Can WBA spend £10m on a player?

The Baggies have been linked with a number of high profile players in recent days one of whom Wilfred Bony it has been suggested might cost up to £10m. Most fans me included who are well used to Albion's prudent approach instinctively dismiss such rumours as nonsense because we know who we are as a club and know that is not how we roll. However my perceptions of what West Brom can aspire to in the transfer market have been shaped by the current financial climate and that is about to change dramatically with the new Premier League TV deal

Budget

The club's income is set to rise because of the new Premier League TV deal assuming that all other elements of the club's income remain constant the deal will guarantee about £15m in additional income. However that is only guaranteed provided the club stay aboard the Premier League gravy train.

Whilst it is safe to assume not all of the additional funds will be available to sign players as there are a number of new contracts in the pipeline. However this is offset by the departure of a number players from the current squad and there will be some additional income generated by transfer activity. 

The new income is certainly sufficient to cover the additional the first year costs of a £10m player. Assuming they are bought in on a 4 year contract and earn £2m a year the cost of the deal is roughly £4.5m in the first year. If spent entirely on players the additional funds could cover the purchase of three players on that basis. I would concede that it would cause havoc with the club’s cash flow position because although the fees are accounted for over the lifetime of the player’s contract they fall due in much shorter order therefore to balance the books in the short term we would have to borrow the money against future earnings. So three is totally unrealistic but one would be possible providing not much else was spent on fees.

Before anyone gets excited about who that means will be heading for the Hawthorns this summer I think it might be worth pointing out that every agent and club can do what I have just done and work out that even quite a modest Premier League club is loaded and adjust their demands accordingly. The Van Wolfwinkel deal at £8m might set the tone, real value for money in the market might be difficult to find. 

Equally the club needs to be mindful that importing talent on higher wages will lead to higher wage demands in the future from the current squad so it is not just the current deals that need to be funded but any future deals that will be impacted by them.

The club might be wise not to throw all of their new found wealth at one transfer window and as ever it will operate prudently but there is no doubt money will be available.

Wages v Fees

Over the last few years Albion have been successful in building the squad by using free transfers and loan signings supplemented with the odd big money signing. To do this most of the player budget has been spent on wages. Ultimately being able to offer competitive wages is the only thing that will allow us to bring in the players we need to maintain our top flight status.

In general Albion will not spend significant fees on players in their late twenties and early thirties because if the deal does not work out the club will struggle to recoup the fee. For the club to be willing to pay a significant fee the player would need to be an established first team player and under the age of 26.

One key advantage of focusing on wages rather than fees is that in the event of relegation wages flex down but the fees don't.

Paying a fee of £4m for a player on a salary of £1.5m a year over a 4 year contract gives an annual cost of £2.5m. If Albion dropped into the championship the players wages might fall by 50% to £0.75m but the fee would still be amortised at £1m a year so the cost would be £1.75m.

Paying the same player on a free transfer £2.5m a year with a 50% flex down clause in the championship would cost £1.25m in the event of relegation. 

Buyer Beware

No purchase in football comes with a guarantee beyond the poorly researched, overpriced panic buy, at the end of a transfer window nearly always fails and if you bet your house on a marque signing you will lose your house. The fee paid is a very poor indicator of success and in certain circumstances the fee itself adds pressure to the player and becomes one of the reasons for their failure.

The reality of being a mid-table Premier League side is that the best players in their position are drawn to the twenty or so richest clubs in Europe and the truly gifted are the preserve of an even smaller elite. By definition most Premier League teams are recruiting average to good players in effect there is a ceiling on the quality of player that a team like Albion can sign. However there is no limit to the money that can be spent on them in fees and wages as QPR and others have shown through the years. 

The key to success in the market is to mitigate the risks through a systematic approach to player recruitment and never invest so heavily in any group of players that their failure undermines the ability of the club to recover from the set back of relegation

I believe the Albion hierarchy have pretty much adopted the following as a blueprint. 

1. Build a team 

This might seem like the ultimate statement of the bleeding obvious but too often clubs sign players who are nice to have but have no clear role in the existing team, and surprise surprise the transfer fails. A new player must always add something to the existing squad and not just replicate what is already there and if he doesn't well don't do the deal. The Borja Valero deal springs to mind whenever I see a club buying a player that does not seem to meet an obvious need.

2. Research Research Research

This is an on-going process there is no point in starting to look for a left back only when you need one because yours has just broken his ankle in a preseason friendly and time to find a replacement is running out. To maximise the chances of success the leg work is carried out months and even years in advance so not only can the club identify targets for positions they know they will need but to cover for unanticipated departures or injuries.

In depth scouting is essential and not just in assessing the player's footballing ability but also his character which will be key to him settling into his new club and will also expose any off field problems which might undermine his ability to perform. It never ceases to amaze me that football clubs are surprised by some of the baggage their new signings bring with them. After all they are investing millions in the player a little bit of due diligence would not go amiss.

3. The Wisdom of crowds

Placing the recruitment process in the hands of one man particularly an old school British gaffer is a recipe for disaster. Obviously the Head Coach does have a pivotal role in identifying areas for improvement but no coach not matter how dedicated can cover the whole market and too often Head Coaches get trapped into the notion that they must have player x partly because they are unaware of the alternatives and partly because of ego, any challenge undermines their authority at the club. Equally managers will always over estimate their ability to turnaround wayward players and without a challenge from either a Director Football or an independent chief scout tend to overlook flaws that others might see.

4. Multiple Targets

This follows naturally from points 2 and 3. When negotiating a deal for a player it is a lot easier to walk away from a deal that is becoming too expensive if you have an alternative and in many cases there will be very little to choose between potential recruits, although the price will vary.

5. Target Players on the Up Escalator

Albion along with other mid-table clubs should wherever possible focus their efforts on finding players abroad or from championship clubs who regard joining Albion as their big break. The problem with taking established players from the bigger clubs both home and abroad is that often the player concerned is on the downward swing and joining Albion from Chelsea Man U or Milan pretty much confirms it.

Very few players leave one of the bigger clubs for a mid-table team and subsequently return to a team challenging for a champions league place. I can only think of one and that is Scot Parker, which would suggest few recapture the form that got them their break into the elite in the first place.

There might be a whole host of reasons for this but there must be an element that the players have lost a bit of hunger or desire, it is not to say they are not dedicated and model professionals but nor do they think they have anything to prove.

6. Plan for Failure

There is no signing that a mid-table club can make that will guarantee their future in the Premier League so don't commit to deals that can only be sustained if the team is in the Premier League. This means two things. Firstly all players contracts have a flex down clause in them and if the players does not want to sign on that basis do not sign them, secondly if a fee is paid either there is a chance that it could be recouped or if that were not possible then club will not pay a fee that would cripple it if the fee had to be written off during a spell in the Championship.

The policy implication on fees is fairly straight forward in general terms once a player reaches his late twenties the less inclined the club is to pay a significant transfer fee for his services.

7. Never Shop at Harrods

Once upon a time following his team's FA Cup triumph someone asked Coventry manager John Sillet what the victory meant to the club he replied "Coventry City have shopped at Woolworth’s for too long, from now on we're shopping at Harrods" There is no virtue in abandoning a tried and tested modus operandi just because of a sudden windfall and in particular when mid-table clubs start to make one big marque signing at the expense of making a number of improvements across the squad it is a sign that the club is about to lose the plot.

Conclusion 

Many fans and commentators believe that it is a big summer for Albion because there are obvious gaps in the squad because of player departures. I would not disagree but I believe that the club has the systems in place to fill the gaps.

Those fans that are looking to the club to splash the cash on established Premier League players are still likely to be disappointed but it is no longer completely impossible. I would not be surprised if Albion break their transfer record this summer but I do not think we will break the 8 figure barrier, it would be possible if all we needed was one standout recruit but that is not the case this summer.

Narrative Fallacy and the Van Persie Myth

 

"The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding." - Nassim Nicholas Taleb

Or put it another way Robin Van Persie might be the difference between Man United and Man City this season or he might not. To recap the narrative. Robin Van Persie was the outstanding striker of last season playing for Arsenal but with only one year left on his contract was coveted by both Manchester clubs. He chose United ahead of City, although it has been suggested that City's pursuit of the player was a bit half hearted much to the disgruntlement of their coach Roberto Mancini.

Having won a nip and tuck battle against their local rivals last year City have been left trailing in United's wake this season with Van Persie making a a noteworthy contribution to United's surge towards a twentieth league title. Football pundits in print and television make the immediate and obvious link that United signing Van Persie instead of City explains the 12 point gap that exists between United and  City at the time of writing. Often it is accompanied with a the sub text that the City board should have backed Mancini's pursuit of Van Persie at all cost regardless of the rather inconvenient fact that Man City lost £90m last year and by some miracle they need to get close to break even under UEFA's financial fair play rules.

However returning to the main hypothesis a superficial review of the facts gives some credence to the belief that the Van Persie factor is the difference, given that he has again been the stand out striker of the season and delivered 20 goals for the Champions elect, whereas none of the City strikers have scored more than a dozen.

In making the link the fallacy is created and doing so pundits become blind to any other explanation. The first flaw in the thinking is to assume that if Van Persie scored 20 goals for United he would score 20 for City which is by no means certain. Accepting that Van Persie comes with a guarantee of 20 goals it should be acknowledged that he plays at another  players expense so to assess Van Persie's potential impact you have to take that player's contribution out of the equation so the net gain might be 10 or 11 goals. Obviously another 10 goals across the course of a season could make a difference to the title race although it is entirely possible it makes next to no difference aside from helping City's goal difference if all the additional goals achieved was conversion of  1-0 wins into 2-0 wins then City's relative position would remain the same.

Even looking at things from the City side of the equation the string of assumptions is starting to stretch the creditability of the Van Persie is the difference myth but that disregards the United side of the equation. In an alternative universe where Van Persie opted for the blue side of Manchester it is far from certain that the outcome is any different. Had United failed to land Van Persie I am fairly sure armed with a budget in excess of £20 million and a wages of £200,000 a week United might have been able to find an alternative, who might have been something other than a complete failure.

I will be honest  I don't have a fully rounded  multi - factored explanation as to why this year's Premier League title race has turned into a procession or why City have tailed off so badly after last year but I know it is not solely down to Robin Van Persie's decision to join United ahead of City. Too often the football pundits looking for the glib easily digested explanation, create and the perpetuate the narrative fallacy of the star player being the difference between outcomes. in some cases they are but not as often as pundits and fans think they are.

Hung out to Dry



Is that the rustle of a wedge of fifties I can hear ? 



The sorry saga of Peter Odemwingie's on off transfer to QPR finished on a farcical note late yesterday evening. The player having decamped to Loftus Road without a deal being agreed, in an apparent attempt to force through a move. Hours latter he had to return home still an Albion player suffering a very public humiliation into the bargain.

 

 Setting aside  the completely bonkers notion that going to sit on QPR's doorstep waiting to be let in was in someway a smart move Odemwingie had the grave misfortune of turning up about twenty minutes after Tony Fernandes pulled the plug on the deal by vetoing Junior Hoillet's loan move to the Albion.

 

In typical hard boiled fashion Albion were grinding out the last drop of juice from the mug in the game and had got the point where they going for maximum value, £3.5m, Hoillet on loan for the rest of the season with QPR paying Hoillet's not inconsiderable wages when the mug woke up and decided to quit the game. It is a pity that by the time Albion got to Fernandes he had already been turned over by the Russians and was probably getting a bit weary of being taken to the cleaners.

 

Having been very public in their pursuit of Odemwingie and by whatever means turned the player's head to the degree that he burnt his bridges with his current club QPR were almost honour bound to cut a deal, not doing so has left the player high and dry. They seem to have wilfully ignored the circumstances that would make a deal very expensive. Firstly Albion did not want to sell and being well run and solvent were under no pressure to sell. Secondly even if Albion could be persuaded to sell they would only do so if they could line up a replacement and the less time they had to do that the less likely the deal was going to happen. To leave the final bid to deadline day was asking for trouble and trouble is what QPR got.

 

Frankly not signing Odemwingie is not going to be the difference between QPR staying up or going down, he's good but he ain't Messi, however the next time they unsettle a player in this manner that player would do well to remember Odemwingie's humiliation and be a little bit more cautious in their attempts to force a move. 

 

Throughout the saga the press have been very well informed about QPR's next move and the likely package that would be on offer to the player, Redknapp has strenuously denied any hand in leaking details to the press and I of course believe him what could he possibly gain from letting a transfer target know that there is a land of milk and honey waiting for him in West London?

 

All these shenanagins have left the Albion hierarchy with a bunch of awkard issues to address not least of which is what to do with the errant Odemwingie who is still a key member of the squad and top earner at the Hawthorns. Chairman Peace issued a strongly worded statement last night ( statement in full) which in itself is a rarity as Peace seldom comments on day to day matters at the club (he sure as hell does not have a twitter account) and it is plain he is personally very disgruntled with the player and by inference QPR.

 

I have no doubt Odemwingie will move on during the summer but he won't be joining QPR and it will be on the club's terms. In the meantime Odemwinige will either get his head down and rebuild his tattered reputation or he will sulk, my guess is the latter. Albion may have won the day in standing up to a greedy self seeking player and a wheeler dealer shit or bust manager but the victory is a  pyrrhic one. Odemwingie's relationship with fans has been damaged beyond repair and he will limp through the last few months of his time at the Hawthorns. It will be a sad end to his time as a Baggie but I don't think he really cares about how he will be remembered.  

 

 

 



Are we all Wigan in disguise ?

The missus in her infinite wisdom bought me the excellent Soccernomics  Simon Kuper and Stefan Szymanski and I have spent much of my Christmas Break with my nose buried in it. In  essence it is an economics book about football written in a style that makes it accessible to the non-economist.

At one level the book is a wonderful statement of the bleeding obvious that the resources that a club, league or nation can draw on determines its relative success on the pitch. However the authors debunk one or two footballing myths along the way and critically identify wages as being the key determinate of success at club level rather than transfer fees. It is a rule that holds true across leagues and over time.

Prompted by this and a tweet from a fellow Baggie " A club without ambition is not a good thing. Don't want to be a Wigan."  I have penned a few thoughts on why Albion fans and indeed fans of most Premier League clubs should not sneer at Wigan.

Money Talks in Football

Whilst that is the general rule over the course of a season clubs with relatively large wage bills will under perform and those with relatively modest ones over perform. Wigan's limpet like grip on the Premier League is testimony to this, whereas clubs with much greater resources Newcastle and Southampton for instance have been relegated to the Championship. Actually Wigan's continued Premier survival is one of the greater mystery's of the Premier League era even allowing for the fact Dave Whelan has bankrolled the club for a number of years.

Within the Premier League there is a clear hierarchy with the contenders for the Champions League spots being able to have wage bills in excess of £90m in efffect form an elite cadre that is virtually impossible to break into over the course of a season. Unless a club is in the elite bracket then it is pretty much in the same boat as Wigan with their first target being survival.

Position	Team	Wages £m	Points	Wage Rank	Turnover £m	Wages as % of Turnover
1	Man U	152.9	80	3	331.4	46%
2	Chelsea	189.5	71	1	222.3	85%
3	Man City	174	71	2	153.2	114%
4	Arsenal	124.4	68	5	255.7	49%
5	Spurs	91.1	62	6	163.5	56%
6	Liverpool	134.8	58	4	183.7	73%
7	Everton	58	54	9	82	71%
8	Fulham	57.7	49	10	77.1	75%
9	Villa	83.4	48	7	92	91%
10	Sunderland	60.9	47	8	79.4	77%
11	West Brom	37.4	47	18	59.4	63%
12	Newcastle	53.6	46	13	88.5	61%
13	Stoke	47.1	46	15	66.8	71%
14	Bolton	56.1	46	11	67.7	83%
15	Blackburn	49.9	43	14	57.6	87%
16	Wigan	39.1	42	19	50.5	77%
17	Wolves	37.9	40	17	64.5	59%
18	Blackpool	13.6	39	20	51.7	26%
19	Birmingham City	44	39	16	56.4	78%
20	West Ham	55.7	33	12	80.9	69%

The above table from the 2010/2011 which is the last season I can find a full set of financial results for demonstrates the point there is a clear gap between the top 6 and the rest. The gap between the median and upper quartile is £43m but the gap between the lower quartile and the median is £10m. In footballing terms a £10m wage gap can be closed by a combination of smart management and good fortune a £43m gap probably cannot.

It is not entirely surprising that the bulk of the division's prime objective is survival when few can pay sufficient wages to guarantee their future participation in the richest league in the world.  If West Ham can get relegated with a wage bill £55m then so can every other club, although it would probably take a special level of ineptitude to get a club with a £100m wage bill relegated, Newcastle managed it but they are the exception rather than the rule.

Some might say survival is Wigan's only aim but other clubs such as Newcastle and Everton can have realistically loftier aspirations such as Europa League qualification or a cup run and maybe in an exceptional year achieve the holy grail of 4th spot. However over the course of a season the extra resources that the likes of Arsenal and Spurs have eventually tell and generally this is reflected by the fact that since the Premier League had four champions league places only 8 clubs have qualified Man Untied, Arsenal, Chelsea Newcastle, Liverpool,Man City, Spurs and Everton. Moreover Arsenal and Man United have qualified every year and Chelsea all but one. Earlier in the decade Liverpool and Newcastle were frequent qualifiers the latter has long since dropped back into the pack and Liverpool have been usurped by Man City and it remains to be seen if they can get back in amongst the elite.

The thing that highlights the difference between the elite and the rest is the Europa League qualification for which is the pinnacle of most clubs ambitions. The extra burden placed on successful mid table clubs e.g. Bolton, Newcastle and Stoke often sees their league form diminish to the point they end up in a relegation battle. Here is the key difference between the rest and the elite. Whilst the elites second string is capable of picking up results against most the rest of the division's first elevens the mid-tables club's 2nd choices are not. Europa league football and the demands it places on mid table squads highlights this like nothing else. It is no coincidence that the team from outside the elite that sustains a challenge for a place in the top 4 is one that does not have Europa League football to contend with Everton this year and Newcastle last year.  

 Wigan are a Big Club

By Premier League standards they are minnows but because of the relatively even way the TV revenues are distributed by the Premier League they are not so out of touch with 75% of the division as to make it impossible for the club to compete. Critically Wigan might be the poorest members of the club but the Premier League is a very rich club and that is what matters because it allows Wigan to pay relative attractive wages in comparison to the vast majority of clubs both home and abroad. For instance Wigan's income is greater than all but 5 or 6 teams in both France and Spain and the only Dutch team to have more resources than them is Ajax.

Domestically the gulf can be demonstrated by the difference between Wigan a club who is often mocked for its poor attendances and the Championship powerhouse that is Leeds United. In terms of money (which is pretty much all that matters in the recruitment and retention of players) Wigan absolutely dwarf Leeds because of the TV rights. If Wigan did not sell a single ticket, pie, programme or have any commercial income they would still be better off than Leeds who are by far the richest club in the Championship if one excludes clubs that are enjoying the benefit of premier league parachute payments.

Provided Wigan do not get kicked out of the Premier League club they are about to get a lot bigger because the next round of TV rights could see Wigan's turnover jump to £70m which would be roughly double that of any Championship club bigger than Ajax and even more French and Spanish teams.

'Arry sees The Light

"There are a lot of players at this club who earn far too much money for what they are; far, far, far too much money for their ability and what they give to the club."

When Redknapp came out with that gem in reference to the players he inherited at QPR there were plenty of wry smiles from fans up and down the land and some names like John Utaka sprung to mind. However 'Arry makes a valid point (probably almost entirely by accident) given that the Elite clubs in the Premier League and elsewhere in Europe cream off the best talent, and by definition the rest are left with average to good players.

The players that might be one of the top 4 or 5 players in their position outside the elite tend to gravitate towards the top clubs, for instance it is debatable as to how long Everton can retain the services of Mario Fellani and Leighton Baines before one of the elite lures them away. Therefore when most clubs are  recruiting there is a ceiling to the quality they can hire and in point of fact the difference in ability between one average right back and another is pretty marginal, however there is no ceiling to the wages that a club might be persuaded to part with for an average to good player.

Conclusions

For a team like Albion operating in the mid-table mix we have very little to fear provided that we remain one of the smarter operators and our competitiors are to varying degrees badly run. However over the longer term we will struggle to dent the bigger teams for parts of seasons or even for whole seasons we might run ahead of our wage bill but sooner or latter the wage bill will find us out but the same could be said for pretty much every other team in the division.