Money and Soccer: A Soccernomics Guide: Why Chievo Verona, Unterhaching, and Scunthorpe United Will Never Win the Champions League, Why Manchester ... and Manchester United Cannot Be Stopped

very good

Great book which really helped me with an EPQ project about football clubs being run for profit.

I found “Money and Soccer” (2015) to be a very well-researched and intelligent book about the professional European soccer business and related economic issues. Szymanski has put years of effort into researching and collecting financial information about the subject and put it together in a lucid way, accessible to a reader with moderate knowledge of finance and economics. The book is fortunately not one of those “debunking” books showing just how smarter academic economists are than the hoi polloi actually running these businesses, but instead is a measured examination of its subject which at times either agrees or disagrees with conventional wisdom. Note that Szymanski doesn’t cover things like Latin American pro football or FIFA national competitions, like the World Cup or Euro Cup. The research spans about fifty years and includes intensive data analysis, with the Premier and other British football leagues receiving particular attention as the English have maintained especially detailed financial records. I have one major conceptual criticism of one of Szymanski’s points, which I will write about below, but I learned much from “Money and Soccer” and found it an excellent effort that anyone with interest in the business of sports will want to read.Szymanski covers the following:1) He finds that soccer leagues everywhere seem to stratify into “superclubs”, sustainably successful middle tier clubs and more marginal clubs. He interestingly makes a telling comparison between the Faroe Island league (didn’t know it existed? Neither did I), which has a dominant club, and Real Madrid and la Liga, pointing out the similarities in the league hierarchies despite the massive differences in money and player quality between the two.2) He argues that the long-term on-pitch success of so many clubs is no coincidence, with fairly extensive looks at the business histories of Real as well as Bayern Munich and Manchester United. That is because…3) Financial firepower is closely correlated to affording excellent soccer talent which is in turn closely correlated to winning. Szymanski takes us through the statistical logic tying together the high degree of random outcomes in individual matches with predictability of success for rich clubs over many games. Now deep fans will nod their heads and want to talk about the exceptions - such as the 2014 Champions League drive from Atletico Madrid, which was minutes from winning the whole thing with a payroll a fraction of the teams it was facing – but Szymanski is more interested in the rule than the exception. He ties in modern portfolio theory and efficient markets, making an analogy between stock and soccer playing picking, arguing that most perfectly competent football executives don’t succeed in beating the “market averages” in selecting players with a high performance-to-cost ratio. He also points to some managers who do indeed beat the averages, such as Brian Clough of Nottingham Forest.4) Szymanski details how the last quarter century has seen the growth of the superclubs, which have gradually evolved into a separate stratosphere of pro soccer. This is tied both to fan support – these breakaway teams are all based in large and generally rich metro areas – and in some cases to the deep pockets of certain owners. Szymanski’s ability to quantify the financing of Chelsea by Russian magnate Roman Abramovich in the 2000s I thought was very interesting, to take one section on a particular situation.5) A series of chapters in the middle of “Money and Soccer” review the economic underpinnings of pro soccer, including stadiums, broadcast rights, bankruptcy laws, corporate finance structure and ownership motivations. This is close to my chosen profession and I thought Szymanski succeeds in being both accurate pretty much in every respect while making things clear for the general reader. Nonfiction writing like this is always appreciated.6) The comparison of European pro soccer with US pro sports is also well done. Szymanski shows that American pro leagues across all sports is approximately the same size as soccer totaled across Europe in terms of revenue and spectatorship and then makes a telling comparison of the worth (the equity value) of US franchises, which are generally higher than European soccer franchises, with a few notable exceptions. Here Szymanski makes a logical leap, but an interesting one: he argues that the fact that a team like Everton in the Premier league is worth less than say the Minnesota Twins is that relegation exists in pro soccer. This ties in with Szymanski’s lengthy explanation earlier in the book about how relegation can be financially disastrous for a franchise. He then traces the origins of pro US and European sports to show how the US leagues developed to form a cartel, which protects owners from the financial disaster of relegation, while the European leagues by historical accident developed the owner-unfriendly relegation system, where teams can be cast down into lower, less renumerative leagues if they lose too many games. This difference in systems has raised the value of the US sports franchises in relation to the European ones. Sounds like a plausible argument to me.7) My constructive criticism of one of Szymanski’s points: he argues that the cultural importance of football clubs –to their fanbase and hence to politicians – explains why so few football franchises ever disappear. He documents how the life spans of sports franchises exceed by many decades the standard life span of over companies. I see a different mechanism at work. When football franchises go into bankruptcy – and Szymanski’s book provides a mini-history of these occurrences – the banks and other lenders seize the assets. Maybe the most important asset is the stadium. Szymanski wonders why these stadiums aren’t simply destroyed and replaced by other real estate, such as supermarkets. I think the reason is that the stadiums are simply much more valuable as such than the underlying real estate. Hence, the lenders seizing clubs see the assets they have seized and come to the rational conclusion that the most effective way of recouping part of their investment is to keep the football club going, on the off chance that the franchise becomes successful and valuable. This fact about clubs’ physical asset value I believe is the key factor in the longevity of football clubs and overrides their community or cultural value, a type of value which is often overcome by purely economic pressures. “Money and Soccer” is clearly interesting enough to provoke this lengthy write-up. I found it a good read by a talented writer who loves soccer and has really done his research. Recommended.

Well written and surprisingly understanding for a dry subject. Soccer and its economics has been always there but now the business is not run by the local businessmen but multi billionaires on the top table which slowly dripping down in the Championship. The lower leagues have gone backwards as they have no support from the top table

Perfect, thank you.