Moneyball: Sabermetrics & European Football
In 2011, the world was introduced to sabermetrics via the movie Moneyball, a movie based on the true story of the 2003 Oakland Athletics. The movie depicts how their GM Billy Beane and Assistant GM Peter Brand (Paul DePodesta in real life), revolutionized player valuation in baseball by utilizing sabermetrics. If you have not seen the movie (which I highly recommend you go do), you may be wondering what exactly is sabermetrics? Derived from the acronym SABR (Society for American Baseball Research), the term refers to the empirical analysis of baseball statistics and is used to compare player’s performance, to predict future performance, and to understand a player’s contribution to his or her team. This is then used to assess the value of players.
Today, the value clubs pay for players is the largest asset on any club’s balance sheet. Take for example, Manchester City, an English Premier League team valued at $4B as of April 2021 according to Forbes. Their 2021 financial statements show £452M in player value, an accounting term they call “players’ registrations”. This valuation of players on the books represents what they paid, less depreciation, and does not include the value of any homegrown players, as they were not “paid for”. For Manchester City, this would currently include 21-year-old Phil Foden, who is valued at €90M as of May 2022. With player valuations so high, is sabermetrics being utilized in sports other than baseball?
This month, AISTS participants are learning about this very topic. In a module titled “The Business of Football”, participants are being introduced to various fundamental financial concepts that help to effectively manage a sports enterprise. One of those topics includes a discussion around sabermetrics and the valuation of players. The participants will then examine how different pro sports leagues have tried to regulate the players labour market in hopes of maintaining a competitive balance between teams, with particular focus on European football.
Sabermetrics in Football
Football is not a sport that has traditionally relied on statistics as much as baseball; however, that is changing. The most famous example is that of Liverpool. In 2014-2015 season, the English Premier League team was sixth in the league with a win-loss-draw record of 18-12-8. Under the analytical work of Ian Graham, the team manager Jürgen Klopp collaborated with Graham to utilize sabermetrics in deciding which players to acquire and how best to utilize them. The result? For the 2018-2019 season, Liverpool lost just one of their 38 regular season games, ending with a win-loss-draw record of 30-1-7 and finishing 2nd in the league. They ultimately went on to win the Champions League that year, 30 years after their previous success. Liverpool is still seeing success today from utilizing sabermetrics. The team currently sit in 2nd place for the ongoing 2021-2022 season.
Due to his success utilizing sabermetrics, Beane serves as the football performance and analytics advisor to Dutch team AS Alkmaar, and he is not the only analyst that works in European football. In fact, with recent signings of some high-profile analysts by major clubs, such as Laurie Shaw joining Manchester City in January of 2021, it can be argued that sabermetrics will play more of a role in player valuations for football clubs.
Software companies are also trying to enter this space. Take for example EPL team Burnley who has partnered with AiSCOUT to evaluate and find future talent. Young athletes can use the free app to take video of themselves performing certain physical and tactical football drills. The app, using artificial intelligence, allows scouts to rate, evaluate, and benchmark the youth players. The development of this software, along with many others, is allowing smaller clubs to utilize sabermetrics in building their teams.
FIFA & The Transfer Market
In addition to player valuations and salaries increasing, loaning out players to other clubs has also become a big business for football clubs in Europe. In 1992, loans made up 6% of all transfers within the top five leagues: England, France, Germany, Italy, and Spain. In 2019, that figure was up to 29%. The structure of the loans is also increasingly more complex. Loans may include penalty clauses if the loaned player does not play a certain number of minutes, which clubs may include when they are trying to develop a player. Many other loans now include an option to “buy” the player at a contracted price at the end of the loan. Clubs can make gains by selling players, and a contract secures the sales price. Some teams, such as German club Dortmund, have been very successful in identifying and “purchasing” or developing young, talented players then selling them for large gains. Other clubs utilize the transfer system for accounting reasons: by keeping a player and loaning them out, the team keeps the asset (the player) on their books and recovers some of their wages via the loan.
As a result of the increase in player salaries and a booming transfer business, the gap between clubs is growing exponentially, leading fans to question the future of football in Europe. In 2017, FIFA undertook a process to reform the transfer system with the objectives being to develop young players, to promote a more competitive balance, and to prevent teams from hoarding players. As a part of this reform, new loan regulations are going into effect as of 1 July 2022. Under the terms of the new regulations, clubs may now only loan out and loan in a maximum of eight players. On 1 July 2023, that number is reduced to seven, then to six the following year. This rule only applies to players above 21 years of age. How will this impact teams? Larger teams that heavily rely on the transfer system will be greatly impacted. These teams may have to “sell” some players or incur a much larger salary expense as they will not be able to recover wages through loans. Smaller clubs that do not heavily utilize the transfer system will not have much, if any, impact.
There is no doubt the work Billy Beane and the Oakland A’s did with sabermetrics is here to stay, and likely to grow, within sport. AISTS students this year have greatly been enjoying the class discussion and learnings this month. Want to learn more? Check out the AISTS MAS programme. Oh, and go watch Moneyball, it is time well spent, I promise.
Related article: Moneyball: Could sabermetrics offer Sunderland a brighter future?