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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Soccer Business Bits: Soccer Business Reading, Playoff Broadcast & Dynamo Day

readingIn 30 minute daily bits, NPR’s broadcast of “Marketplace” provides a great look at national and international business issues.  On the most recent broadcast, host Kai Rysdal interviewed Simon Kuper, co-author of “Soccernomics” , a book that explores soccer stats and finances, while looking at the beautiful game through a monetary lens.  A transcript and audio file of the interview are here.

The book addresses club finances, the transfer market and the relevance of a nations’ financial status to its potential success on the pitch.  The authors also discuss the growth of stats as an important component of managing in the modern soccer world.  One nugget is the author’s view that the US National Team greatly under performs the American financial position, while England is playing above its economic status.   One author is a journalist and the other an economist.  Click here for more on the book and the opportunity to purchase the recently released paperback version.

A weekend of four national MLS playoff broadcasts got underway on Thursday with ESPN2 providing coverage of the RSL/Columbus tilt.  Last week we “business blogged” the Seattle/Houston broadcast and won’t duplicate that effort here.  Nevertheless, we again give full marks to ESPN for a well produced telecast that started with a dramatic voice over and continued the trend of opening the show with the booth team in the stands. Efforts to cross-promote the FSC, Telefutura and second ESPN2 games for the rest of the weekend. The cross promotion is great to see and should increase audiences for all stations.

Finally, we have written many times about Houston’s outstanding promotional efforts.  Now that promotional effort can be extended to Houston mayor Bill White who proclaimed November 6, “Dynamo Day” in the City of Houston. The Mayor encouraged Houston residents to wear orange in support of efforts to bring the City its third MLS crown.  Anything that increases awareness of MLS and the MLS playoffs is great for the League and the local franchises.  There are rumors of a big crowd on Sunday and the Mayor’s proclamation won’t hurt that effort.  Click here for a great article about the Dynamo and their efforts in the community.