Book review: Soccernomics

policy-winter10-coverPublished in Policy Magazine (Sydney), 16 June 2010

Soccernomics: Why England loses, why Germany and Brazil win, and why the U.S., Japan, Australia, Turkey— and even Iraq—are destined to become the kings of the world’s most popular sport

By Simon Kuper and Stefan Szymanski
Nation Books, New York, 2009
US$14.95, 328 pages
ISBN 9781568584256

The global financial crisis has shaken the belief that economics can tell us anything worthwhile about human nature. Locked away in their ivory towers, economists have taken leave from reality to deal with grossly unrealistic abstractions of the world in which the rest of us live, or so the prejudice goes.

Given this sad, unworldly image of economics (or ‘the dismal science,’ as it is often referred to), 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 theFinancial Times, have written a book 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 to systematically analyse and understand soccer despite its popularity and influence over the ages. Its wisdom is encapsulated in sayings like ‘Soccer is a game for 22 people that run around, play the ball, and one referee who makes a slew of mistakes, and in the end Germany always wins’ (Gary Lineker, former English player now BBC broadcaster) or ‘England have the best fans in the world and Scotland’s fans are second-to-none’ (Kevin Keegan, former English player and coach).

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 business people is not one of the world’s greatest secrets. As it happens, I had as a student applied for an internship at my favourite soccer club to see how the football business really worked, and I would have done it for peanuts. So I saw the chief executive and he offered me 2000 marks a month! Compare that to my other two internships at 360 marks (at a mining company) and 800 marks (at a mineral oil company) and you can see how little business sense the soccer manager had. No wonder the club is almost broke now. And they are probably no better at managing players’ salaries.

According to Soccernomics, such naïve business practices are not the exception but the rule. By statistically analysing the hiring patterns of European soccer clubs (for players, not for interns), 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 have long passed their zenith; and they spend millions in transfer fees but forget to help players relocate, learn the language, and integrate.

The mistakes made in club management are so obvious that any rational observer would be stunned. What’s remarkable, though, is the fact that soccer clubs neither learn from their mistakes or get punished for making them. As Szymanski and Kuper explain, the reason may be that soccer clubs hardly ever go out of business. In fact, most of them are not really in business anyway. As the authors put it, ‘The business of soccer is soccer.’ When companies fail, they go bankrupt. When soccer clubs fail, they get relegated to a lower division with a lower cost structure. That’s practical for them, but it does not teach them business discipline.

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 are reflected in soccer. It is no coincidence that the most successful soccer developed within a comparatively close-knit region of Europe from where it slowly migrated to other parts of the world.

Behavioural economists will also be surprised that the book reveals remarkable rationality in soccer players. The authors cite the work of a game theorist who calculated the optimal strategy for penalty takers wishing to maximise their chances of scoring. When compared to the actual strategies applied by the players, they happened to be almost identical. Better still, goalkeepers, too, tend to intuitively choose the penalty strategy that game theory would have recommended. Maybe homo economicus is not dead after all?

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 major tournament, though rarely economically profitable, significantly lifts the host nation’s happiness for years. No wonder countries like Australia invest huge resources into their bids to host the FIFA World Cup.

Australia is predicted by Szymanski and Kuper to be one of the upcoming soccer superpowers. More than that, they believe that soccer will cannibalise other homegrown sports so that ‘[a] century from now, Aussie Rules might exist only at subsidized folk festivals.’ Given that more Australian children now play soccer than Aussie Rules and both rugby codes combined, this prophecy may not be as outrageous as it first seems.

Convincing as the rest of the book is, readers may nevertheless wonder whether such longterm forecasting is reliable. Or is Australian soccer just another bubble that will eventually burst? Future generations of soccer economists will tell us.

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