Catch - is that you?

[Paul 7,486]

The only way Liverpool will ever win the League is by paying higher wages than their rivals - it's not rocket science

 

By David Maddock

 

For the hard of thinking amongst our generally enlightened readership, I'd like to revisit a topic first touched upon a fortnight ago, when I suggested a correlation between wage spending and league position.

 

For all Rafa's moaning about money, only a new stadium will allow Liverpool to win the title

 

Quite interestingly, some of the regular contributors to the comments section at the bottom of my columns couldn't get their heads around the concept. But it is simple really. Let me explain.

 

Over a period of time, the wealthiest clubs who can pay the highest wages tend to do better than the rest. Not exactly rocket science is it?

 

 

Yet some took it to be a defence of Liverpool or their manager, or a prediction of their impending rise to supreme dominance or even some scientific mumbo-jumbo designed to confuse and distort.

 

So let me explain further, and this time, I'll do it particularly slowly. In modern football, there is only one way to rise to the top of the pile over a long period, and that is to find the revenue so you can pay higher wages than your rivals, thus attracting the very best players.

 

That is not some fanciful notion, but a scientific fact, provable over the past decade not just in the Premier League, but across every league in European, with a 93 per cent correlation.

 

There are two three ways of increasing spending. One is to find a particularly generous benefactor, as Chelsea and Manchester City have done, with lots of patience and very deep pockets to keep funding the inevitable losses accumulated by attracting the very best.

 

But history tells us that is a short-term position, because in the end the benefactor tends to tire of losing so much money, and either cuts back or withdraws. Roman Abramovich has been particularly generous at Chelsea, but even he is now asking the club to become self-sufficient, which will have an undoubted impact on future spending.

 

How long before the same happens at Manchester City? Most people within football assume it is a passing trend, and within a couple of years the pipeline from the Middle East will dry up. We will see.

 

Which brings us to the second form of revenue - borrowing. Lots of clubs have tried it, Leeds spring to mind and Portsmouth currently, along with many, many, many other clubs. They borrow money from the banks, or other sources, and hope increased success will increase revenues to allow that debt to be paid off.

 

That policy, of course, is increasingly exposed as untenable, as Leeds proved, as Portsmouth are proving. Currently, it is estimated that more than two thirds of Premier League clubs are borrowing well beyond their means, and could pay a heavy price.

 

The third way of increasing spending is to increase income. Which brings us back to the original article. I suggested, rather uncontroversially I thought, that if Liverpool are to challenge in the long run, then they can't go down the borrowing road, but must ultimately find ways of increasing their revenue to match the top spenders.

 

Chelsea currently have the highest wage bill and City will soon have the second highest, both underwritten by their owners. Manchester United are third, because of their massive turnover, allowing them - comfortably - to meet interest payments and still have profit left over to pay wages.

 

Arsenal will be fourth highest, because they too have big turnovers thanks to increased revenue streams from a state of the art new stadium. Liverpool, by next season will be fifth in the wage spending league, and thus can expect to generally, over a long period, end up fifth in the league.

 

Obviously, this is a dangerous position, because it means they would miss out on Champions' League money, so they must act, and realistically, the only way they can do that is to build a new stadium, and increase their income dramatically.

 

It is possible. The banks have already committed funds to help the build of a new stadium, if the current owners reduce debts on the borrowing they took out to pay for the purchase of the club. They will do that by bringing in new investors.

 

If - and it is still a big IF given the current climate - Liverpool can find a new investor or investors to reduce debt by £100million, then they will be able to build a new stadium, and then match and possibly even exceed the revenue streams of Manchester United and Chelsea.

 

They can become self-sufficient, in terms of being able to meet interest payments on the money borrowed to pay for the club, and still have enough profits to pay the highest wages, which - despite the understandable protests from fans opposed to the Glazer regime - is the position United are in.

 

Not rocket science again, just a reasonable assessment of how the club can plan for the future and get themselves out of the current slump in fortunes they have endured. It is entirely plausible, and doesn't even require the overthrow of the hated American owners, just a dilution of their holding.

 

Here endeth the lesson. I hope you get it this time.

[05 Milan 153]

I can't belive the snotty "I'm smarter than you"-tone in that article, it's almost like he's meant it ironic or as a joke. Paul, I would more say it's written by someone with Catch's brain and Code's debating style :)

 

His points are valid though. There is an extremely high correlation, whether people like it or not. To deny it would be to put your head in the sand and believe that we'll win the league if we only attack teams and have a manager who is best buddy with the players.

[Hermes 268]

"Arsenal will be fourth highest, because they too have big turnovers thanks to increased revenue streams from a state of the art new stadium. Liverpool, by next season will be fifth in the wage spending league, and thus can expect to generally, over a long period, end up fifth in the league."

 

That is an obvious statement and one that I made a few years ago. You don't need correllation of wages to state that, as long as everything else is equal.

 

But everything else isn't equal is it? Put Ron manager in charge of a club with 5 times the budget of every other club and see how many times they win the league.

[coachpotato 654]

Probability that with the revenue attracting top players, top managers would also be attracted?

Ron Manager then would end up at a club 5th or worse.

Wonder where that might be?

[Hermes 268]

Probability that with the revenue attracting top players, top managers would also be attracted?

Ron Manager then would end up at a club 5th or worse.

Wonder where that might be?

 

Mourinho has only once worked for the richest club in the world at the time, he hasn't done too bad.

[kop 26]

Mourinho has only once worked for the richest club in the world at the time, he hasn't done too bad.

 

He is winning the leagues with the richest teams in the leagues he is winning. If you pull "the world" into it, then the CL and the club world championship should be the benchmark shouldn't it? I agree though, he hasn't done too bad in the leagues he has competed in, and the CL title he got in Portugal is one of the biggest achievements of any managers.

 

 

About the article; no, it's not rocket sience. Why does he try to make it rocket sience then? It's bloody obvious what he is saying. I never thought so many people were disagreeing with him, as he claims there is.

[Hermes 268]

He is winning the leagues with the richest teams in the leagues he is winning. If you pull "the world" into it, then the CL and the club world championship should be the benchmark shouldn't it? I agree though, he hasn't done too bad in the leagues he has competed in, and the CL title he got in Portugal is one of the biggest achievements of any managers.

 

 

 

Juventus and AC Milan have more money than Inter, Benfica had more than Porto.

[Dicko 726]

Juventus and AC Milan have more money than Inter, Benfica had more than Porto.

 

None of that is true, but don't let that stop you.

[goatboy59 33]

I can't belive the snotty "I'm smarter than you"-tone in that article,

 

 

I saw the name and wasn't in the least surprised.

 

One of the main benefits of improved Liverpool performance is that Maddock can go back to being a snidey, sniping arsehole again.

 

His current 'defend the manager at all costs' persona (he did it in 2004 as well) makes me vomit.

[Hermes 268]

None of that is true, but don't let that stop you.

 

You should know better than that by now, I assume you know what revenue means?

 

Forbes' list of the most valuable football clubs - Wikipedia, the free encyclopedia

 

 

Deloitte Football Money League - Wikipedia, the free encyclopedia

[Tom R 1,787]

None of that is true, but don't let that stop you.

 

er, yes it is.

[Hermes 268]

er, yes it is.

 

Indeed, Inter have not been the richest club in Italy in any of the last few years:

 

Deloitte Football Money League - Wikipedia, the free encyclopedia

[GJM 118]

I am not an expert on this, far from it, but two questions:

 

1. Do these revenue or estimated club value figures include money that benefactors spend on player fees, salaries etc out of their own pockets, or do they just count income from competitions, TV, commercial enterprises etc.

 

2. Why is revenue a better measure here than money spent? Wouldn't money spent on players, salaries etc etc better capture 'wealth' as intended in the article abvove?

 

Not trying to be a smart arse or catch anyone out, genuinely interested.

[Antynwa 27]

Give me a minute whilst I go smack my head into a brick wall.

[sh#t waffle 1,726]

Ok. Then what are you going to do?

[Hermes 268]

I am not an expert on this, far from it, but two questions:

 

1. Do these revenue or estimated club value figures include money that benefactors spend on player fees, salaries etc out of their own pockets, or do they just count income from competitions, TV, commercial enterprises etc.

 

2. Why is revenue a better measure here than money spent? Wouldn't money spent on players, salaries etc etc better capture 'wealth' as intended in the article abvove?

 

Not trying to be a smart arse or catch anyone out, genuinely interested.

 

Err, excuse me. Puns are my department.

[sh#t waffle 1,726]

It's been 24 minutes. I think Ant may have banged his head too hard.

[kop 26]

The interesting thing in this discussion should be how much the clubs spend on wages though, given the initial article. I only found the numbers for the English clubs (shocking numbers by the way):

 

Chelsea, with wage costs of £172m remains the

highest spender by some distance, over £50m above

the next highest club, Manchester United, who spent

£121m. The other top five wages spenders in 2007/08

are, for the sixth season in succession, Arsenal £101m,

Liverpool £90m, and Newcastle United £75m.

 

I guess the numbers for 2010 will have City maybe amongst top 3? Does anyone have the numbers for Italy and Spain?

 

http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/UK_SBG_ARFF2009_Highlights.pdf

[GJM 118]

Err, excuse me. Puns are my department.

 

It was accidental. I would never tangle with the Grandmaster of punnery.

[GJM 118]

The interesting thing in this discussion should be how much the clubs spend on wages though, given the initial article. I only found the numbers for the English clubs (shocking numbers by the way):

 

 

 

I guess the numbers for 2010 will have City maybe amongst top 3? Does anyone have the numbers for Italy and Spain?

 

http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/UK_SBG_ARFF2009_Highlights.pdf

 

And those figures for Newcastle suggest that whilst over performing may be tricky, under performing clearly isn't!

[Hermes 268]

And those figures for Newcastle suggest that whilst over performing may be tricky, under performing clearly isn't!

 

Newcastle are obviously the reason why the correllation is not 100%. :whistle:

[zigackly 621]

I think it's worth making the point that for the last three years the Mancs have won the title despite spending less money on wages than Chelsea, and Arsenal have performed less well than us, despite spending more ...

 

In fact last season we finished above two clubs who spent more than us and only four points off another, after producing a shitload of home draws against teams we should have mullered.

 

There is a correlation, sure, but it's far from a certainty.

Edited 17 Feb 2010, 11:08:36 by zigackly

[Catch22 1]

In most industries revenue would be a good proxy for wage spending but this is football.

 

Italian data is less robust than the UK although not quite as bad as if he had managed a club in Greece!

 

Inter or Milan are the higest payers, certainly Inter this year as Milan cut costs in the summer.

http://juventus.theoffside.com/competitions/scudetto/serie-a-the-classification-rated-by-salaries.html

 

Szymanski has writen a paper on Italian football & the correlation is also above 90% but i don't think it has been formally published yet.

[Rex Banner 39]

Catch is that poo?

[JohnnyH 7,215]

I can understand why Maddock felt he needed to write that piece in the smart arse way he did. He makes a very obvious and clear point which is that if you pay higher wages then you can attract a better quality of player. Yet, just like some on here, the comment was twisted to Maddock saying that if you pay a shite player loads of money he becomes good. This was not what he said, or what was said by the people who brought it up here, yet the usuals twisted it that way to try and belittle the point instead of seeing it for what it was, which was correct.

 

Yes, there are always exceptions like free transfers where an average player who would usually have cost roughly £8m can be get a much higher salary because you can give him the 3 or 4 million extra on to a £40k a week salary and still be saving as you got him for free.

 

But the main point is spot on and is proved time and time again. However, people will be off on their twisty twisty again and come out with the usual stupid comment of "Well, we'll give Riera £100k a week and he'll be brilliant so" thus entirely missing the point on purpose

 

By the way, any time Mourinho has won a league he has been the biggest spender in that league at that time by a distance. He may not have been at the richest club, but he was spending the most money. And if he comes to City, he again wont be at the richest club (on turnover it is the Mancs), but will spend the most money.