Arsenal's Financial Health - Infographic

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Last week, Arsenal Holdings Plc released their Annual Report to investors and supporters that details their financial dealings for the year 2012/13. The Report, which can be found here and is 66 pages long, contains a huge amount of data about the club (although it's not presented in the best format in my opinion).

Performance Analytics in Professional Football - Part 1

Monday 16 September 2013

The use of goal line technology has been widely debated by pretty much every news outlet, and following FIFA's commitment to modernise certain aspects of the game, it seems that common sense has finally prevailed.

One topic that receives little mainstream coverage, but will interest many fans, is how professional teams are beginning to introduce and adopt other forms of technology in the quest for marginal gains.

In a global perspective, the use of technology and data in sports is nothing new. Baseball has sabermetrics (I'd advise everyone to read Moneyball by Michael Lewis, don't just watch the movie) and the NFL has a dedicated website giving public access to their entire database.

But football (the one with it's origins in England where you actually kick the ball, not throw it) seems to lie in a murky state where the uptake of technology and data seems to have been comparatively slow.

The difference between football and many other sports is that football is one of the purer team sports, where the collaborative effort of a team normally effects the outcome of a game. In comparison, baseball can be broken down into clearly defined events, such as a pitch, a home run etc. Football is far more fluid than this, thus making it harder to isolate a specific player's contribution to the team. 
Using statistics from Opta, The Guardian Chalkboards are great examples of how player movement and interactions can be tracked through a game

Simple data is the start

Broadly dubbed “Soccer Analytics”, the game is in a period of transition where a rising proportion of clubs (to different degrees) are beginning to turn to third-party providers who can record, compare and present quantifiable information that will help them build a better picture.

Soccer Analytics is formed at two distinct levels: the individual player or the team as a whole. In essence, metrics can be used to look at the contribution from a particular player, or a number of data sets can be used together to look at the team as a collective. There are too many metrics to list on here, but they do cover a huge amount of information.

As I mentioned, integrating specific metrics into football analysis is not a brand new concept - certain data has been available for decades. Starting in 1950, an obscure RAF commander called Charles Reep, began to record and document every aspect of a game whilst watching his beloved Swindon Town, detailing events as discrete as the number of successful passes prior to a goal. Widely acclaimed to be the first 'soccer analyst', it was this data set that led Reep to hypothesise that the most effective tactic was the 'long ball game' after recognising that the majority of goals tended to stem from three or less successful passes.

Arsene Wenger, using his degree in Economics as a platform, is a staunch proponent on the effectiveness of data analysis, to the point where he has a propensity to solely rely on data to form an opinion when scouting a potential transfer target. 

Arsene's rational behind this is straight forward; using a vast array of data points on a group of transfer targets, such as comparing their 'goals to game' ratio or other defined metrics, Arsene believes he can accurately judge the current and potential ability of a player far more effectively than if he were to only watch him play. 

Under this model, if he is able to purchase a player at what he believes is the correct price, and subsequently his predictions of the player's ability turn out to be correct, he is essentially arbitraging the transfer market to exploit market inefficiencies caused by other clubs who have failed to realise a player's true ability/value.

Wenger, a proud 1974 graduate from the University of Strasbourg, is also a major advocate of employing statisticians to help break down Arsenal's matches into small, comparable metrics. According to Slate, he receives a bulky 60 page report filled with numbers after each game. 

Opta, the company behind numerous Twitter personalities such as OptaJoe, are one of the main providers of data to the industry. Boasting a number of lucrative contracts with teams including Chelsea, Opta's database is easily the most detailed and truly is a statistician's gold mine (as a point of reference, approximately 1,500 'events' are recorded in a typical football match). This short YouTube video gives a decent overview of how the data is collected by their analysts.

With access to all of this data and staff who have the capacity and knowledge to form correct judgements, clubs have the sudden ability to scout thousands of players across over 15 leagues. Indeed, it sounds not too dissimilar to Football Manager.

Last week the Harvard Business Review published an insightful article entitled “Ferguson's Formula” that looked at the managerial strategy adopted by Sir Alex Ferguson. Although the article was an excellent read, I found it puzzling that they failed to mention that Manchester Utd, under the direction of Sir Alex, were one of the leaders in the use of analytics.  

Throughout the duration of Sir Alex's tenure at Manchester United the game changed enormously. From the formation of the Premier League in 1992 to the imposition of transfer windows, Sir Alex has spoken publicly about the requirement of managers to adapt to compete. “Most people with my kind of track record don’t look to change. But I always felt I couldn’t afford not to change. We had to be successful—there was no other option for me—and I would explore any means of improving.“

Indeed, fresh-faced David Moyes is not a stranger to the use of Performance Analytics in the sport. Tucked away in the Liverpool suburb of Halewood is Everton's 55 acre training complex that houses their dedicated Analytics Department. Upon his arrival in 2002, Moyes instigated the first moves towards a completely separate management team that would have an input into team choices and training regimes.

Steve Brown, First Team Performance Analyst at the club, worked with providers Prozone and StatDNA to provide Moyes with "extensive information because he's so detailed, thorough and methodical in his work."

"At times we've used certain 'without possession' shapes which have negated the opposition" he said. "At times, the manager (Moyes) has come up with a specific system, making subtle positional changes which has then allowed us to negate the problem, or allowed us to capitalise [on it] -- it's those kind of intricacies which Moyes is brilliant at"

The Manchester United senior management team have recently procured patented video analysis software from a Sydney based company called Sportsec, at the cost of just over £150,000. With Moyes' tradition of extensive researching and seeking input from others at the club, it is becoming quite clear how his management style aligned so closely with that of his predecessor.

Prozone Animation: You'd be forgiven if you thought this was Football Manager

Like with most new concepts, there are always a group of sceptics who will be averse to adapting. Andre Villas-Boas, the current Tottenham manager who was previously charged with leading Chelsea's opposition scouting during Jose Mourinho's first stint as manager, refuses to use any form of data or technology to draw his conclusions. “I have never used ProZone,” he admitted. “You always have to be very, very careful with statistics. For me it's useless but it varies from coach to coach”.

Going forward

The application and effectiveness of metrics can only be judged according to the ability of the club to properly use this information. However, as clubs become more efficient in using the available data, it is likely to provide the biggest benefit for those who operate under a constrained budget. 

At the top end of the spectrum, a rich club can easily identify and accumulate a squad of great players as these players stand out most. "You don't need statistics to spot the real great players or the really bad ones. The trick is to take the players between those two extremes and identify which are the best ones," said the Match Analysis company president, Mark Brunkhart. 

For the 'less endowed' teams, the prospects of suddenly having an improved scouting infrastructure, and the potential of a marginal advantage in the transfer market, may be the difference between assembling a squad capable of competing and one that cannot. 

With this in mind, the power of metrics should not be diminished, but, in my opinion, it should be embraced as the next evolution in the game. With Financial Fair Play regulations now in place, the pressure on management to maximise the potential of their current squad and act prudently in the transfer market is greater. The majority of clubs will no longer be able to 'splash the cash' on an acquisition, only for the acquisition to flop.

Over the coming years I expect that you will read and see more data being used in reports and articles. A number of high profile publications, including the excellent 2013 book entitled "The Numbers Game", have begun to unravel the potential of data analytics and show clubs how they can integrate this information into a wide range of their managerial decisions.

Coming up in Part 2 we will look at specific applications of Performance Analytics - using Opta's vast research database and interviews with industry leaders, we will undertake a comprehensive analysis of exactly how your team is likely to be using the data available.

Don't forget to follow us on Twitter for first access to articles.

Over and out, JW.

The 2013 Summer Transfer Window Visualised

The Premier League's biggest spenders, the most expensive players, and betting odds - its all here, in this excellent infographic.

The cost of insuring Wayne Rooney

Every player, either directly through contributions to the football club or privately through their management agent, will obtain insurance against future loss of earnings. 

Although the majority of players have agreed contractual terms that entitle them to earnings even if they are injured, they will need to be insured against serious, prolonged injury that could curtail their football career.

Financial Fair Play - The Championship Model

Before I publish part 3 of my Championship Finances Review I want to outline Financial Fair Play in the Championship. The purpose of Financial Fair Play, how it is implemented, how it affects each club in the league, and how you should interpret your club's figures.

Financial Fair Play (FFP from hereon) is a set of regulations, negotiated between the Football League and its clubs, that attempts to establish a league of financially sustainable and responsible football clubs.

Each division in the Football League has its own set of regulations which differ slightly, but I will be focussing on the Championship as this is the league I have been covering in previous posts.

Acceptable Losses & Shareholder Equity

The clubs in the Championship must abide by the UEFA FFP model which requires clubs to at least break even, with operating losses only being acceptable within defined limits during the 'adjustment period'.

Shareholder influence will also reduced over time in order to stop a club being solely reliant on funding from ownership (known as shareholder equity).

Clubs will be required to provide The Football League with detailed financial accounts before December 1 of every year, which will then be assessed by the league and a 'Fair Play Table' will be released that ranks every club.

The Football League will assign each team a “Fair Play Result” which is based upon their financial performance. There are two tiers of the “Fair Play Result”.

1. A club that is break even or profitable (excluding external investment from ownership) will be given a positive value that is equal to the club's profit for the previous financial year. The league has outlined a plan to exclude certain items when calculating a club's P&L, such as infrastructure investment, but I will cover this later.

2. A club may be loss-making provided it is within an acceptable deviation and must be covered by shareholder equity. The permitted level of acceptable deviation or the amount of shareholder equity allowed will be reduced over time – the overall aim of this “adjustment period” is to remove the reliance and influence of ownership funds and force clubs to be sustainable as an independent entity.
Acceptable Loss Deviation Permitted (£m)
Shareholder Equity Permitted
Total Permitted Allowances
2015/16 +
Spending Allowances

Whilst calculating a club's annual profit or loss, which in turn determines their 'fair play result', the Football League have outlined a few exceptions that will be made.

1. Investment in Youth Development or Infrastructure (including charitable or community expenses) which are deemed beneficial to the club or league will not be taken in to account when calculating their P&L.

2. The profit affecting element of the purchase, sale and depreciation of fixed assets excluding players (e.g. a club's stadium).


The financial performance of clubs in the 2011/12 and 2012/13 seasons will be monitored, but no sanctions will be put in place.

Going forward, any club that remains in the Championship that does not meet the regulations set out in FFP, will be subject to a transfer embargo, starting with the 2015 January transfer window. The club will not be permitted to make any signings (including free players) until they lodge information with the Football League that clearly shows they are falling in line.

Fair Play Tax - Promotion

If a club is promoted to the Premier League and it is later deemed that they have done so whilst not following the FFP regulations, will be subject to a fair play tax.

Clubs that are relegated from the Premier League will not be forced to abide by FFP regulations in their first year. This season of unregulation is strictly limited to one year.

If the club is immediately promoted back to the Premier League then they will be subject to a 'fair play tax' which is determined by the extent to which they deviated from FFP, and applied at the following thresholds:
Deviation from FFP
Fair Play Tax
£1 - £100,000
£100,001 - £500,000
£500,001 - £1,000,000
£1,000,001 - £5,000,000
£5,000,001 - £10,000,000
£10,000,001 +
Funds raised through the Fair Play Tax will be distributed amongst the clubs that have conformed to FFP.

Salary Cost Management Protocol (SCMP)

The Championship and the Football League have decided not to limit expenditure on player's salaries, whereas League 1 and 2 have defined spending limits which are directly linked to a club's total turnover.

By not agreeing a SCMP, it is at the discretion of each club to decide how much they want to spend on players salaries, but in deciding this amount, they must abide by the overall FFP model.

For sake of comparison, going forward from this season, League 1 clubs must not spend more than 60% of their total turnover on players salaries.

Points for discussion

1. A club may chose to ignore FFP regulations provided they are willing to gamble on immediate promotion and are happy to pay the fair play tax.

2. A club relegated from the Premier League will have an obvious advantage in the Championship as they are not required to abide by FFP in the first year.

3. If a club is promoted and has ignored FFP, surely stepping in and stopping them from being promoted would be a better disincentive? This might not be possible because they only have to submit their accounts by December 1 so the Premier League season would have already started.

4. A transfer embargo may actually worsen a club's financial position if their losses are not related to their spending on players but actually due to another factor.

I hope the above clears things up for you and puts you in a good situation to understand how FFP will affect your club. Make sure you stick around for "Part 3 - Profit & Loss" of my Championship Review.

Also - follow me on Twitter for first access to my articles.

Over & out,


Championship Finances - Part 2: Expenditure

Apologies for the slight delay getting this post online - I've recently changed jobs so had a little less time to get this complete. If you haven't read Part 1 then I advise you do so before going any further.

But as promised, here is Part 2 of my review of the Championship Finances focussing on club expenditure.

West Ham were the league's highest spenders splashing out just shy of £55m in total. Barnsley, who just avoided relegation, were the only club to spend less than £10m in total, an impressive feat if you consider they were playing against teams who were willing to spend far more on their playing squad.

Total league expenditure rose above half a billion for the first time, but only £4m was paid by clubs in direct taxation. In fact, Middlesbrough received a tidy £3m tax rebate for readjusting their previous financial disclosures.

As you all know, a high proportion of a club's costs are incurred through player salaries and as teams chase that golden promotion to the EPL (and the financial windfall that comes with it) they have been happy to break the bank to bring in better players.

9 clubs in the Championship were happy to pay more in player salaries than the amount the club actually generates, a worrying figure to say the least. Bristol City, who have a limited ability to generate revenue because of the size of their Ashton Gate ground (avg home attendance 13,836), spent £18.7m in player salaries but only generated a total turnover of £11.9m.

Unsurprisingly, the league's biggest spenders were West Ham at £41.6m, with second place going to Southampton who paid out £28.7m.

Reading spent 135% of their revenue (£19.9m) on players (£26.8m) but this gamble obviously paid off as they stormed to the Championship title and got their golden EPL pay day.

The league average was 93% which is far too high to be sustainable.

I included this graph in a separate post the other day as I think it throws up an interesting concept: effective player cost per league point achieved.

In essence what it tells you is this: how much (£,000s) the club paid in player salaries to achieve one Championship point. For example, eventual winners Reading accumulated 89 points by spending £26.8m in player salaries, an effective cost of £301,000 per point.

Peterborough Utd, who were promoted the season before and eventually finished 18th, had the lowest effective cost at £114,000. They paid out just £5.7m in player salaries and finished one spot ahead of Nottm Forest who had spent £17.4m in salaries.

Again, West Ham led the way on this measure, partly because they retained their core Premier League squad in the hope of returning to the EPL at the first attempt (they did through the play-offs). With a total wage bill of £41.6m, they effectively paid £484,000 per point.

Although they failed to return to the EPL, I think Blackpool were the stand out performers when you consider this measure. With an effective cost of £165,000, they were the only team to make the play-offs with a sub-£200k figure.

Total net debt across the league rose to £830m, with Brighton leading the way with net debts totalling £110m partly due to their recent investment in building the new Amex Stadium. The majority of this debt is owed to Brighton owner, Tony Bloom, who has bankrolled the club's recent rise through the league.

Although the graph does show that the majority of clubs in the league owe a substantial amount of money, these figures are likely to fall drastically in the upcoming years with the introduction of Financial Fair Play regulations. I am going to look at FFP in Part 3 when I look at the Profit and Loss Accounts for each club, but the majority of the debts owed across the league are directorship loans which will (probably) be converted into equity in order to bring clubs in line with the new regulations.

The above table shows the net debt to revenue ratio for each club in the league. For those who don't know, a number above 1 says that the club has net debts greater than their annual turnover. For example, Ipswich Town are holding net debts totalling £72.5m but the club only generated £15m in turnover that year, hence their net debt to revenue ratio of 4.8.

Only 8 clubs in the league have a ratio less than 1 (so they owe less than the amount they generate each year) with Leeds leading the way with a ratio value of 0.05 because they only hold a negligible amount of debt.

That pretty much concludes Part 2 of my review of expenditure. I've had a few people ask why I've split my review into three separate articles, so I think it's important to say why here.

In my writing I always try to explain figures and ratios using the simplest explanation or the most suitable graph. In doing so, I feel like I am able to target a greater number of football fans and therefore those who don't have a financial background are still able to understand their club's position. As a result I decided to split the core business of a football club into three simple functions - 1) Revenue 2) Expenditure 3) Operating Profits.

Hope you stick around for Part 3 as this is where the nitty and gritty analysis will be done when I look at Operating Profits (well, pretty much Operating Losses) across the league.