Published in The Weekend Australian (Sydney), 5 June 2010

THE global financial crisis has shaken the belief that economics can tell us anything worthwhile about human nature. Given this sad image of economics, it is refreshing to see that there are still economists out there who have something worthwhile to say. Even if it is only about soccer.

Stefan Szymanski, economics professor at Cass Business School in London, and Simon Kuper, a journalist for the Financial Times, have written a book, Soccernomics, that pretends to be about soccer (or football, as most soccer fans would call it). In fact, readers may be left with the impression that Soccernomics superficially deals with little else.

But hidden behind the story of the world’s most popular sport, readers will encounter how economic principles are at work even in places and at times where one would least expect them.

Furthermore, Soccernomics holds lessons that apply well beyond the football ground.

Historically, little effort has been made systematically to analyse and understand soccer despite its popularity and influence through the ages.

That there are some hidden truths about soccer probably never occurred to players or sports journalists. It took a few soccer-obsessed economists, statisticians and mathematicians to dig for hidden patterns in soccer.

Szymanski and Kuper have collected those findings and turned them into an entertaining read. The result is a book that is at once incredibly narrow and extremely diverse. The questions it aims to answer range from “which is the best soccer nation on earth?” and “what impact does soccer have on suicide rates?” to “why are the people who run soccer clubs so dumb?” All these questions are satisfactorily answered based on empirical data and sound economic logic.

That soccer club managers are not particularly savvy businesspeople is not one of the world’s greatest secrets. According to Soccernomics, naive business practices are not the exception but the rule. By statistically analysing the hiring patterns of European soccer clubs, they found that managers are systematically biased in numerous ways.

They hire expensive Brazilians when cheaper Moldovans are just as good; they prefer experienced players who are long past their zenith. What’s remarkable, though, is that soccer clubs neither learn from their mistakes nor get punished for making them.

As Szymanski and Kuper explain, the reason may be that soccer clubs hardly ever go out of business. When companies fail, they go bankrupt. When soccer clubs fail, they get relegated to a lower division with a lower cost structure.

Despite this, the curious world of soccer is full of fascinating material that has counterparts in the real world.

Most interestingly, regional economics, with its theories about the development of clusters and spatial networks, is reflected in soccer. It is no coincidence that the most successful soccer developed within a comparatively close-knit region of Europe, from where it migrated to other parts of the world.

That soccer has a lot to do with happiness is nothing new to the average supporter. Fascinatingly, though, the effect goes well beyond soccer fans. There is clear evidence that a big tournament, though rarely economically profitable, significantly lifts the host nation’s happiness for years. No wonder countries such as Australia invest huge resources in their bids to secure the FIFA World Cup.

The authors predict Australia will be one of the upcoming soccer superpowers. More than that, they believe soccer will cannibalise other home-grown sports so that “[a] century from now, Aussie rules might exist only at subsidised folk festivals”. Given that more Australian children play soccer than Aussie rules and both rugby codes combined, this prophecy may not be as outrageous as it seems.

Convincing as the rest of the book is, readers may nevertheless wonder whether such long-term forecasting is reliable. Or is Australian soccer just another bubble that will eventually burst?

The Socceroos’ performance at this year’s World Cup may indicate whether Szymanski and Kuper are on the right track. In the meantime, Soccernomics should be any intelligent soccer fan’s half-time read.

Oliver Marc Hartwich is a research fellow at the Centre for Independent Studies. This article will appear in the CIS magazine Policy later this month.

Soccernomics: Why England Lose, Why Germany and Brazil Win, and Why the US, Japan, Australia, Turkey – and Even Iraq – are Destined to Become the New Kings of the World’s Most Popular Sport, by Simon Kuper and Stefan Szymanski (Basic Books, $22.95 online).