Soccernomics: A Chat With Simon Kuper

It is “Cyber Monday” and in honor of that online shopping holiday, we thought we would bring you an interview with Simon Kuper, co-author of the acclaimed book, Soccernomics, a must read for any fan of the business of soccer, and a great gift for the holidays.  The book 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 Times and his book, “Football Against the Enemy” won the William Hill Sports Book of the Year Award in 1994.

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: In your conversations with Billy Beane, did you discuss his efforts to incorporate his data driven approach to his involvement in the San Jose Earthquakes?  How is he using numbers to assist San Jose in building a successful franchise?

SK: I’m sorry, I never met Billy Beane, and I didn’t indicate that I did in the book. But I did recently meet a performance director at a top English club who regularly visits Beane for ideas. This performance director thinks the Moneyball thinking in baseball can help soccer, even though the sports are totally different. He says Beane loves soccer and is always quizzing him about the latest English soccer gossip. But I have no idea about the Earthquakes – though they were my local side when I was in sixth grade in Palo Alto in 1980/81. I remember seeing George Best play for them. Happy days.

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 last week with the New York Times.

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Marketing in America: An Interview with David Frederick of Concave

With Black Friday upon us, we thought we would take a quick look at the marketing of soccer products in the United States.  Dave Frederick of Concave Sports was kind enough to chat with us about his product and what is involved in marketing a new soccer shoe in the United States.  Mr. Frederick is an attorney who has been involved in sales and corporate development for a number of years. He is a lifetime soccer player and has been involved with Concave for three years.  At the bottom of this post, check our our review of the new Concave shoe.
Footiebusiness.com: What is unique about the Concave product?

David Frederick:
The technology that we have built into the upper of the boot is unlike any other soccer shoe on the market. We have increased the sweet spot of the primary striking area of the boot by 400%, increasing power by 15% and accuracy by 30%. The easiest analogy is that we are doing for soccer what Calloway did for golf by introducing the Big Bertha driver and what Prince did for tennis by introducing the oversize racquets.

FB: What was the impetus for bringing it to market in the United States?  The soccer playing population in the US is huge at all age levels. Who is your target market?

DF: We have shoes for almost every age level and player type. Our target audience is players that want to improve their game.

FB: What is your plan for marketing Concave in the U.S.?

DF: We are taking a grass roots approach in our marketing. We are focusing PR on local channels as we open new soccer specialty retail stores. We are running promotional events with our Kicker Tube which allows players to try the boots first hand and have the speed of their shots recorded. We are also active in various social media channels such as Twitter and Face Book. We are going to be very active at soccer trade shows and promotions through soccer clubs and academies.

FB: Do you intend to enter the mainstream retail sporting goods market or soccer specialty stores?

DF: Our primary focus is on soccer specialty stores.

FB: Does Concave have any agreements with MLS teams or MLS players to wear Concave products?  Do you anticipate any such arrangements?

DF:
Brandon Barklage of DC United and Scott Palguta of the Colorado Rapids both wore Concaves during this past MLS season. We are actively engaged with additional players in the MLS and USL for sponsorships for the coming season. We have several players in England and Scotland wearing the boots, including John O’Shea and Danny Webber, as well as several players in the Championship and First Division.

FB: What does Concave charge for its boots? How did you determine the price point?

DF: Our PT+ model (kangaroo leather uppers) retail $175; PT 1 (calf leather uppers) $120; PT Midi (synthetic uppers) $70; PT Dome (calf leather indoor shoe) $80; PT Mini (synthetic children’s shoe) $50. Each model is targeted to be priced competitively in its category.

Thanks to Dave Fredereick.  Now for our thoughts on the boots. They are definitely the best looking soccer cleat we have ever seen; the unique design is certainly quite different than the tyipcal cleat design.  The shoes fit well and were very comfortable to wear.  Out on the field, they performed quite well, as ball striking was effiicent and powerful.  The larger sweet spot certainly adds a confidence factor when shooting from long range while at odd angles.  Our only criticism was that the molded shoe seemed to get clogged with dirt a bit quicker than usual, but traction never slipped and performance never suffered.

Happy Thanksgiving

Just some quick hits on this big travel day and holiday. Check back on Friday for a special shopping version of Footiebusiness.com. We will chronicle one brand’s efforts to penetrate the U.S. soccer shoe market.  For now:

Grant Wahl does a nice job addressing the MLS Players’ Union’s efforts to involve FIFA in the CBA negotiations.

Jersey sponsors can reap big benefits when their teams succeed.  Xango has gotten a big lift from its RSL sponsorship, which originally checked in at $500,000 per season.  Earlier this year, the parties extended the original four year deal through 2013.

Check out this great article about Seattle hosting MLS Cup and some of the business issues raised during the weekend.

Have a great holiday and check back in on Friday.

MLS Cup 2009: Final Notes

Some quick hits on MLS Cup before we officially move to the off season.

MLS Cup overnight ratings are out.  Overnights are tricky, because the final rating can change, but according to the presented figures, the broadcast reached 30% more viewers than the 2008 final on ABC.

The coverage of the match was outstanding in Salt Lake City and we think that the result was ultimately the best one for MLS.  They got their marquee game involving Beckham, but in the end, there was an underdog story and a city (SLC) that was inundated with soccer.  The newspaper coverage was great and the championship bodes well for sponsorships and ticket sales for the coming year.  Had Los Angeles won, it is likely that the victory would have been hardly a blip on the city’s radar.  Instead, RSL got wall to wall coverage, a parade and really captured the city.

Finally, one of the bigger stories to emerge from the weekend was the repeated indication that the MLS Cup will move away from a neutral site and to the home of the higher seed.  Many MLS fans support the move, but we think otherwise.  MLS Cup provides a big event that can accomodate plans months in advance.  The retail summit, supporter’s summit and all other sorts of League events can be scheduled months in advance.  Holders of MLS GSLs can plan their trips and MLS creates a destination event like the Super Bowl.  We think the change is misguided.

Business Blogging: The Broadcast of MLS Cup 2009

As we have for a number of other soccer broadcasts this year, particularly USMNT games, we will “business blog” the ESPN broadcast of MLS Cup 2009.  Before we start, a quick word about ESPN coverage leading up to the game.  The ESPN Classic broadcast of MLS Cup history was outstanding and definitely worth a watch.  On ESPN.com, the game got reasonable front page placement, but between the NFL and NASCAR, there wasn’t much possibility of lead story placement for the game.

Bill Simmons’ 40 minute interview on Landon Donovan for a podcast was very good, and Colin Cowherd’s interview with David Beckham was short but also good placement for an audience that is likely not typically soccer focused.    On the network, there was little in the way of lead-in, and it was very disappointing to see the “bottom line” featuring La Liga scores and no reference to the upcoming game. There were some graphics indicating the game was coming up next.

As had been the case throughout the playoffs, the broadcast opened with a pre-game presented by VW and a strong visual introduction.  The first round of commercials came from VW, adidas, Gatorade, Best Buy and then a series of local sports.  After the break, ESPN showed its AXIS technology and its hotzone graphic that showed average speed, distance and location of a player’s movement (very neat).  The network did a good job showing the player and Cup entry into the game.  The second round of spots featured Budweiser, Pepsi Max, the Marines, MLS W.O.R.K.s and then local spots.  Kickoff crowd looked good, although there seemed to be some Seattle fans that didn’t make the trip.

As usual, the booth was staffed by Harkes and Dellacamera.  VW was the first screen sponsor and typical MLS sponsors (AA, VW, AT&T and othera) were apparent on the signage.  Pepsi was also a screen sponsor and Allen Hopkins apeared for the first time in the tenth minute.  Crowd mics seemed limited, as the noise was not overly present on the television.  Other screen sponsors include Axe, Gatorade

The hot zone finally emerged in the 33 minute and the offiside line soon thereafter.  Also, Hopkins and Stone did a good job providing insight from the benches with regard to tactics and injury.

Axe sponsored the halftime report.  Commercials at the half game from Gatorade, adidas (that commercial is getting tiresome), ABC (for Scrubs, my favorite show) and then local ads.  Strange choice to lead with Keller rather than game analysis, Seattle shouldn’t have been the story, the game should have been.   After the interview, Axe had the first spot, followed by Pepsi Max, the Marines, FIFA Soccer and others.  The hot zone was again used at the half and it was again intersesting, as was the ESPN axis.

We will stop here and post any business notes from the second half as they arise.

Soccer Business Bits: Seattle Business, Stadium Architecture & Labor Issues

Before we get into it today, note that we will “business blog” the Final providing discussion of the broadcast, advertisements and other business aspects of the game on Monday morning.  Please check back for that.

Next week we will also have a chat with Soccernomics author Simon Kuper, but today we post a link to a Seattle Times article about the perceived economic benefits of the Sounders to downtown Seattle.  The article provides anecdotal evidence of increased economic activity resulting from the 15 Sounders’ home dates.  Such claims have long been disputed by economists, who believe that the there is little to no benefit from stadiums.  Nevertheless, on the eve of MLS Cup 2009, the article does show that local business in Seattle have bought into soccer as a financial plus.  A number of the people interviewed indicated that they were originally skeptical of soccer in Seattle, but have now embraced the team.

The Original Winger posts a great interview with Gino Rossetti of Rossetti Architecture.  Rossetti is the designer behind many of the new MLS soccer stadiums and he provides some great insights into the design process. There are some great tidbits about how designing a soccer stadium involves different factors from those of other sports (i.e. soccer fans only get up once per game at halftime) and how Red Bull Arena will change the soccer stadium playing field.  We recommend the story.

There have been a number of labor related stories popping up in the last few weeks, most regurgitating information about a potential strike (which is very premature).  However, with the Commissioner giving a number of interviews over the last few days, here is a link to some of his most recent comments on the issue. Based on comments in the story from Nat Borchers, guaranteed contracts will be a big subject of dispute.  The NFL is on the only other major sport without guaranteed contracts.

 

Soccer Business Bits: Flying to Seattle, ESPN News & More

Just a couple of quick hits today:

Kudos to RSL for arranging a $300 non-stop flight for RSL fans from Salt Lake City to Seattle for the big game.  The best part?  The flight will be on the RSL branded plane. Other one-stop flights are available at $99 per flight.

ESPN has announced its broadcast plans for the game and lead-up to to the match. Highlights inclulde an ESPN Classic presentation on the lead-up to the Cup and notifcation that the broadcast will be seen in 122 countries.  Perhaps most interesting, the article also notes that the Galaxy/Dynamo Conference Final, despite the 11:25 start tine and and 36 minutes of power delays, was the most watched MLS broadcast in ESPN history, with more than 700,000 viewers and a .5 rating. These numbers do not include an additional 120,000 on ESPN Deportes.

Finally, Red Bull Arena has been announced as a host site for the Football World Series.  The four team tournament will take place in the Summer of 2010 and will include a number of prominent world club teams.  The Red Bulls will be one of the teams involved.