seek to understand outcomes in football, money, is not the factor driving the unexpected results in 2015. In particular:
- The success of the Premier League in generating ever higher amounts of income for clubs, especially from broadcasting rights, cannot explain relative outcomes in the Premier League because the distribution formula between teams has not changed; and
- Financial Fair Play has, according to the author, worked to cement the existing hierarchy by favouring clubs with the highest commercial revenue, typically the teams that have dominated the Premier League in recent seasons.
Having ruled out the impact of money, the author goes on to explore other factors, concluding some element of luck, together with a degree of tactical innovation, supported by good signings explains both Leicester City’s meteoric rise and the wider unpredictably of results..
…or is it?
Football lover that I am, the idea that tactical innovation is the major reason for the unexpected ranking in the table is very appealing and it does fit with my personal experience as a fan. Mark Hughes has improved Stoke City’s position in the last two seasons by changing the team’s style. While the excitement and atmosphere generated by Stoke City’s first season in the top division of English football was unforgettable, the current team is easier on the eye and so far, more successful.
But the economist in me has a nagging doubt – much of the research into success in the Premier League has concluded that wages are the single most important factor in explaining positions in the Premier League. Have things really changed that much so that money is now less important than tactics?
As discussed above, the reason pundits have been arguing that the Premier League has changed is the decline in the dominance of the “Big 6”. In each of the last 5 seasons, five of the top 6 slots in the final table were taken by a combination of Manchester United, Manchester City, Arsenal, Chelsea, Tottenham Hotspur and Liverpool. Viewed against this, the current season does seem unusual, but is it?
In fact, the current season is not the first season that has seen the table at the end of the calendar year, roughly halfway through the season, not being dominated by the big teams. Only last season at halfway, Southampton was 4th and West Ham United 6th, which is similar to the current season with Leicester City 2nd and Crystal Place 5th at the mid-point. However as BBC Sport noted, this season is interesting because:
- Chelsea have made the worst start of any reigning champion;
- In early December, the gap between top place and fifth was the joint closest in the last 10 years; and
- Chelsea and Manchester City, last season’s top 2 lost 12 games in the first 15 rounds of the season, the highest for 10 years.
It does appear that there is something afoot, although it may reflect a trend that has been developing over a few years. Are tactics and luck really the drivers? Having recently been involved with producing EY’s analysis of the Economic and Social impact of the Premier League, I felt that more attention needed to be given to the economics of the competition. Our report was clear that the Premier League’s business model was very effective in ensuring a competitive league. Could it be that this effect is just getting stronger?
Does money matter?
I wanted to understand if the suggestions that the increase in Premier League revenues and FFP were not drivers of the 2015/16 classification were valid. Where I differ with the thoughts set out in the blog mentioned above are:
- My first hypothesis is that the success of the Premier League in increasing the revenues of its clubs relative to the clubs in the other major leagues has had a positive impact on the ability of clubs, especially outside of the Big 6, to attract top quality players from other major leagues. It is always dangerous to extrapolate from personal experience but the fact Stoke City have been able to attract Bojan, Shaqiri and Arnautovic suggests something is going on.
- Secondly, I had a suspicion that the interaction between higher total revenues and FFP has had an impact on the relative strength of teams in the Premier League?
To explore the issue further, I have drawn on the recent history of the Premier League. The 2010/11 season was the first time that clubs were restricted to squads of 25 home-grown players aged over 21. Using a variety of sources, the Sky Sports Football Yearbook, www.footballsquads.co.uk and the FIFA website, I set out to analyse the number of elite players in each club’s squad at the start of every season from 2010/11 to the current one. (This approach can be seen to an extent as a proxy for wages as we don’t have access to published wage data for the current season. It may become more useful as a method if FFP limits wage variability between clubs over time, limiting our ability to model the impact of wage differences on performance).
To define “elite” players, I took the top 10 ranked countries in the world in September of each season and identified how many players from these countries were in each 25 man squad at the start of September each season. I had to fiddle a little because England was only in the top 10 in 4 years but clearly accounts for a significant number of the elite players in the PL. I allowed for this effect, by analysing England (and Wales in 2015/160 separately and moving another country into the top 10 and then adding in England international players by club, assuming all England internationals are “elite” players. I also had to adjust the data to account for the effect of France on the numbers – there are a significant number of high quality French players in the Premier League but France only made the Top 10 once, potentially distorting the results. I therefore did my analysis for 2014/15 with France in and also with France out of the numbers – my conclusions hold for both versions of the analysis.
The analysis is inevitably judgmental to an extent and open therefore to potential error in the data as permanent transfers, loans and the timing of international appearances can be difficult to confirm exactly. The good news is that I believe the results are clear and would not be affected by a few errors in my data, but you can judge for yourselves.
Money does matter…
The table below shows the number of “Elite” players (ie from the Top 10 FIFA ranked countries and England) for each season in the Premier League between 2010/11 and 2015/16, broken down into:
- “Big 4” : Arsenal, Chelsea, Manchester City and Manchester United;
- “Big 6”: Big 4 plus Liverpool and Tottenham Hotspur, two teams that have not won the Premier League title but have been part of the group dominating Champions; League places in the period;
- “Constant 4”: the 4 teams who have also been in the PL in each of the seasons analysed, Aston Villa, Everton, Stoke City and Sunderland.
- “The Rest”: the 10 teams in each season not in the above categories with 3 changes per season among the cohort due to relegation and promotion.
Number of “Elite” players per squad
With France included in 2014/15, the numbers are: Big 4(60), Big 6 (86), Consistent 4 (30), The Rest (46), Total (165).
Between 2010/11 and 2015/16, the number of elite players in the Premier League increased from 96 to 160, a growth of 67%. English international players accounted for 63% of elite players in 2010/11 but account for only 39% in the current season. There seems little doubt therefore that the greater wealth of the Premier League relative to other European leagues has increased the ability of clubs in aggregate to attract elite foreign players, but can this help explain the current competitive position?
The findings on the share of elite players accounted for by the different groups of clubs identified above shed light on the issues. There has been a significant decline in the share of elite players accounted for by the Big 4 and Big 6 groups:
- In 2010/11, the Big 6 accounted for 60% of elite players, this share rose slightly in 2011/12 and 2012/13, but has fallen consistently since and now stands at 51%;
- We see a very similar trend with elite player shares for the Big 4 which have fallen from 40% in 2010/11 to 33% in the current season.
- The consistent 4 have increased the number of elite players in their squad by 60% over the period but this not has allowed them to maintain their share of elite players. They have strengthened relative to the Big 6 in terms of share of elite players but have moved in the opposite direction relative to the Rest, the other 10 clubs in the division.
- The Rest are the big winners, increasing their share of elite players from around a quarter to a third over the 6 seasons reviewed.
This simple analysis suggests that the competitive gap in the Premier League, measured in terms of share of elite players, has narrowed in the last 5 and a half seasons. More work is needed but it does seem as though this is a plausible explanation for the ranking of clubs as at December 31st 2015, roughly the mid-point of the season. A more balanced competition means the chances of shocks increases and helps to explain the tighter bunching of teams.
So what has caused the change?
In my opinion, three things have happened:
- The increase in relative wealth of Premier League clubs relative to clubs in other major leagues has led to more elite players being attracted to play in the competition.
- The greater ability of PL clubs to attract elite players together with limits on squad sizes and restrictions on wages through FFP, means that the clubs outside of the Big 6 are able to strengthen their playing rosters more than previously.
- But FFP has also limited the ability of the Consistent 4 to mop up the elite players not taken by the Big 6. These clubs may have first pick of the remaining elite players but can’t sign them all due to wage constraints, hence the relative improvement of “The Rest” in my categorisation.
But Leicester City’s success goes beyond economics…
The Premier League business model is based around a relatively equitable distribution of revenues to ensure a strong competition, certainly when compared to other European leagues. As the Premier League’s relative success has increased this has created opportunities for some of the supposed weaker teams to strengthen their playing squads. The indicative analysis presented above suggests this can explain some of the events of the current season.
However, Leicester City’s remarkable success goes beyond the level any economist would forecast. Yes the club has strengthened its playing squad but not to a level on paper that would be consistent with results this season. Football lovers everywhere should rejoice in the fact that we can’t quantitatively identify the mix of skill, luck, tactics and team spirit that is allowing the Foxes consistently to beat all predictions and confound the pundits.