La Liga is broken, and it’s getting broken-er

By: Patrick W. Zimmerman

 



The income gap within soccer is threatening the future of the beautiful game. This is no secret, as corruption throughout the FIFA ecosystem has become as hot of a topic as the accelerating fees (and wages) paid for elite players by a small handful of clubs dominating the television market and (in a related note) the pitch. There’s a lot of money, and the likes of Real Madrid, Manchester City, and Paris Saint Germain are throwing their weight around like ‘roided-out gorillas in a room full of bonobos. Sure, occasionally the bonobos can out-think and out-dance the big boys, but don’t bet on it happening too often.

It’s an environment with no salary cap, few financial fair play rules, little oversight, and it has precipitated a spending arms race that has removed the suspense around many of the most high-profile soccer competitions (such as the Spanish La Liga or the German Bundesliga). Even worse, it’s almost certainly an unsustainable system. As a perverted caricature of a capitalist system, world soccer has been reliant almost exclusively on the continued rapid expansion of one market: television rights. Similarly, the expansion of regional television networks is the primary drive of baseball’s current spending spree, though on a smaller scale.

So, how soon will this be a real problem, and how much does money really buy happiness? Or championships. Which are really the same thing if you happen to be a billionaire owner of your own soccer team.

Let’s find out! TO THE MATH CAVE!

I pulled transfer numbers and points for the 10 La Liga seasons between 2005/6 and 2014/15 (handily compiled through the German transfer market news website Transfermarkt.com) and started to dig into the data. The expense numbers are (mostly) accurate, while the market values are estimates (similar to the estimates used in the Football Manager simulation game). So “market value” should be taken with a huge heaping grain of salt, while the raw transfer numbers are relatively reliable.

I dumped the raw numbers for each team for each year into a database (before 2005/6 there is a lot of missing data, so I didn’t go back all the way to the 1995 Bosman ruling as I had originally planned). All averages, correlation coefficients, and totals are my own, so if you see an error, please let me know.


Question 1 — Where should I spend my millions when I win the Megapowerscratcherball lottery and buy a fútbol team?

What is more closely tied to a team’s success: transfer market expense or overall squad value?

I calculated the coefficient of correlation between each team’s average transfer expense and their points earned in a given season. I also did this for the estimated market value and points earned. R is read on a -1 to 1 scale, with -1 being a perfect negative relationship (every euro spent would actually cost a team points) and 1 being a perfect positive relationship (every euro spent is the primary predictor of whether or not a team will earn points).

The bottom line: Money buys success to a greater extent than it did 10 years ago, at least if you’re Real Madrid or Barcelona. In addition, transfer market expenditure is becoming relatively more important to a team’s success on the field, as opposed to its total squad valuation (which incorporates home-grown players). Also, it seems as if Real and Barça were much more resistant to the effects of the financial crisis (which hit Spain harder than many other places) than the rest of the league.

Notes: all transfer expense numbers are 3-year averages, a less volatile number and more reflective of a team’s transfer strategy. Years listed in all plots below are year of season start.

Welp! I guess it does make sense for teams that can afford it to shop for a shiny new Gareth Bale or Neymar every couple of seasons. Barça’s La Masia academy is (correctly) lauded for producing the core of their team over the last decade (Leo Messi, Xavi, Andrés Iniesta, Carles Puyol, Gerard Piqué, Sergio Busquets, and Victor Valdés, most prominently), but it seems as if not enough credit is given to expensive imports like Luis Suárez, Dani Alves, Eric Abidal, David Villa, Samuel Eto’o, Neymar, Javier Mascherano, and Ivan Rakitic.


Question 2 — Wait, are Real and Barça really spending that much more than everyone else?

What about teams like Atlético de Madrid or Sevilla or Valencia? They’re good too, right? Short answer: Yes, they are spending that much more. Next.

The big two in Spain have generally spent a lot more than the rest of the league, in part because of the asymmetrical way television revenues are distributed in the country, which, finally, prompted the country to pass a new law regulating the funds (a little bit) more equitably. The new law took effect at the start of this year. For the top division, 50% of TV money will be split evenly, a quarter as graduated prize money based on the standings for the last three seasons, and the last quarter on “social penetration” (implantación social), a super-sketchy concept kind of meaning “popularity + history.” Maybe. Or, maybe, it means “Real and Barça get this to keep them happy and guarantee they always stay near the top.”

The bottom line: Real Madrid and Barcelona’s spending is an order of magnitude higher than anyone else’s, and Barcelona has vastly increased the money it puts into the transfer market. Only Atleti seems to have (sort of) bucked the trend, and every other major team’s spending is trending downwards. This is in absolute terms, not normalized Euros.

Any system where I seriously considered plotting budget on a logarithmic scale is broken. Possibly beyond the repair efforts of the new TV Law.


Question 3 — Ok, so how did Atleti win the league in 2014, and what fuels Sevilla’s success if they can’t spend as much money?

Atleti and Sevilla survive and excel through moneyfútbol. They have pursued a consistent policy of trying to buy low, sell high, and use those profits to buy more players (Dani Alves, Kün Agüero, Diego Costa, Ivan Rakitic, Aleix Vidal, Carlos Bacca, and Arda Turan being some notable examples). In particular, they tend to target a handful of promising players with high upside that don’t cost a lot, use undervalued players to win games, sell the ones that develop into stars for giant bags of money, and then use that money to buy another group of promising players. Repeat.

This is particularly obvious by looking at net transfer expense and comparing it to the expenses above. Sevilla and Atleti both spend a lot, but these expenses are made possible by the sales of players to Real, Barça, and abroad (the Premiership in England, most commonly).

The bottom line: Total purchases minus total sales for each team in each year reveals, unsurprisingly, that almost every single La Liga team aside from the big two has moved towards a seller’s strategy over the last decade. And even Madrid has started to fund its extravagance through the sale of players. Only Barcelona’s trendline is really pointing up.


Question 4 — So how much, exactly, has the money gap created a performance gap on the field?

Two wins.

The standard deviation in points for the league standings has gone from ~14 points to closer to 20 points over the course of the last 10 seasons. That is to say, StDev used to be around 4–5 wins and now it’s closer to 6–7.

That may not seem like a lot, but in a 38 game season, 6 points can be the difference between going down and staying up. In 2014/15, 35 points was enough to survive in the first division (Granada and Deportivo de la Coruña only had 7 wins total.).

The bottom line: the spread in the standings is steadily increasing between top and bottom. In 2014/15, Córdoba, the last place team, had a points total (20) lower than the standard deviation for that year (20.3). Yes, that’s right, Córdoba could have earned zero points and been within the error bars. Córdoba, you were a rounding error.

To put into context, here’s a plot of the points needed to win the title and the points earned by the highest relegated team (sanctions and financial relegation excepted).


Question 5 — Ok, so how much do I need to spend on the transfer market to get my team to the Promised Land of the Champions League, where TV money rains from the sky?

These days, about €75 million. Every standings threshold (title, UCL qualification, Europa League qualification, and safety) is trending upwards (unsurprisingly) except safety, though the graph is a little bit messy.

The bottom line: as the top of the league accelerates away from the bottom, the financial windfalls of European competition will become increasingly restricted to a few teams that have budgets orders of magnitude higher than the rest or teams that can play the moneyfútbol game disproportionately well. And it’s an open question as to whether Sevilla and Atlético can maintain such a scouting edge over the rest of the league or whether their practices and personnel will get poached by the teams at the top (as happened in baseball a decade ago).


So now what?

The best-case scenario is that Financial Fair Play (and the Spanish Law in line with it) actually creates some parity. Real Madrid and Barcelona will continue to win, but possibly not exclusively. Which would be an improvement.

The worst-case scenario is that the whole system collapses. This wouldn’t mean the end of soccer, but it would involve teams going bankrupt en masse, and a suspended or interrupted competition isn’t completely out of the realm of possibility.

A more likely (and not terribly optimistic) outcome is that a European Superleague, rumored for years, comes to fruition, relegating all of the teams not granted entry to second-tier status, further concentrating the talent, resources, and attention of a global sport on a handful of elite clubs on a single continent.

This is depressing. I’m going to grab a drink and watch replays of Brazil 1–7 Germany to cheer myself up.

About The Author

Architeuthis Rex, a man of (little) wealth and (questionable) taste. Historian and anthropologist interested in identity, regionalism / nationalism, mass culture, and the social and political contexts in which they exist. Earned Ph.D. in social and cultural History with a concentration in anthropology from Carnegie Mellon University and then (mostly) fled academia to write things that more than 10 other people will actually read. Driven to pursue a doctorate to try and answer the question, "Why do they all hate each other?" — still working on it. Plays beer-league hockey, softball, and soccer. Professional toddler wrangler. Likes dogs, good booze, food, and horribly awesome kung-fu movies.

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