Soccer Business Bits: More on Stats, LiveStrong Opening & More

Here are some quick hitters from around the world of business and American soccer.  We’ll start with this piece from Simon Kuper in the Financial Times.  Following a theme we have touched on over the last week (both through our interview with Mr.Kuper and our excellent guest post from Dave Laidig), the new Kuper article looks at the growing impact of statistics in club soccer.  Kuper continues to beat the drum for using in depth statistical analysis to unearth transfer market gems and to avoid costly errors.  Kuper again looks to Wenger and Billy Beane as key figures in the statistical movement.  We recommend giving the Financial times article a read.

The Sports Business Journal provides excellent coverage of the LiveStrong Park opening in the most recent edition of that excellent publication.  The article looks favorably upon Sporting’s new home and discusses the great lengths to which the franchise went to cater to its entire fanbase.  There are 5 club levels in the stadium, the branded CoolTV lounge and great appointments in the 35 suites.  Impressively, all 35 suites are sold out at rates from $50-90k for the season.  According to the article, the suites are tied-up for long terms.  The club seats and field level seats are also sold out.

SBJ also took a look at MLS clubs’ efforts to sell their local beer and soft drink rights.  We reported a number of months ago that MLS teams are free to sell their own local rights in certain sponsorhip categories.  SBJ is now reporting that a large number of MLS franchises have inked deals with league sponsors Pepsi and Anheuser-Busch for local rights, while seven have signed with other brewers and more than a handful have signed deals with Dr. Pepper and Coca-Cola.  According to the article, these deals can run from $75-200k.   In the beer category, it is interesting to note that some teams have looked to local brewers for partnerships and as a way to further promote close ties with local businesses.

 

The Monday After

Before we get to our weekly attendance roundup, here a couple of business related stories from the weekend that was.  We’ll start with popular radio program World Football Daily, where I was invited to chat with the hosts for 25 minutes on Friday about the business of the American game.  This was my third time on the program and it is always fun. We talked about shirt sponsors, soccer stadiums, Rossi and more.   A copy of the interview will be posted here as soon as the file can be uploaded.

We’ll move to Sports Illustrated, where the weekly magazine has provided soccer writer Grant Wahl with ample opportunity to discuss the USMNT.  Two weeks ago, Wahl discussed the outbreak of dual passport holders involved in the national team pool.  SI devoted four pages to the topic.  The most recent edition of SI included a one page Wahl piece on the Nats’ disappointing opening round at the Gold Cup.  As we have said in the past, SI is the most mainstream of sports magazines and is read by millions of Americans each week.  Any opportunity for soccer to grab ink before that large non-soccer specific audience, is extremely valuable.

Now for a quick look at weekend attendance, including the more than 60k that turned out to the new Meadowlands to see Mexico and Guatemala.  In MLS action, the week got off to a rough start with less than 7k at Gillette for the Revs/TFC match.  The Revs did better on Saturday night, with more than 14k in attendance.   Friday night at LiveStrong was lively, with a reported 18, 467.  TFC saw a big crowd for its home match against Seattle, with almost 22k at BMO Field.  The Galaxy worked their magic in Colorado, with more than 18k at DSG Park.  Rio Tinto hosted just under 17k in Salt Lake while Robertson saw just over 13k through the turnstiles.  Vancouver cracked the 20k barrier, while just over 13k were at the Home Depot Center for Chivas USA.

Selling Tickets in MLS

Time for a quick check around Major League soccer to see what types of promotions and ticket offers teams are pushing for the upcoming slate of games.  If we miss any, please drop us a line and let us know.

We’ll start in Colorado, where the Rapids are looking to capitalize on a visit from David Beckham and Father’s Day weekend to ensure a big crowd on Saturday night.  Here is a list of promotions for the night.  The Rapids have typically put on a big show for July 4th, and the team is already promoting the 2011 version of 4th Fest. The event includes concerts, kids’ activities and fireworks.

In Houston, the June 18 match is sponsored by H-E-B and includes a giveaway for the first 5000 fans.  Unfortunately, clicking through the website doesn’t provide great information about the nature of the giveaway. It may be an apron in Dynamo orange, but the image is tough to decipher.

The Revs play host to Chicago on Saturday night.  The Revs are coming off a Wednesday night home game that drew less than 6,700.  However, there do not appear to be an promotions running in Foxboro on Saturday.

The always aggressive Chivas USA marketing department will give away 10,000 foam fingers as part of their Saturday night match.  The promotion is courtesy of Bush’s Baked Beans.  The team is also offering a buy one get one promotion for the game.  The Father’s Day deal starts at $10.

As always, let us know of any other deals and promotions around the league.

Soccernomics: A Chat with Simon Kuper

Back in 2009 we had a brief chat with Soccernomics author Simon Kuper.  The book was first published in October, 2009 and continues to cited in soccer circles.    Soccernomics combines economics and soccer to provide an interesting look into the use of data in sports and takes direct aim at some of the longest held beliefs of fans and soccer managers about the evaluation of players.  The book also looks at a number of financial “myths” that surround the game, including the financial benefits of hosting big soccer events and the profitability of sports franchises.   Mr. Kuper is a sports columnist for the Financial Time sand his book, “Football Against the Enemy” won the William Hill Sports Book of the Year Award in 1994.  Given the recent excellent guest post from Dave Laidig about Opta, we thought that Kuper’s thoughts on stats in soccer were especially interesting.  Here are some excerpts from that interview.

Footiebusiness.com: You make a compelling case that big sporting events (e.g. the World Cup), do not provide the financial benefits that are so often touted when efforts are made to secure financing for such events.  Does that analysis change when the U.S. is the prospective host country?  Given the size of U.S. stadiums (and thus larger crowds), and the existence of sufficient infrastructure, do American communities have a better chance of deriving a financial benefit from hosting such a big event?

Simon Kuper: I think the financial benefit would not be very big in any case. I mean, with tourists, conferences and business travelers, the main American cities get a lot of custom most of the time. A world cup probably wouldn’t boost their numbers hugely. Also, during a world cup “normal” travel usually falls off, as business people and tourists don’t go to the country for fear of higher hotel prices and of soccer hooligans (there’s always lots of publicity about soccer hooligans, even though they tend not to appear much in reality at big tournaments). So I think the boost would be limited.

But it is true that because the US already has the infrastructure and the stadiums, its cost would be minimal too. It wouldn’t have to build loads of new stadiums with expensive hotels and access roads etc, like Japan did in 2002 or Germany and South Africa since. That’s a big advantage. I suspect the world cup 1994 cost very little and boosted the US economy by very little. It wouldn’t be a bonanza for any American town, but it probably wouldn’t hurt. In South Africa, by contrast, taxpayers are paying billions desperately needed for other things to build world cup stadiums that after 2010 will be empty almost forever.

FB: The book discusses the increased use of statistical data among managers/scouts in the game of soccer and in addition to figures such as Arsene Wenger, you reference familiar baseball names such as Bill James and Billy Beane.  Statistics and numbers are integral to the enjoyment of many baseball fans.  Does soccer lend itself to a similar “numbers culture”?  Are there statistics that casual soccer fans can embrace as a way to further understand and enjoy the game?

SK: There are fewer stats in soccer than in baseball or cricket, but the number of stats is growing. In the past we only really had goals. Now companies like Opta and Prozone produce measures for each game of how many kilometers each player ran, how many tackles and passes he made, etc. This info is proprietary and they sell it for lots of money, but sometimes newspapers buy it so fans get to see it. There’s interesting stuff there, even though those stats don’t tell you much about a player’s worth. Clubs have been trying to mine these stats for knowledge, and as far as I can see, they have discovered that running more kms than the opposition does not correlate with winning matches, possession doesn’t correlate with winning matches, tackles are not a good indicator of a good defender as e.g. Paolo Maldini rarely made any tackles, and so on. Some data are useful: e.g. how many of a striker’s shots are on target is very telling (I think Eto’o does best on this measure) and if your team sprints greater distances than an opponent during a match, that does correlate with winning.

But definitely soccer stats are at an early stage. There’s nothing like in baseball or cricket. What we found very interesting in our book was the off-the-field stats: e.g. correlating players’ wages with league position, and finding that wages explained almost entirely where a club finishes in the league. In other words: high wages win matches; the rest is just noise. By contrast, a club’s transfer spending doesn’t predict where it will finish in the league, because so many transfers go wrong. That was fascinating to me. This was data that Stefan, my co-writer, had assembled. I loved it because as you know, in soccer people generally just talk and spout opinions, but nobody has data. Stefan does.

FB: You effectively argue that owning a professional sports franchise is not a profit making enterprise.  Do team owners make money through appreciation value?  If they hold their teams for a number of years, can they make money?

SK: I think the best analogy is with the art market. Buying a soccer club is like buying a painting. It gives you status among your rich peers, and though it won’t give you an annual return, there’s a fair chance that after a few years you’ll be able to sell it at a profit to another rich man in search of status. That’s the best business model in soccer, because the model of annual profits hasn’t worked for anyone except Man United. Of course you’re betting on the price of soccer clubs rising like the price of art, but in both cases that has largely happened as both markets go global: just as there are more Indian and Russian billionaires buying art now, there are more Arab and Russian billionaires buying soccer clubs. (OK, the art market took a massive hit last year, but leaving that aside for the moment.)

FB: Finally, given the amount of money brought in through television rights, has match attendance stopped being a primary revenue source for teams?

SK: You’d have to look at the numbers, and it differs per club and per league, but I think that for many clubs that is now true. I think Barcelona and Real Madrid each get somewhere over $200 million a year from selling TV rights. I very much doubt that they get that from match attendance, despite their giant stadiums. And it’s easier to grow the TV market than the live attendance market, because in TV your potential audience is the world – people in LA or Shanghai watching on the sofa or in bars – whereas there’s a limit to the amount of people you can pack into a stadium. More than about 100,000, and the people in the top tiers can’t really see anything. So the future of profit growth in soccer is most probably TV. But our book isn’t so much about profits, because the vast majority of clubs don’t make any. What interests us is what data can tell you about the game itself, and the silly decisions that clubs make.

Thanks to Simon Kuper for some great insight and responses.  While we don’t agree with everything in the book, we do believe it makes for a great read and great gift for soccer fans and fans of all sports.  For more about the book, click here for an interview that Mr. Kuper did with the New York Times.

Soccer Business Bits: BMO Triples Down, Re-brand for Fox & More

The Montreal Impact and BMO Financial Group have announced that BMO will become the presenting sponsor of the Montreal Impact when the team kicks off its inagural MLS campagin in 2012.  Already the presenting sponsor of TFC and with a stadium naming rights deal in Toronto, BMO is continuing its significant investment in MLS.  Recall that Vancouver announced BMO as its initial founding partner.  The four year deal focuses  on the Whitecaps youth soccer initiatives.  The five year deal with the Impact will include the BMO name on Impact jerseys, on game tickets and throughout Saputo Stadium.  BMO customers will also have special privileges at the park.  BMO will also have a strong role in Montreal area youth soccer programs.  The 2012 Impact jerseys with the new BMO logo will be unveiled during the upcoming Summer. According to the team’s website, “BMO’s partnership with the Impact fits perfectly with the institution’s grassroots support of more than 900 girls’ and boys’ teams across Canada. To make this commitment to young people even more tangible, BMO will introduce the BMO Team Up with the Impact program that will enable young players from local clubs to attend the Impact’s home matches in a dedicated BMO seating area.”

Elsewhere, Fox Soccer Channel has announced a complete rebrand of its identity, including a name change to Fox Soccer. The new look, on-line presence and graphics will be unveiled on August 13.  According to the press release accompanying the announcement, FOX Soccer’s makeover includes new studio sets and improved on-air graphics packages.   The new identity will include re-designed logos, upgraded studio sets and a high-tech on-air graphics package.

Finally, Eric Hassli’s recent wonder goal bears mentioning, as the strike has become something of a national and international sensation.  The goal featured on multiple ESPN platforms, been viewed by millions on YouTube and been featured on broadcasts around the world.

Guest Post: Improving MLS Quality by Leveraging its Partnership with Opta

We are once again fortunate to have a guest post from Dave Laidig.  Dave is a corporate contracts attorney who occasionally submits posts about soccer.  He resides in Minnesota, and laments the Panama result.  Once again, thanks to Dave for his great insights. 

Soccer is known as the beautiful game, an implicit acknowledgment of the art underlying the sport.  And art frequently defies objective evaluation.  Can we describe Picasso with numbers, or affirm that Hemingway is 20% better than John Grisham?  We know such descriptions are futile.  And we carry that sense of futility over to the art of soccer.  We all appreciate a no-look heel pass, but how do we value the consistent vision of a midfielder?  And this is, quite literally, the million-dollar question. 

However, soccer has an objective end product – wins.  And wins are the result of objective events, goals scored or allowed.  The events of the game are defined, and their contribution to the ultimate result can be measured through performance metrics.  This data is valuable, as demonstrated by the recent partnership between Opta and MLS.  And as discussed in earlier commentary, some of this value is derived from the marketing benefits of advanced game information.[1]  But a large part of the value of better performance data is in the area of labor management.  Specifically, advanced performance metrics can adds accurate, objective information that can supplement talent evaluation, increase cost efficiencies and support pricing for transfer sales

Importantly, the performance metrics are valuable if they intrinsically describe the game; such as data of the fundamental elements of soccer like touches, runs, passes, player location, time, and goalie actions.  Further data can describe a pass (square, cross, forward lob) or a defensive touch (tackle, deflection, header) or similar actions. 

Using the elements of game action, derivative statistics can also be developed that convey more complex concepts in soccer.  For instance, upon merely counting the types of passes and whether they are successful, one can report the number and percentage of completed passes, or compare square passes and advancing passes.  Additionally, one can track linking “creative” passes, or advancing passes that allows the recipient to complete their pass (or score).  Thus, this creativity can be defined as putting the recipient in a position to advance the possession.  A measure such as “creative passes” allows a person to quickly understand the context of a game, and how a player impacted the result.  

And these measurements are just the initial, first-tier types of measurements.  With further analysis of a season’s worth of data, one can determine which game elements affect the game outcome, and by how much.  Additionally, this same analysis can be used to determine which game elements affect player salaries, and by how much.  Thus, by comparing the game data with the salary data, then one can identify inefficiencies in the labor market.[2]  Ultimately, a savvy manager would use the data to exploit the labor market.

Most businesses evaluate the performance of its employees with metrics.  A company may measure production rate, sales, or even customer service.  As a business, Major League Soccer is no different in this regard.  MLS can determine the value of its players through scouting players, film study, or evaluating some of the few objective statistics available, all labor-intensive methods.  Some MLS employees – the players – perform their job in a very public way, and success is easier to understand.  Consequently, MLS can identify the best players available (and evaluate their relative value) on the field, perhaps even determine which position on the field leads to the greatest success for a player by using performance metrics. 

As a pub mate recently explained to me, some are able to evaluate the players just by watching the match and feel that objective data is unnecessary.  And it’s certainly true that expert observers can meaningfully evaluate a game and its participants.  However, it takes staff time to watch every single game, which becomes a daunting task if one considers evaluating talent in numerous leagues overseas.  Using metrics can allow the same staff to cast a wider net.  And even in the video presence of a stellar 90 minutes, one cannot tell if the game was an aberration, or a representative display.  And for players with some weaknesses – which makes up almost all players not named Messi – how do we decide the relative value of strengths and weaknesses?  How will results in a different league translate to a current one?  While trained experts can provide answers, in the current environment it becomes increasingly difficult to offer more than mere speculation.

In deference to my drinking buddy, advanced metrics will not replace professional evaluation, made through training time or scouting, but should supplement professional evaluation with objective, relevant information.  Of course, no method of predicting future value is perfect – indeed, an injury can derail the best laid plans – but adding information can make the evaluation process incrementally better.  And with the size of contracts increasing, and the total number of evaluations made across the league, an increase is evaluation efficiency can yield strong dividends.

As nothing in life occurs without cost, advanced performance metrics need to be compared to other talent evaluation methods, such as extra scouting, team trials and additional film study.  Compared to the costs associated with other talent evaluation methods, the return on investment for advanced metrics is favorable.  For example, MLS had more than 70 contracts over $150,000 in 2010.  A certain percentage of these contracts will be “busts”; or players who do not perform to their expected contribution level.  Advanced performance metrics may pay for itself – independent of any marketing benefits – if the costs of advanced metrics are less than the reduction in “busts.”  In other words, the league may come out ahead if it spent $200,000 for its advanced metrics, and avoided 2-3 busts with top-heavy contracts.  Additional revenue may also be generated by identifying undervalued talent which can lead to a profit in the transfer market.  Further, more specific, objective information also can support the value of MLS players on the transfer market.

Fully incorporating data analysis into the labor management function, using data provided by Opta or within each team’s scouting apparatus, can lead to many benefits for MLS.  As early adopters, MLS will be in a better position to determine the value associated with a performance measure and exploit inefficiencies in the market.  Also, as a league with comprehensive statistics, MLS players will have the potential for higher demand as more information leads to more accurate predictions of performance – and serves as an equalizer for players that get less media attention.  And while in-depth analysis, repeated again and again, can indentify higher performing players, the development of objective performance data can only benefit decision-makers as they evaluate talent.  Further, because the metrics are objective and consistently applied, the empirical value to the MLS can be demonstrated and lead to even better performance metrics.  Investing in the quantitative analysis of advanced in performance metrics is in the league’s interests.  Ultimately, standardized, meaningful measurements of performance can lead to an improved product at a better value. 

 


[2] The same process was followed by the Oakland A’s, described in Moneyball, where the A’s management determined that on-base percentage (and walks) were important to wins but were undervalued in the market. 

The Monday After

Another busy soccer weekend here in the States, with MLS, WPS and Gold Cup action.  Before we take a look at attendance, there are a couple of other stories worth noting.  We’ll start in Portland, where the Timbers have cut a great pair of commercials with their presenting sponsor Alaska Airlines.  The commercials are entertaining and the priority bording offered to fans wearing a Timbers jersey further cements the relationship between the team and the sponsor.  The airline is the first domestic carrier to sponsor an MLS team.   The arrangement includes multi level digital advertising at the renovated PGE Park and a role in the Timbers’ youth set-up.  Alaska Airlines employs approximately 2,300  employees in the Portland area.

On the attendance front, Red Bull Arena saw a solid crowd of just over 21k as the Red Bulls edged New England.  This followed more than 18k at LiveStrong Sporting Park for the stadium opener.  Philly had another great crowd a PPL Park, with more than 18,500 in attendance. 14k plus were at RFK for a DCU loss, while more than 19k were in Houston for the Dynamo.  Portland saw more than 18k, while the Galaxy managed to top 20,000 at the Home Depot Center.  Columbus was the only drag on attendance, with another sub-10k crowd mid-week.  However, the team rebounded nicely with more than 13k on Sunday.    Seattle saw its ususal big number, with more than 36k at Qwest.

The US Men were upset by Panama on Saturday night.  More than 27,700 were at Raymond James in Tampa to see the match.

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