Professional Documents
Culture Documents
Hugh McDowell
06580360
Dissertation submitted in partial requirements for the Bachelor of Arts Degree, School of
Economics, University College Dublin, April 2010
TABLE OF CONTENTS
Page
i
ii
iii
TITLE PAGE
TABLE OF CONTENTS
ABSTRACT
1: INTRODUCTION
1.1 Purpose and motivations
1.2 Contextualization the Premier League and the transfer window
1.3 Contribution of the research
1.4 Organization of the paper
1
1
2
2
3
2: LITERATURE REVIEW
2.1 Buying success in the Premier League
2.2 Human capital in sport
3
3
4
5
5
5
5
6
6
6
7
8
9
4: RESULTS
4.1 The marginal effect of total net spend on points
4.2 The marginal effects of Summer and January net spend
4.3 The lagged effect of net spending
10
11
12
12
13
13
14
18
20
21
REFERENCES
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ii
ABSTRACT
Prior research in the production function of a football club has tended to focus either
on the club as a financial entity, or on the relationship between payroll size and team
performance. This study seeks to focuses on the empirical relationship between the
amount of money football teams spend in the transfer market and their subsequent
performance in the league. The research is based on an econometric analysis of league
points accumulated and outlay in the transfer market.
The paper examines the performance Englands Premier League clubs over a five year
period, from 2004 to 2009, with reference to their activity in the transfer market over
the same period. Three issues are investigated: the relationship between net transfer
spending and Premier League performance over a season; the marginal effects of
money spent in the January transfer window and the Summer transfer window; and
the lagged effect of transfer activity in a season on performance in subsequent
seasons.
Findings of the research indicate a positive relationship between spending and
performance, and, in particular, a strong marginal effect for summer spending in
comparison with spending in January. Furthermore, analysis suggests that investment
in playing personnel yields improved team performance both in the season in question
and in subsequent seasons.
iii
1: INTRODUCTION
This project investigates the marginal effect of money spent in the transfer market on
the league performance of football teams. During the course of the paper, three issues
will be addressed.
The first concerns the overall effect of a football clubs net transfer spending during
the course of a season on that clubs performance during that season. Team
performance is measured by league points accumulated. Secondly, the difference
between the marginal effect of spending during the Summer transfer window and
marginal effect of spending during the January transfer window is examined. Finally,
the lagged effect of net transfer spending is analysed.
1.1 Purpose and motivations
The exponential growth in the global interest in world football since the formation of
the Premier League in 1992 has made it one of the most popular sporting competitions
in the world. The rapid spread of television in developing countries over the last two
decades has brought about a remarkable increase the Premier Leagues audience. The
competitions increased popularity has injected huge sums of money into English
football, and football clubs are now able to generate huge revenues through
sponsorship and marketing. The primary purpose of this paper is to investigate to
what extent clubs can use their vast earnings, through the acquisition of human
capital, to influence their on-field performance.
There are several factors which are thought to influence the success of a football
team. Some are considered absolute truisms of the sport the quality of coaching, the
quality of playing personnel, or the quality of tactics. Others are less tangible the
number of home-grown players in a squad, the mentality surrounding the club, the
clubs history, or even the size of the clubs stadium. In the past, research papers of
this nature have attempted to formalize the rather informal notions about football
production functions intuitively (or unconsciously) held by managers. (Carmichael,
Thomas & Ward, 2000, p.11). A fiercely contested concept among followers of
professional football is the notion that money buys success; that a teams
performance will improve as a result of large amounts of spending in the transfer
market. Advocates claim that, in the modern era of the game, money has become the
sine qua non of football success; critics argue that putting eleven brilliant footballers
onto a pitch together does not necessarily produce a good football team, and that a
certain level of cohesion and understanding between the players is required. The
motivation of this paper is establish whether or not money truly can buy success.
1.2 Contextualization the Premier League and the transfer window
The Premier League is the highest division of English footballs tiered system. Each
of its twenty teams plays each other twice in a season, once at home and once away.
Teams are awarded three points for a win, one point for a draw and no points for a
loss. At the end of the season, which lasts from August until May, the three teams with
the least points are relegated to the English Championship, Englands second division,
and are replaced with three promoted teams from that division. The team which
finishes the season with the most points is crowned champions, which the top four
clubs gain qualification to the lucrative European Champions League.
In response to negotiations with the European Commission over employment
conditions, FIFA, world footballs governing body, imposed a transfer window
system in the 2002-2003 season. Only during transfer windows are clubs allowed to
buy and sell playing personnel from other clubs. For most major European leagues,
including the English Premier League, the transfer window system comprises of a
shorter window, generally from January 1st until January 31st (henceforth referred to as
the January window), and a longer window, from July 1st until August 31st (henceforth
referred to as the Summer window).
1.3 Contribution of the research
This research can be distinguished from existing literature in the field of sport
economics in two ways. Firstly, research up until now has established linkages
between investment, in the form of payroll, and performance. Footballs transfer
market sets it apart from most other team sports in terms of the mechanism by which
players move from one team, club or franchise to another. In practically all team
sports (and, indeed, professions), transfer fees do not exist, and in ones where they do
(rugby union, for example), they are tiny in comparison to those in professional
football. On that basis, researchers have tended to examine salaries as a means of
investment in personnel. Secondly, the emphasis on the performance of Premier
2
League clubs in previous research has previously tended to pertain to areas such as
financial performance and efficiency, rather than being strictly measured by sporting
performance. In that regard, this paper is one of few which focus solely on league
performance as a measure of success.
1.4 Organization of the paper
Section 1 has introduced the aims and context of this research project. Section 2 will
examine previous literature in the area of investment in human capital and its effect
on performance, with particular emphasis on sport economics. Section 3 will outline
the research issues and methodology adopted, and Section 4 will present the results of
the research. The paper concludes in Section 5 by considering the implications of the
research and the significance of the findings. Limitations of the study and suggestions
for further research are also considered.
2: LITERATURE REVIEW
Literature in the area of the economics of team has tended to focus on American
sports (in particular, baseball) in which huge amounts of statistical data are readily
available. This focus on statistics does not travel across the Atlantic, and on-field
performance in European team sports (with the possible exception of cricket) is far
more difficult to measure. As a consequence, sports such as football, where
performance is almost entirely an output of the collective rather than the individual,
have largely been neglected by sport economists. Nevertheless, several studies related
to football have produced results relevant to this study.
2.1 Buying success in the Premier League
A common research topic in sport economics is to construct production functions for
team sports, where in-game statistics are used as input measures. Two such studies
which are of relevance to this paper concern Premier League football (Carmichael,
Thomas & Ward, 2000) and Rugby League (Carmichael & Thomas, 1995). In the case
of the latter, the authors observe that the interdependent nature of team sports make it
difficult to identify marginal products for individual players. In both papers, the input
co-efficients are highly significant, leading the authors to justify, and highlight the
importance of, constructing production functions for sports teams.
Several studies of the performance of Premier League clubs suggest that money is
influential in success. Leech & Barros (2006) conduct a comparison of each clubs
average player wage and its performance which suggests a positive correlation
between revenues, wages, and position, signifying that sport results and financial
results are related (p.6). Their paper also notes that money cannot be used as an
entirely accurate predictor of performance, as the role played by managerial skills in
sports is linked to matching sporting and financial performance in the football
market.
A contrast of spending and performance (Hall, Szymanski and Zimbalist, 2002)
suggests a much closer correlation between the two in football than in baseball.
Although Major League Baseball clubs and Premier League clubs had almost
identical standard deviations in terms of payroll, the variance in winning percentages
for football clubs was over 50% higher despite there being roughly four times more
fixtures in Major League Baseball, which would imply that less of its variation is
owing to chance. While the Hall et al. measure financial outlay in terms of payroll
rather than transfer spending (so that a comparison with baseball can be drawn), they
establish a clear Granger causality (which determines whether one time series is
useful in forecasting another) between spending and performance. It also goes on to
hypothesize that it is the more mobile nature of the footballs player market that
makes spending in football more efficient than spending in baseball.
2.2 Human capital in sport
In the absence of a transfer market akin to that found in professional football,
economists have used various other statistics to measure the quality of human capital
available to a team. Langelett (2003) regresses the performance of college-level
American football teams against the quality of player they draft from high school. His
research is similar to that in this paper, in that he includes the lagged effect of player
recruitment on performance. In this case, human capital is measured using rankings
presented by two mainstream media sources after the drafting of high school
graduates has taken place. His research demonstrates a clear and significant
correlation between the rankings of new recruits and subsequent performance.
However, the regression suffers from multi-collinearity between lagged variables. In
addition, the issue of causality remains unclear, as there is evidence to suggest that a
teams past performance influences their ability to recruit the best players.
3: RESEARCH QUESTIONS AND METHODOLOGY
This section outlines the three issues examined by the research, and describes the
manner in which the data is selected, measured and used to address these questions.
3.1 Issue 1: The marginal effect of spending on performance
The most obvious, and most important, objective when a football clubs spends money
in the transfer market is to improve the quality of its playing personnel. If no
correlation between spending and performance existed, it would make no sense for
transfer fees to exist. It is intended that the data will establish whether there is a
significant marginal effect of spending on performance, whether this effect is positive
or negative, and whether it is large enough to justify an aggressive transfer market
policy.
3.2 Issue 2: The marginal effect of money spent in each transfer window
While the summer window traditionally gives managers a chance to prepare a squad
capable of meeting the objectives of the club over the forthcoming season, the January
window acts as an opportunity to chop and change based on results achieved in the
first half of the season. Having established the marginal effect (if any) of spending on
performance, the next issue to be addressed is whether a difference exists in the
effectiveness of money spent in the summer transfer window and in the January
transfer window.
3.3 Issue 3: The lagged effect of spending on performance
The final result which this paper intends to produce is to establish whether transfer
spending contains any sort of lagged effect in other words, whether spending in
previous seasons will influence outcomes in future seasons. While it is nave to
assume that spending during a season ceases to be relevant as soon as that season
ends, it is interesting to investigate to what degree time can influence the effectiveness
of money spent.
from transfer payments, with amounts in pounds sterling. This provides us with a net
spend figure for each club for each transfer window. Transfer data for the 15 clubs
who were not in the Premier League for all five seasons is only included for the
season in which they did compete. In the case of any deal which was agreed in
principle (and, in some cases, paid for) outside a transfer window, the transfer fee
involved is included in the calculations for the window in which the player officially
joins the purchasing club.
The justification behind the use of net spend, rather than merely expenditure, is that is
is assumed that net spend will provide an indicator to a clubs improvement. A club
could spend 30 million in the transfer market, but still may not improve if its
purchases are financed by sales of players worth 40 million. If it is assumed that,
broadly speaking, all clubs value all players the same, it can also be assumed that a
net spend of zero will neither improve nor worsen the absolute quality of a clubs
squad. However, there are two caveats to this statement. The first is that the
assumption of all clubs valuing all players the same is unrealistic. Valuing a football
player is a subjective process which is different for each different manager.
Furthermore, clubs have varying levels of resources, and the perceived resources of
the two clubs involved in a transfer deal will affect the behaviour of both. On the one
hand, a so-called mega-rich club, such as Chelsea, is likely face inflated transfer fees
for any player it attempts to purchase. On the other hand, a financially-stricken club
which desperately needs to offload players to stay afloat will probably receive
reduced transfer fees, as rival clubs prey on their eagerness to sell quickly. The second
caveat is in a league contest system, the absolute quality of a football squad is not
relevant. Because teams score points against each other, an absolute improvement in
the quality of a squad will not necessarily earn a team more points if all the other
teams in the league improved by a greater degree.
3.5.2 Measurement of dependent variable
The dependent variable for this paper is the number of points attained in a Premier
League season. This data was also found using Soccer Base.
Each of the one hundred observations of points attained corresponds to specific net
spend data from the preceding Summer and January transfer windows. In particular,
7
Points
83
Summer Net
Spend
0.15
January Net
Spend
1
The data entry in Table 3.1 corresponds to team no.1 (Arsenal FC), in the season
2004/2005, during which Arsenal attained 83 points and finished in second place. The
club spent net 150,000 in the Summer window 2004, and net 1 million in the
January window 2005, leading to a total net spend for the season 2004/2005 of 1.15
million.
3.5.3 Predicted response of dependent variable to independent variable
Modern conventions within football would suggest that a positive relationship
between points attained and total net spend should be observed. Football clubs spend
money in the transfer market in order to improve the quality and/or quantity of their
playing squads. If there was no relationship between expenditure and performance, it
would make no sense for clubs to engage in transfer activity. This positive
relationship should also be observed in both the January and summer transfer
windows. Furthermore, the period of observation coincides with notable
improvements in performance on historical trends for several clubs (for example,
Chelsea and Aston Villa), which are generally seen as the result of exogenous shocks
(Leech & Barros, 2006) - takeovers by wealthy individuals who have subsequently
spent heavily in the transfer market.
With respect to the differences between January spending and summer spending, there
is no prevailing theory which states that one is more effective than the other. One
observation worth making at this point is that clubs who have under-performed from
where is points, c is a constant, x is total net spend, and is an error term. This
study focuses on the sign, size and significance of , the co-efficient on total net
spend which tells us the marginal effect of spending on points. Its sign signifies
whether spending has a positive or negative effect on points, and its size will signify
to what degree spending affects points. A t-value of greater than |1.96| implies that the
co-efficient is significant at 95%.
The second regression undertaken by this paper will examine the difference between
January net spend and summer net spend. The estimated model is similar to the
previous model:
c J S
respective co-efficients. Similar to the first regression, the sign, size and significance
of and signifies the marginal effects of January and summer net spend
respectively. The interpretations and significance thresholds remain the same as
before.
The third and final regression of this project is slightly different from the previous
two, in that it estimates lagged co-efficients. Due to the relatively small time-span of
the data, a lag of just two periods is estimated. Any more periods would drop too
many data entries to be worthy of analysis. The regression is:
c 1 x 2 xn1 3 xn 2
Median
Variable
Points
Net spend (m)
52.28
9.83m
49.5
7.05m
Standard
deviation
17.82
16.03m
2.74m
7.08m
0.38m
4.46m
8.00m
13.63m
10
100
20
40
Points
60
80
(Chelsea 2005)
-20
20
40
Total Net Spend
60
80
The regression finds a significant and positive marginal effect of net spend.
Specifically, our model estimates:
Points = 50.09 + 0.222(total net spend)
In other words, for every million pounds of net spend in a season, a team can expect
to attain an extra 0.222 points. With a t-value of 2.02, the co-efficient on total net
spend is just about significant at 95%. The standard error on the co-efficient, which is
the standard deviation of the difference between the models estimate of the coefficient and the co-efficients true value, is 0.11.
11
This regression suggests significantly positive marginal effect for net spending in the
summer window, but the co-efficient on January spending is not significant. With 100
observations, the model estimates:
Points = 50.12 + .083(January net spend) + .271(summer net spend)
The t-value for the co-efficient on January spending is 0.38, suggesting insignificance
to the extent that the result can be ignored. However, the t-value for summer spending
is 2.10, which is significant at 95%. It indicates that every 1 million in summer net
spending will secure an additional 0.271 points. It is also observed that the standard
error on January spending (.220) is noticeably larger than the standard error on
summer spending (.129).
4.3 The lagged effect of net spending
In estimating the lag effects of transfer spending, the sample size is 47 and the
following is observed:
Points = 52.12 0.28(Net Spend season n) 0.81(Net Spend season (n-1)) + .611(Net
spend season (n-2))
The inclusion of lags in the model reduces the sample size from 100 to 47, and
increases the intercept from just over 50 to 52.12. The reduced sample contains the 14
teams who competed in the Premier League in the five seasons in question, in
addition to Charlton Athletic and Wigan Athletic, who each competed for three
consecutive seasons, and West Ham United, who competed for four consecutive
seasons. Of these 47 observations, only one was relegated (Charlton Athletic in 2007),
which explains why the intercept on points is higher than for the previous sample of
100 teams.
The negative co-efficients on this period and last periods total net spend are ignored,
as the t-values associated with them (-0.21 and -0.37 respectively) indicate that they
are not statistically significant. However, the co-efficient 3, which suggests that a net
spend of 1 million two periods ago will gain a team .611 additional points, has a tvalue of 3.58 and so is highly significant at 95%.
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Finally, it is observed that the adjusted R-squared statistic for the final regression is
0.2043, which is far greater than those from either the first (0.0302) or the second
(0.0255).
Table 4.3: Summary of Regressions
Dependent Variable
Total Net Spend
0.222
Significance
Level
2.02*
Intercept
50.093
24.30**
0.271
.083
50.123
2.10*
0.38
24.25**
Lagged Regression
Total Net Spend
Total Net Spend (n-1)
Total Net Spend (n-2)
-.028
-.081
0.611
-0.21
-0.39
3.58**
52.123
16.37**
Intercept
Co-efficient
*Significant at 5%
** Significant at 1%
On the basis that significant results were obtained in each of the three research areas,
the objectives of this project were met. While the research is not without its
limitations (which are addressed later in this section), it also contains worthwhile
results which are worthy of analysis.
5.2 Analysis and discussion of results
In accordance with previous literature in this area discussed in the review of literature,
a significantly positive marginal effect of expenditure on performance was found.
This result confirms the usefulness of the transfer market as a mechanism by which to
improve a playing squad. Furthermore, the findings confirm money as a driving factor
in the sporting success of a team. In a departure from Hall, Szymanski & Zimbalist
(2002), the area of player incentives is not problematic. The magnitude of investment
in human capital in the case of this paper should have little bearing on the behaviour
of the player, because the size of a transfer fee and a players income are almost
completely unrelated.
The magnitude of the marginal effect presents several interesting implications. Firstly,
it is sufficiently large to justify large net spends in the transfer market. A net spend of
20 million, for example, will garner roughly 5 additional points an amount
sufficiently large to make a difference between qualifying for lucrative European
competition and not, or between staying in the Premier League and not. On that basis,
it is also worth remarking upon the ability of investment in playing personnel to be a
profitable exercise. Indeed, if a considerable outlay during a season thrusts a team into
a Champions League qualifying position, it is highly likely that it will have been a
profitable venture.
Secondly, the size of the marginal effect re-affirms that money alone cannot buy
success. In fact, no team in this study truly buys success; teams contesting the title
and teams engaged in relegation fights are both statistical outliers. For example,
consider the three lowest and three highest net spends in this data set as shown in
Table 5.1.
14
Points
51
83
61
- 20.8m
- 20.4m
- 16.65m
51
95
50
43.05m
75.85m
82.4m
As shown in Table 5.2, similar results are observed in the case of the three highest and
three lowest points tallies:
Points
11
15
28
12.95m
4.025m
-7.85m
91
95
97
44.9m
75.85m
-14.8m
Again, these outliers imply that success cannot be bought. Derby Countys respectable
net spend of 12.95 million in the 2007-2008 season did not prevent them from
achieving the Premier Leagues lowest ever number of points, while in the same
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season Manchester United won the Premier League with the most points in history,
despite also recording a profit of 14.8 million in the transfer market.
Final proof of the effect of statistical outliers on the data can be produced by running
the original regression without the observation for Chelsea in 2005. The regression,
with 99 observations, becomes:
Points = 50.27 + 0.188(total net spend)
Not only has the size of the marginal effect fallen quite dramatically, but, with a tvalue of 1.36, the co-efficient is no longer statistically significant. The Chelsea 2005
observation, therefore, is playing a large role in producing a significant result for of
0.222.
The results for the second regression are of interest in that they show a clear and
measured difference between the effectiveness of money spent in January and money
spent in the summer. While summer spending brings about a noticeable, significant,
and positive effect on performance, the marginal effect of January spending is barely
positive and not significant.
One interpretation of the large standard error for January spending is that it is a less
accurate way of improving team performance, as players traded during the January
transfer window cannot be relied upon to achieve their intended effect. Another,
perhaps more plausible, interpretation of this results is that there is a selection bias in
the teams that choose to engage actively in the January transfer market. Generally, a
team which spends a lot in January is one which has performed in a manner below
expectations in the first half of the season and is in need of investment to secure their
objectives. This applies particularly to teams threatened with relegation. Tottenham,
for example, spent 39 million in the January window of the 2008-2009 season in
order to secure their Premier League status after a disastrous start to the season left
the club in real danger of finishing in the bottom three.
Conversely, there are several advantages to signing a player in the summer window.
Firstly, for the majority of the summer window there are no league fixtures. This gives
16
a new arrival the opportunity to settle down in the local area, integrate with team
mates, and learn how his new team plays, without the pressure of competitive
matches. Secondly, players signed during the summer window are more likely to have
been thoroughly scouted and fit in with a managers long-term plans, rather than act
as panic purchases to try to turn around a sinking ship. Thirdly, the new acquisition
will participate in pre-season training with his new team, ensuring that he is fit and
fresh for the start of the season.
The differences in the characteristics of January and summer purchases are borne out
in the regression. The effectiveness of summer spending is, on average, far greater
than the effectiveness of January spending. There are two observations worth making
at this point, however. The first is that the removal of Chelsea 2005 from the
regression again renders spending insignificant. The second is that the upper bounds
of the 95% confidence intervals for the two marginal effects are almost identical, at
0.52. This confirms that January spending is a lot more hit-and-miss in its
effectiveness than summer spending.
The high value on the co-efficient of total net spend from two seasons ago is among
the most noteworthy of this paper. A marginal effect of .611 points for every 1
million of net spend two seasons ago implies a very clear and very large lag effect of
spending. It signals that a certain bedding-in period exists between a player joining a
club and that player affecting results. Moreover, the t-value on 3 is 3.58, which shows
that it is highly significant. The co-efficients on 1 and 2 are both negative but have
low t-values and are not considered significant.
When the Chelsea data entry from the 2004/2005 season is removed from the
regression, it might be expected that the co-efficient will become insignificant in the
same manner that they did previously. In actual fact, the significance only drops
slightly, to 3.54, demonstrating that, unlike the first two regressions, the Chelsea 2005
entry is not the major cause of the phenomenon. In fact, Chelseas two largest net
spends over the period of study occur in 2004/2005 (75.85m) and 2005/2006
(44.9m) seasons, and are followed two seasons later by points tallies which are
below Chelseas mean (2006/2007 83 points, 2007/2008 85 points). The fact that
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the results are robust in the absence of outliers affirms the effectiveness of lagged
spending on performance.
It is worth spending some time to think about the credible rationales behind this
lagged marginal effect. It may take some time for a new player to acclimatise to his
new surroundings, both sporting and non-sporting. It makes intuitive sense to believe
that a player who is settled off the pitch is more likely play well on the pitch. This is
particularly true of players arriving from foreign leagues, who may not be used to
British life, the English language or the idiosyncrasies of the Premier League. Once
these players are used to their new environment, it is easier for them to perform well
for their new teams, and this acclimatization period may take a year or longer.
The results of the regression may also be explained by money spent on young players,
whose value at least as correlated with their potential talent as it is with their current
talent. It may take time for expensive young players to break into a team or to match
their potential with performances, and as a result it is possible that the marginal effect
of expenditure on teenagers is lagged. Wayne Rooney, for example, joined
Manchester United in the summer window of 2004 in a much-publicised 20 million
transfer from Everton, but his effect on the team was a gradual one - the striker scored
17 goals in his first season, 21 in his second and 24 in his third. Evidently, as he
developed as a player and settled in Manchester, his effectiveness for Manchester
United increased. Theo Walcott, then aged 16, transferred from Southampton to
Arsenal in the January 2006 window for a fee rising to 12 million, but over four
years later has yet to establish himself as anything more than a bit-part player at the
club. It can take time for young talented players to truly make their mark on the big
stage.
18
19
While the Tevez case is an extreme one, it highlights how the exclusion of loans from
the data diminishes its quality. Tevez had a relatively high profile effect on the
outcome of the Premier League in first his two seasons in England, but is not included
in any clubs net spend for those two seasons.
Outside of the transfer market, there are many other factors in the world of football
which may contribute to an augmentation in a teams human capital. Two are noted
here: youth systems and coaching. A clubs ability to develop and integrate graduates
from their academy can act as a substitute to buying players in the transfer market,
and may even lower net spend, through sales of home-grown talent. Similarly, good
coaching and management can bring out the best from seemingly limited talent. In the
framework of the regressions performed in this paper, both of these factors may have
unobserved effects on points scored in the Premier League and consequently this must
be considered a limitation of the research.
The list of contributors to the success of a football team over the course of a season is
vast, and could not possibly be covered in these pages. It would be simple-minded to
believe that transfer spending is the only means towards achievement in football. A
huge variety of variables play a role - the clubs manager, payroll, fixture schedule,
injuries, internationals, fans, stadium, to name but a few. None of these variables are
included in this papers regressions, despite their obvious impact on league
performance.
The research also does not take into account the existing standards of the teams in
2004. The regression treats all teams as equal at the beginning of the period of study, a
premise that clearly is not true. The existing state of each teams playing squad in
2004 is clearly a major constituent in determining the league winner in subsequent
years, although naturally its influence diminishes with each passing season.
Finally, the limitations of the data itself must be acknowledged. Although its source is
relatively reputable, the size of transfer fees has not and cannot be verified by the
parties involved. Instead, the data is treated as a best estimate of the true size of the
values. The data set is also relatively small, limiting the significance of the data
somewhat.
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References
1. Hall, Szymanksi & Zimbalist (2002) Testing Causality Between Team Performance and Payroll:
The Cases of Major League Baseball and English Soccer Journal of Sports Economics 2002; 3; p.
149
2. Carmichael & Thomas (1995) Production and efficiency in team sports: an
investigation of rugby league football Applied Economics 1995; 27; p. 859
3. Carmichael, Thomas & Ward (2000) Team Performance: The Case of English
Premiership Football Managerial and Economics Decisions 2000; 21; p. 31
4. Langelett (2003). The Relationship between Recruiting and Team Performance in Division
Journal of Sports Economics 2003; 4; p. 240
5. Leech & Barros 2006 (2006). Analyzing the Performance of the English FA Premier League
with an Econometric Frontier Model Journal of Sports Economics 2006; 7; p. 391
6. Soccer Base, http://www.soccerbase.com/
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