Player Values, Myth and Age by Soccer By The Numbers

WEDNESDAY, NOVEMBER 28, 2012

Mapping the Market: How Much Do Players in the Premier League Cost?
FRIDAY, NOVEMBER 30, 2012

The Myth of the English Premium

THURSDAY, DECEMBER 6, 2012

Age and the Inverted U: Player Age and Transfer Market Valuations

2013 January 05

Mapping the Market: How Much Do Players in the Premier League Cost?
If you wanted to buy yourself a Premier League footballer, how much would you have to shell out? As we get closer to the January transfer window, we thought it would be interesting to take a fresh look at how much players go for these days. To find out, we collected data from the respected Transfermarkt website on all players currently on Premier League squads and performed a variety of calculations on their transfer values (complete data were available for a total of 502 players; we collected these data in October). The average Premier League player is currently valued at 5.94 million - a tidy sum to be sure, and of course higher than it's ever been, but not stratospheric. The interesting thing, too, is that the values of players aren't normally distributed - in bell curve fashion, where most (average) players would be expected to be located somewhere in the middle, and then a few on the low and the high ends, respectively. Instead, the transfer values of players show a remarkably skew toward the lower end. Take a look. Here's the overall distribution (we've grouped players in bands to make the graph more intelligible).

Clearly, the majority of players are valued at significantly less than the average. 25.9% are on the market for 1.3 mio. or less, 51.6% are valued at 3.1 mio. or less, and a whopping 70.5% are valued at 5.7 mio. or less. This makes sense - many of the players in the dataset (in fact, by definition about half, in a squad of 25, assuming some injuries over the season)

are not regular starters for their clubs. And of course there are a few very special talents who can command much, much more, thus bringing up the average. Finally, we wanted to see how much the market differentiates by position. Here we see that the market values different positions differently - something we've long known, but seldom have put a real number on. Players' values increase significantly as we move up the pitch, with forwards valued highest at an average of 7.6 mio., and net minders at less than half that (3.3 mio.) The jumps in value from keeper to defender is almost 2 million, midfielders are about 1 mio. more than defenders, and strikers about 1.4 more valuable than midfielders.

The market appears to value scoring goals more than it values preventing them. Of course, these broad averages obscure a lot of differences across individual players and clubs - something we will be writing about in the coming weeks - but they map out the domestic English market as it stands today.

The Myth of the English Premium

Every time an Andy Carroll or Alan Shearer get sold, Liverpool (over-)pay for British-born players, or Arsene Wenger (and lately, Alan Pardew) go shopping for undervalued talent in France, the idea of an English (or sometimes, British) premium is bandied about. But is it really true that you have to pay a premium for English players? The underlying idea here is that there is positive discrimination in the English player market, with selling clubs charging a little (or a lot) extra for English or British players.

To find out, first, let's look at how the transfer market currently values English v. non-English players (or players fortunate to hail from the British Isles or not). Using data from the respected Transfermarkt website on all players currently on Premier League squads, we performed a variety of calculations on their transfer values (complete data were available for a total of 502 players; we collected these data in October). One thorny problem, of course, is who counts as "English" or "British" - this turns out to be slightly less than obvious. Sure, Ben Foster is English, but there are a number of players whose ancestry or personal history is more than a bit muddled. Some of it owes to the vagaries of modern migration; some of it has to do with which national side someone chooses (or hopes) to play for. So, this is a long way of saying: we did our best to determine a player's nationality, but we probably made a few calls that are debatable. That's our first indication, though, that determining the English premium is less than completely straightforward. Keeping those caveats in mind, the numbers show that the market appears to value English and British (which includes Scottish, Irish, and Welsh) players less than the average. Recall from our previous analysis that the average Premier League player this fall is valued at 5.94 million. In contrast, English players are valued almost exactly one million pounds less (4.96) and all British players combined about 1.5 mio. pounds less. (4.51). In fact, given that about half of all players in the league qualify as British in some way, the average of 5.94 million is brought down by the relatively low valuations of native footballers. The average for non-Brits, in fact, stands at 7.39 million. On its face, this suggests that English/British players can be had at a bargain, rather than a premium.

But seeing differences in averages doesn't mean that English or British players necessarily command a premium - by definition, "premium" implies that a club needs to pay more to

obtain an English player than they would for an ordinary player; it's a kind of surcharge for the same player they would otherwise buy. To figure out if there is evidence of a premium, we conducted several regression analyses to see if a player's "Britishness" is a significant predictor of his market value once we take into account a variety of factors that also might determine how much he goes for - things like age, his contract year, which club he plays for, position, etc. The regressions are important because they allow us to control for things like quality (the average player on a top team is better than the average player on a team closer to the bottom) or career trajectory (players' values tend to increase with age but also have a distinct peak) or position (goalkeepers go for less than forwards), and so on. That is, we wanted to know: if we were to find two players of the same age playing for the same club in the same position, etc. - with the same characteristics - would the English or British player be more or less expensive, or would it not matter at all? We suspected these analyses would wash away a lot of the effect of "Britishness." The results are clear. Our analyses show that British and English players are systematically less expensive than players from other countries even when we account for a number of player characteristics. Using the numbers from our regression models, the following are the transfer values we would predict (in millions): Non-British: 7.45 British: 5.07 Non-English: 6.97 English: 4.99 We suspected that part of this pattern had to do with the fact that our pool of players includes a bunch of young lads riding the bench, while the foreign-born superstars make up much of the starting XI. Not so. Even when we select only players above, say, age 22, or who have experience playing in the league, the same pattern appears. To see how this plays out, we can use our models and some fancy math to determine how the market values two identical players. Let's take two 25-year old midfield players who are for the sake of argument - identical and average in every other way. Our prediction for the British player would be that he is valued at 3.96 million; for the non-Brit, the model predicts 6.58 million. Or let's take the average 28-year old forward; the Brit would be valued at 4.74 million; the equivalent player from elsewhere 7.36. None of this means, of course, that there aren't exceptions; but for every Andy Carroll or Fernando Torres there are many more "normal" players who produce the average. And that's the point: to show what's normal in the transfer market. According to these numbers, normal is that the effect of being British persists and that it is negative rather than positive or zero. So when we put it all together, the numbers tell a clear story: British players go for less. Why, then, does the notion of a British premium still have legs? We suspect it's because nationality is one of the factors that are easy enough to understand and compare players on. In a league that has seen a huge influx of foreign players in the last 20 years and whose talent currently is roughly half domestic and half international, the question of who is better or who is more valuable is a fun question to bat around.

We also suspect the idea of a premium rears its head with regularity because people remember the unusual - Liverpool's buying spree under Comolli or Wenger's success in scouring the French market - rather than the typical. Outliers are memorable and vivid averages less so. And the average British player goes for about a million and a half quid less than the identical import. A bargain, some might say.

Age and the Inverted U: Player Age and Transfer Market Valuations
Some things, like a good wine, get better with age. Footballers do, too, but unfortunately only up to a point. Even in the era of Giggs, Scholes, and Friedel, no matter where athletes do their work, they will eventually see a decline in performance. If that's true, and if we assume that a player's performance is linked to his market value, both should increase during the first half of a player's career and decline thereafter. But is that really the case? And if it is, where exactly is that turning point the time at which players become more and less valuable? One way to answer that question is examine their performance; another way is to see what the market says. It's the latter we focus on here. We wanted to know: what is the connection between a players age and the price he can command? To answer these questions, we collected data from the respected Transfermarkt website for all players currently on Premier League squads and performed a variety of calculations on their transfer values (complete data were available for a total of 502 players; we collected these data in early October). 1 As in our previous analyses, we estimated a set of of regression models with the aim of accurately predicting a players valuation based on a variety of factors, including things like position, nationality, club, contract length, experience in the league, and so on. But critically, we also included two variables to assess the influence of a players age on his valuation the actual age, to capture any linear trend in age and age squared, to see if the connection between age and valuation is curvilinear. Lo and behold, our results reveal that the conventional wisdom holds.2 Players valuations look like an inverted U, rising for some years but then peaking and falling afterwards. While these regression results confirm conventional wisdom, they don't tell us the exact shape of that inverted U. To pinpoint when exactly the market says players peak, we used the regression models to calculate the average player's values in different age groups (and plotted them in the graph below). We were surprised. According to these results, the current Premier League market valuations tell us that players peak relatively early in their careers.

To appreciate what these data are based on, it's worth knowing that players prices are valuations, not actual sums someone paid for the player. This means that they are akin to the value of your investment portfolio based on what the stock market says it is worth, but not realized gains and losses when the time comes to cash out. If you speak German, you can find more detail here 2 Both age terms in our regression were statistically highly significant (with age positive and age squared negative).

In fact, our calculations suggest that players' market valuations are highest at age 26, at a price of 7.24m. The data also show that 18 and 33 year-olds are valued roughly the same, with players beyond 33 continuing to decline significantly - a 35 year old is half as valuable as a 31 year old or the average 20 year old. Of course, there is no such thing as the "average" player - it's a figment of our statistical imagination by controlling for things like positions or nationality. Moreover, these calculations don't tell us whether there are differences in age curves for different positions or nationalities or players with different sets of skills (we strongly suspect there are, as Mr. Friedel would probably point out). And admittedly, the data are from a single season and therefore it's impossible to say whether they are generalizable beyond this year or how they have evolved and will continue to evolve over time. At the same time, the numbers do tell us something about the logic of the transfer market. Players' valuations peak in their mid-20s rather than the late 20s, as is commonly assumed by people in the know. By the way, that doesn't mean you should sell your stellar 26 year old midfielder - his performance probably is in line with his value. Instead, to find value in the market, see if there are great bargains to be had among players whose valuations haven't peaked or who the market thinks are past their prime. You don't need to field 11 of those kinds of players - one or two will probably do.