European Football Spending vs. Performance
By Skyler Stark-Ragsdale, Kieran O’Conner, Yu-Shao Chien and Adam Spector
European football spending continues to inflate as clubs realize they can buy trophies rather than win them with their coaching and with their strategy.
This was not always the case.
In the late 1980s, UK football, for example, was in crisis, from hooligans fighting in the stadiums, attendance declining, and star players threatening to play in Italy and Spain for more money. This crisis was further cemented after the Hillsborough disaster in 1989. People knew something needed to be done.
Although the issues were apparent, there was one problem: Nobody had the money to make the changes. The money came when Sky Television knocked at the door and wanted in on the broadcasting rights. Average fans were delighted, as Sky offered much higher broadcasting deals to clubs than the BBC and ITV, who paid a modest fee that was then shared between all 92 clubs of the English Football League.
With the rumors circling, the top 22 clubs decided to break away from the league and, in 1992, formed the FA Premier League. This meant they could share the massive deal of £304 million between fewer clubs, and many fans believed football was saved. Since the deal, football in England has continued negotiating with broadcasters to show live games. In May 2021, the Premier League confirmed it would extend its £5.1 billion television deal until the end of the 2024/25 season.
The continued increase in money yearly has led to a rise in popularity, and many regard the Premier League as the best soccer league in the world. Marc Jones, a football writer for Reuters, said, “I think the game itself is probably better than it’s ever been. The kind of atmosphere at the grounds is phenomenal.”
For a league to be successful, the clubs that play must also be successful. The clubs began to find themselves individual investors, relying on money from sponsorship deals and personal investments made by their owners, on top of their income from broadcasting.
As money flowed in, the quality of the league improved, prompting clubs to pursue larger financial investments every year.
And these circumstances extend beyond the Premier League.
“Football is not a business that follows the general rules that every other business runs on.…” said Jones, regarding the influx of money to the best European soccer leagues. “It’s all about talent, so you have to go out and buy it.”
Today, European soccer leagues are caught in a financial race to the top, where the teams that can afford the most, perform the best.
Money in the top five leagues
With the pressure to be successful, teams need to spend money to make money — but some clubs have more than others. This financial inequity is especially apparent in La Liga, the top Spanish soccer league, Ligue 1, the top French soccer league, and the Bundesliga, the top German soccer league. The teams that spend more money in each of these leagues yield better results, begging the question: Can league titles and trophies be bought rather than earned? In these cases, it appears so. If a club has the funds, they can buy the best — the most expensive — players in the world.
There is a strong correlation between high annual player-related expenditure and high league ranking in all of these leagues.
In the 2021-2022 La Liga season, the top three clubs in league performance — Real Madrid, Barcelona, and Atletico Madrid — also had the highest player-related expenditure per point earned. Real Madrid spent €3.37 million per point, Barcelona spent €3.8 million per point, and Atletico Madrid spent €3.3 million per point, while the rest of the field spent significantly less. Similarly, after 29 games in the 2022-2023 season, Barcelona, Real Madrid, and Atletico Madrid continued to spend the most per point earned in the league, with Barcelona ranking first, Real Madrid ranking second, and Atletico Madrid ranking third.
As Jones noted, "If money is no object, you can certainly construct a pretty successful team if you bring in the right manager." This trend is not unique to La Liga, as there is also a strong correlation between high player-related expenditure and high league ranking in Ligue 1 during both the 2021-2022 and 2022-2023 seasons.
After 38 games played in the 2021-2022 season, PSG ranked first but spent far more per point earned than the other nineteen teams. Their league victory cost them €5.5 million per point. Marseille, who placed second, spent the second most per point: €1.4 million.
After 31 games played in the 2022-2023 season, PSG again bought their way to the top, spending €6.1 million per point earned on the season, over twice as much as the next highest spender.
Marseille spent €2.3 million per point earned, the second most in the league, matching their second-place league ranking.
Troyes, though, spent the fourth most per point earned, $1.4 million, and sits in 18th place in the league. However, more than one outlier is needed to break the correlation between high player-related expenditure and high league ranking.
Bundesliga cost per point earned, too, shows a correlation between high league ranking and high cost per point earned, but not as strong a correlation as La Liga or Ligue 1.
In the 2021-2022 season, Bayern Munich ranked first after 38 games. They spent $3.8 million per point earned, far more than the second-highest spender, Wolfsburg, who spent $2.7 million per point. Wolfsburg, though, was an outlier in the correlation between high expenditure and high league ranking, as they landed in 12th place.
After 29 games played in the 2022-2023 season, Dortmund ranked first above Bayern Munich after spending less money per point earned than Bayern. Dortmund spent $2.5 million per point, while Bayern spent $5.4 million per point. Regardless, both teams outranked and outspent the rest of the Bundesliga.
Luke Higgins, a Manchester United Fan, said he is aware of the correlation between money spent and ranking.
“That’s how football is now, the teams who have the most money win the most competitions,” said Higgins.
Champions League
The center stage of football has changed over the years. From the late 1980s to the late 1990s, Italy was seen as the best league in Europe. La Liga quickly took over that title entering the 2000s up until recently. Now, the English Premier League is regarded to have the highest quality football.
But the title of being ‘the best league in Europe’ is superficial and often comes down to a matter of opinion. One prestigious title that isn’t decided by opinion in European football is the Champions League. The UEFA Champions League was founded in 1955. At the time, 16 teams took part in a knockout tournament to crown the best in Europe.
Today there are 32 teams that qualify for the tournament by finishing in the top four of their domestic season (though this varies depending on the strength of the league, with some leagues only contributing three or two teams per year). The 32 teams are then placed into eight groups and begin a season-long knockout tournament to decide the champion of the continent. Much like in the domestic league, certain teams have more money than others, which often translates into success.
The Spanish team, Real Madrid, won the Champions League last season, taking their total competition wins to 14. To put that into perspective, Italian side AC Milan, who are second in total wins, have lifted the trophy seven times.
On their journey to winning the competition, they beat PSG, Chelsea, Manchester City, and Liverpool, four of Europe's wealthiest teams. PSG, though, was the only team Real Madrid faced that had spent more money than them that season.
In the 2021-22 and 2022-23 Premier League seasons, Chelsea and Manchester United stand out as the large spenders of the group but both performed marginally. Over the past ten years, though, Manchester City spent a net of €984 million in the league, creating an extraordinary financial base on which they can now stand, according to a report published by FanNation. As a result, the club won the Premier League six times in eleven years and numerous league-wide tournaments. The club’s spending over the last two years in the league is not extreme, as represented in the visualization below, but they still rank at or near the top of the league supported by their financial security.
Despite their domestic success, they have yet to lift the Champions League trophy and cement themselves as the best team in Europe. The club is a top three all-time spender and has proven they can win one of Europe’s hardest leagues consistently. Their struggle to win the European trophy is a phenomenon.
Though three to four clubs still spend more than the rest, the Premier League remains competitive.
Regarding the Premier League, Luke Higgins said, “I think that teams can win trophies without having ridiculous amounts of money, but the minimum is definitely getting higher and higher.”
Serie A is a more balanced league in terms of spending, producing varied club performance. Even though Juventus had a hold on the league title for nine years straight, the league is on track to have a different winner than the prior year for the third consecutive season.
Marc Jones explained that while money can certainly provide advantages in acquiring top talent, it is not the only factor in a team’s success. Other factors such as team chemistry, coaching, and player development also play a crucial role in a team’s performance.
It is also worth noting that there are teams with smaller budgets that have been able to achieve success, such as Leicester City in the English Premier League, who won the league in the 2015-2016 season with a significantly smaller budget than their competitors.
But Higgins said money still dictates a team’s ability to bring in the people they need to win.
“The manager is the most important role to get right in order to be successful and they not only want to be paid more money the better they are, but managers today want to know that they will be backed in the transfer window to go out and buy big names,” he said.
FiveThirtyEight Prediction Accuracy
FiveThirtyEight.com predicts professional European soccer performance. They generate an SPI value for each team, which defines the team’s predicted performance for the upcoming season. The SPI rating is based 66% on the clubs’ previous season ranking and 33% on their market value. The visualizations below compare FiveThirtyEight’s 2022-2023 Premier League SPI predictions with the clubs’ actual performance as well as the clubs’ 2022-2023 market value with their actual performance.
While FiveThirtyEight’s SPI predictions were mostly accurate, predicting a team’s performance based on market value is not.
The clubs in the visualization comparing SPI rating to actual performance are closely linked, while those in the visualization comparing market value to actual performance are scattered.
For example, there are two teams with similar market values but vastly different performances, such as Newcastle (15 wins) and Southampton (6 wins). Basing predictions only on market value is not entirely accurate and should not be solely relied upon.
We can conclude that while market value impacts a team’s performance, other factors, such as injuries and team chemistry, also need to be considered. This also explains why “market value” only accounts for 33% of the variables in FiveThirtyEight’s preseason SPI predictions.
Although this example uses the Premier League and only shows data visualization for that league, the other four major European football leagues (La Liga, Serie A, Bundesliga, and Ligue 1) have similar results.
Higgins also recognized the gap between wealthy clubs and clubs with less money.
“I think if you look back on decades ago, money was probably also a big part of who won trophies. The only difference now is that the gap between how much a few teams have in a league compared to the rest is getting bigger and bigger,” Higgins said. This financial gap is a common phenomenon in European professional football. Wealthy teams dominate the leaderboard, while less funded teams generally perform poorly.
Wealth in European Soccer
While it is true that the wealth disparity in professional European soccer has been an ongoing issue, the increasing financial resources available to a few teams have led to an imbalance of power and a lack of competition in some leagues. However, it is also important to note that smaller clubs can still perform well and even beat bigger clubs, as evidenced by Leicester City's historic Premier League win in the 2015-2016 season.
Furthermore, money can certainly give teams an advantage, but it is not the only factor to determine success. Other factors such as coaching, player development, tactics, team chemistry, and injuries also play significant roles. This is why "market value" only accounts for 33% of the variables in FiveThirtyEight's preseason SPI predictions. It is not a completely accurate predictor for a team's performance.
Despite these criticisms, it is undeniable that the financial investment in soccer has led to significant improvements in the game and the overall success of the sport. However, it is important for soccer organizations to ensure that financial success does not come at the expense of the integrity of the game.
In recent years, there have been efforts to address the wealth disparity in soccer, such as the implementation of financial fair play regulations by UEFA. These regulations aim to ensure that clubs operate within their means and do not overspend beyond their revenue. While there is still a long way to go in creating a more balanced and competitive environment in European soccer, these efforts show that there is recognition of the issue and a willingness to take action.
Click here to see the methodology behind the project.