What Makes Pogba, Ronaldo, and Messi $100 Million Men
BY ADAM GROSSMAN, ANDREW JACOBS, AND PAT MOCHEL
Soccer’s summer transfer window begins this weekend as the wealthiest clubs in European soccer will likely spend millions on top talent from around the world in the transfer market. The question then becomes how much do you pay? According to Rory Smith’s recent article in The New York Times entitled “Soccer’s Confounding Calculation: What’s a Player Worth?” there does not appear to be a good answer. More specifically, “This is also what lends the transfer market its veneer of chaos, the sense that even experts are grasping in the dark: each club and each individual acting according to a value system only they know, and having a willingness to change it from case to case.”
So why are soccer players so hard to value? To start, it is really difficult to determine an individual player’s contribution to winning. Dubbed the beautiful game, soccer is 22 athletes weaving across the pitch, each having a unique effect on the flow of the game. Additionally, soccer has few quantifiable stats over a season, with even the most elite strikers having under 100 shots per year and elite defenders tallying few recordable stats. Contrast this to a data heavy sport like baseball, blessed with mountains of data, with starters amassing over 500 plate appearances a season with easily quantifiable outcomes.
Even with these difficulties, individual player performance metrics are being developed and refined. Expected goals is a way to quantify a team’s ability to create quality chances, a topic near to the heart of both managers and fans. Additionally, Audi’s Player Index (API) has been utilized in the MLS to quantify and evaluate nearly every action a player takes on the field. By allocating positive or negative points for 88 possible action items, like a key pass or a missed penalty, the API attempts to quantify a player’s contribution to the team. Expected Goals and API certainly both have their limitations, but they are only the first steps when evaluating on field success.
If these player performance metrics were perfect, however, that would still not provide a team with a player’s full value. The foundation of Smith’s exploration of this topic centers on the belief that finding players that will help a team win more games means that these players will also help a team generate more money. The problem is that this belief is not correct. More specifically, winning is not the only way that teams generate money from players.
If we think of soccer players as more traditional assets that companies hold on their balance sheet, then we are more likely to be able to quantify their value. In purely economic terms, assets are primarily considered valuable for the cash flow they can deliver to their organization. Soccer players are potentially valuable assets that can help teams generate revenue during a season and / or can be sold to other teams to bring in revenue in one-time transactions. The way we can quantify the impact of player’s on-field contribution to a team is by determining what impact winning has on generating revenue for the organization. In particular, how much more money does a team make in ticket, media, sponsorship, merchandise, concessions, and parking sales when it wins. Once this is determined then we can look at a player’s contribution to winning (i.e. what percentage of a team’s likelihood to win is attributed to a player) and determine his economic value.
Perhaps just as important as an individual player’s on field contribution, however, is his / her off-field impact. More specifically, fans want to see star players and star players do not necessarily mean players that solely help their teams win. Paul Pogba’s record breaking transfer fee to Manchester United is a good example of why off-field impact matters. Before Pogba stepped on the field for the Red Devils, Adidas was able to activate a social media campaign with substantial results. “At around midnight on 7th August, Adidas’ official Twitter account ‘accidentally” leaked a music video featuring Pogba, clad head to toe in Manchester United gear…The 48-second music video features Pogba dancing alongside Stormzy as he raps a verse from his song, ‘Nigo Duppy’. Instantly catchy and shareable, the video had been viewed six million times on Twitter by the end of the day. To put that in perspective, Pogba’s six million views in a day dwarfs the 318,000 views that Granit Xhaka’s Arsenal announcement video received, and dominates the 278,000 achieved by Chelsea’s account as they unveiled N’Golo Kante.” Pogba’s star power translated into immediate success for both United and Adidas.
Pogba also shows how player valuations are highly context dependent and can vary widely by team. For starters, a value of a win varies drastically by team, especially in a sport that financially rewards positive performance as much as European soccer. Two additional league wins for Arsenal FC in 2016/2017 would have resulted in a champions league spot and a nice paycheck of $14 million. Contrast that to fellow London club West Ham where two additional wins would have moved them from 11th to 9th which would lead to no monetary reward. In addition, a player’s ability to command attention will be different on different teams. For example, seven out of the top-ten selling jerseys in MLS came from European players in 2016 that had previously played for long stretches on the continent. While the star power of someone like David Villa has faded in La Liga in Spain, these type of players do have the ability to generate significant revenue for teams in the MLS that is not dependent on how much or how well they play in the MLS.
Block Six Analytics Revenue Above Replacement (RAR) is designed specifically to examine how a player’s on-field and off-field performance helps a team generate top-line revenue growth. We first determine how much of a team’s revenue is generated by on-field and off-field performance. We then determine an athlete’s contribution to winning and his / her overall ability to engage with fans, media, and sponsors in ways that generate revenue for a team. Therefore, RAR calculates the revenue a player would generate given a specific team at a specific time using a comprehensive, data-driven, and context dependent starting point in evaluating players. Taking this approach enables us answer the question about how much a player is worth.