Avoiding the Drop

There are a lot of different ways you can try to predict the future success (or lack thereof) of your team. You could, for example, look at past performance: how well did they do last year? Did they lose anybody important? No? Well, then things should work out their way again, right? Yeah, ask Liverpool about how that works out (and explain it to the version of me that wrote their preseason preview).

No, when it comes to gauging future success, there’s only one method to go by: the wage bill. According to “Soccernomics”, the wage market efficiency is at 89%; that means that, by and large, wage prices are reflecting a really big chunk of the information available to investors (or, in this case, clubs). Translation into plain English: if you’re getting paid a metric assload of money, there’s a fairly good likelihood that you’re worth that amount of money.

For our purposes today, that means that there’s also a correlation between a team’s wage bill and their eventual league position. It’s pretty direct, too; if you’re paying out the most in wages, you should be at the top of the league. If you’re in twentieth place, than you should be in last. There’s not a lot of wiggle room here; it’s supposed to be a pretty accurate predictor.

After the jump, then, let’s look at the teams in the Premier League, 1-20, to see who’s not pulling their weight and who’s punching above it.

A quick note on the information I’ve compiled: it’s about as accurate as I can get it to be. Premier League clubs need to file their accounts with the league at the end of May. Back in June, The Guardian published all the accounts (link), omitting Liverpool (who filed their accounts late) and the three newly promoted sides (Birmingham, Burnley, and Wolves). For those clubs I found data on the Liverpool Echo (link), which was updated in October. I also used the Echo’s information for Manchester City, as last year’s accounts don’t reflect the influx in spending they had over the summer. For Portsmouth, who have sold several players over the summer, I referred to a story in the Telegraph (link). The data’s admittedly not perfect, but it’s pretty damn close. I also would exercise caution using West Ham’s numbers; while the actual wage bill might be correct, they’ve lost two major players to injury this season that they’re probably not paying anymore (and aren’t there to help out, regardless).

So without further adieu, here’re the clubs ranked by wage spending, along with their current league position.

First thing’s first: go Birmingham. With half the year done, Birmingham have managed to slot themselves into seventh place. That’s right between Manchester City (6th) and Liverpool (8th), both of whom are in the top five highest wage bills in the Premier League. That’s pretty fantastic for a team that was tipped for relegation, it’s even better.

It’s pretty clear that, at the top, Chelsea and Manchester United are following the metric: Chelsea outspends everyone and their league position reflects that, while Manchester United outspent everyone but Chelsea…with the league position to go along with that.

At the bottom, however, it’s a little more murky. Hull City, the cheapest team in the league, is actually punching above their weight. When you consider that a good chunk of their cash is being devoted to Jimmy Bullard, who’s been on and off all season, Hull’s doing a fantastic job just treading water. Villa’s doing a nice job of playing above their potential, while Liverpool and Manchester City are playing below their wage positions.

Speaking of Manchester City. A lot was made about Mark Hughes being fired unjustly, but the fact of the matter is this: per point, only Chelsea is paying more per league point than Manchester City. According to the wages that club is spending, they should be a hell of a lot higher than they are; instead, they’re clawing around in sixth place only because other teams around them are continuing to drop points. And unlike at Liverpool, where there’s a cash crunch and an inability to strengthen the squad, Manchester City’s budget has doubled since last season; that should have seen a dramatic rise in their league position.

Which brings us to causation. Manchester City can’t simply pay players more and hope to rise up the table; it doesn’t work that way. The wage bill doesn’t cause anything, it’s just an indicator. One of the factors it depends on is that a team doesn’t overpay for players; that would cause a market inefficiency, which in turn would invalidate the entire thing. So, yes, Manchester City’s spending the cash; looking at their squad, though, it’s possible they spent it on the wrong players.

See, an interesting counter to the relative efficiency of the wage market is that there’s a pretty big inefficiency on the transfer market. Simply spending £250,000,000 on player transfers does not, in fact, mean anything. For instance, I’m sure that Manchester City could buy any player in MLS for £50 million; that doesn’t mean, however, that that player is worth that money. If Mark Hughes was overseeing the purchase the seriously iffy players Man City purchased this summer (Roque Santa Cruz, Carlos Tevez, Joleon Lescott, and Gareth Barry have all underperformed this season), than it’s fair to say that he should be held accountable for that.