Soccernomics (13 page)

The New Manager Is Always a Man

The entire industry discriminates illegally against women. He is also almost always white, with a conservative haircut, aged between thirty-five and sixty, and a former professional player. Clubs know that if they choose someone with that profile, then even if the appointment turns out to be terrible they won’t be blamed too much, because at least they will have failed in the traditional way. As the old business saying goes,

“Nobody ever got fired for buying IBM.”

There is no evidence that having been a good player (or being white and of conservative appearance) is an advantage for a soccer manager. Arrigo Sacchi, coach of the great Milan from 1987 to 1991, who couldn’t play soccer himself, explained, “You don’t have to have been a horse to be a jockey.”

Playing and coaching are different skill sets. Match for match, the most successful coach in soccer’s history is probably Jose Mourinho, who barely ever kicked a ball for money. When Milan’s coach Carlo Ancelotti noted Mourinho’s modest record as a player, the Portuguese replied, “I don’t see the connection. My dentist is the best in the world, and yet he’s never had a particularly bad toothache.” Asked why failed players often become good coaches, Mourinho said, “More time to study.”

The problem with ex-pros may be precisely their experience. Having been steeped in the game for decades, they just
know
what to do: how to train, who to buy, how to talk to their players. They don’t need to investigate whether these inherited prejudices are in fact correct. Rare is T H E W O R S T B U S I N E S S I N T H E W O R L D 83

the ex-pro who realizes, like Billy Beane at the Oakland A’s, that he needs to jettison what he learned along the way. Michael Lewis writes in
Moneyball
, “Billy had played pro ball, and regarded it as an experience he needed to overcome if he wanted to do his job well. ‘A reformed alcoholic,’ is how he described himself.”

Managers Don’t Need Professional Qualifications

Only in 2003 did UEFA insist that new managers in the Premier League have passed the “Pro Licence” course. In England’s lower divisions this remains unnecessary. Yet Sue Bridgewater, an associate professor at Warwick Business School, showed that managers with the Pro Licence won significantly more matches than managers without it. She also showed that experienced managers outperformed novices. That qualifications and experience are useful is understood in every industry except soccer, where a manager is expected to work the magic he acquired as a superhero player.

The New Manager Is Often Underqualified

Even If He Has Qualifications

Chris Brady, a business school professor, teaches finance and accounting in the Pro Licence course. He says his entire module takes half a day. No wonder some English managers mismanage money: they don’t understand it. Clubs are ceasing to entrust their finances to managers, giving them instead to more qualified executives like Kaenzig, who guarantee stability by staying longer than the club manager’s average two-year tenure. That at least is the theory: the week after that conference in Zurich, Hannover released Kaenzig.

Immediate Availability

The new manager is appointed either because he is able to start work immediately (often as a result of having just been sacked), or because he has achieved good results over his career, or, failing that, because he 84

achieved good results in the weeks preceding the appointment. McClaren became England manager only because his team, Middlesbrough, reached the UEFA Cup final in 2006 and avoided relegation just as the FA was deciding who to pick. By the time Middlesbrough was waxed 4–0 by Seville in the final, McClaren already had the job.

His period under review was so short as to be a random walk. The same went for the main candidates to manage England in 1996: Bryan Robson, Frank Clark, Gerry Francis, and the eventual choice, Glenn Hoddle. Today none of them works as a manager (Francis and Clark haven’t for many years), none had his last job in the Premier League, and none will probably work that high again. They were in the frame in 1996 because they had had good results recently and were English—

another illegal consideration in hiring.

Star Power

The new manager is generally chosen not for his alleged managerial skills but because his name, appearance, and skills at public relations are expected to impress the club’s fans, players, and the media. That is why no club hires a woman—stupid fans and players would object—and why it was so brave of Milan to appoint the unknown Sacchi, and Arsenal the unknown Wenger. Tony Adams, Arsenal’s then captain, doubted the obscure foreigner on first sight. In his autobiography,
Addicted
, the player recalls thinking, “What does this Frenchman know about soccer? He wears glasses and looks more like a schoolteacher. He’s not going to be as good as George. Does he even speak English properly?”

A manager must above all look like a manager. Clubs would rather use traditional methods to appoint incompetents than risk doing anything that looks odd.

BAD STAFF

The most obvious reason soccer is such an incompetent business is that soccer clubs tend to hire incompetent staff. The manager is only the start T H E W O R S T B U S I N E S S I N T H E W O R L D 85

of it. Years ago one of us requested an interview with the chairman of an English club quoted on the stock market. The press officer asked me to send a fax (a 1980s technology revered by soccer clubs). I sent it. She said she never got it. On request I sent three more faxes to different officials.

She said none arrived. This is quite a common experience for soccer journalists. Because soccer clubs are the only businesses that get daily public-ity without trying to, they treat journalists as humble supplicants instead of as unpaid marketers of the clubs’ brands. The media often retaliate by being mean. This is not very clever of the clubs, because almost all their fans follow them through the media rather than by going to the stadiums.

A month after all the faxes, I was granted permission to send my request by e-mail. When I arrived at the club for the interview, I met the press officer. She was beautiful. Of course she was. Traditionally, soccer clubs recruit the women on their office staff for their looks, and the men because they played professional soccer or are somebody’s friend.

If soccer clubs wanted to, they could recruit excellent executives.

Professors at business schools report that many of their MBA students, who pay about forty thousand dollars a year in tuition fees, dream of working in soccer for a pitiful salary. Often the students beg clubs to let them work for free as summer interns. The clubs seldom want them. If you work for a soccer club, your goal is to keep working there, not to be shown up by some overeducated young thing who has actually learned something about business.

In part this is because much of the traditionally working-class soccer industry distrusts education. In part, says Emmanuel Hembert of A. T. Kearney, it is because many clubs are dominated by a vain owner-manager: “Lots of them invested for ego reasons, which is never a good thing in business. They prefer not to have strong people around them, except the coach. They really pay low salaries.”

Historically, only Manchester United recruited respected executives from normal industries (such as Peter Kenyon from Umbro), though now a few other big clubs like Barcelona are starting to do so, too.

Baseball appears to be just as incompetent. In
Moneyball
Lewis asks why, among baseball executives and scouts, “there really is no level of 86

incompetence that won’t be tolerated.” He thinks the main reason “is that baseball has structured itself less as a business than as a social club. . . . There are many ways to embarrass the Club, but being bad at your job isn’t one of them. The greatest offense a Club member can commit is not ineptitude but disloyalty.” Club members—and this applies in soccer as much as in baseball—are selected for clubbability.

Clever outsiders are not clubbable, because they talk funny, and go around pointing out the things that people inside the Club are doing wrong. “It wasn’t as simple as the unease of jocks in the presence of nerds,” writes Lewis—but that unease does have a lot to do with it.

The staff of soccer clubs tends not merely to be incompetent. They are also often novices. This is because staff turnover is rapid. Whenever a new owner arrives, he generally brings in his cronies. The departing staff rarely joins a new club, because that is considered disloyal (Kenyon, an exception, was persecuted for moving from United to Chelsea), even though players change clubs all the time. So soccer executives are always having to reinvent the wheel.

Worse, the media and fans often make it impossible for clubs to make sensible decisions. They are always hassling the club to do something immediately. If the team loses three games, fans start chanting for the club to sack the coach or buy a new player, in short to tear up the plans it might have made a month ago. “Consumer activism in this industry is extreme,”

warns A. T. Kearney in its report
Playing for Profits.
Hembert says, “The business plan—as soon as you sign a player for £10 million, you blow up your business plan. Commercial employees have to fight for £100,000 of spending here or there, but then suddenly the club spends £10 million.”

Or more. Sven Goran Eriksson once flew into Zurich to tell the International Football Arena a “good story” about his time managing Lazio. “The chairman I had was very good,” Eriksson recalled for an audience of mostly Swiss businessmen. “If I wanted a player, he would try to get that player. One day I phoned him up and I said: ‘Vieri.’”

Christian Vieri was then playing for Atletico Madrid. Eriksson and Lazio’s chairman, Sergio Cragnotti, flew to Spain to bid for him.

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Atletico told them Vieri would cost 50 billion Italian lire. At the time, in 1998, that was nearly $29 million. Eriksson reminisced, “That was the biggest sum in the world. No player had been involved for that.” He says the talks then went more or less as follows:

CRAGNOTTI: “That’s a lot of money.”

ERIKSSON: “I know.”

At this point Atletico mentioned that it might accept some Lazio players in part payment for Vieri.

CRAGNOTTI: “Can we do that?”

ERIKSSON: “No, we can’t give away these players.”

CRAGNOTTI: “What shall we do then?”

ERIKSSON: “Buy him.”

CRAGNOTTI: “Okay.”

Eriksson recalled in Zurich: “He didn’t even try to pay 49. He just paid 50.”

Nine months after Vieri joined Lazio, Inter Milan wanted to buy him. Once again, Eriksson reports the conversation:

CRAGNOTTI: “What shall I ask for him?”

ERIKSSON: “Ask for double. Ask 100.”

CRAGNOTTI: “I can’t do that.”

Eriksson recalled: “So he asked 90. And he got 90. That’s good business.” (Or the ultimate example of the greater-fool principle.) Someone in the audience in Zurich asked Eriksson whether such behavior was healthy. After all, Lazio ran out of money in 2002 when Cragnotti’s food company, Cirio, went belly-up. Cragnotti later spent time in prison, which even by the standards of Italian soccer is going a bit far.

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Eriksson replied, “It’s not healthy. And if you see Lazio, it was not healthy. But we won the league. And we won the Cupwinners Cup. We won everything.”

The point is that soccer clubs, prompted by media and fans, are always making financially irrational decisions in an instant. They would like to think long term, but because they are in the news every day they end up fixating on the short term. An executive with an American entertainment company tells a story about his long-arranged business meeting with Real Madrid. His company was hoping to build a relationship with the club. But on the day of the meeting, Real ritually sacked its manager. The usual chaos ensued. Two of the club officials scheduled to attend the meeting with the American executive did not show up. That’s soccer.

SAFER THAN THE BANK OF ENGLAND:

WHY SOCCER CLUBS ALMOST NEVER DISAPPEAR

On September 15, 2008, the investment bank Lehman Brothers collapsed, followed almost immediately by the world’s stock markets.

Any soccer club on earth was a midget next to Lehman. In the year to September 2007, the bank had income of $59 billion (148 times Manchester United’s at the time) and profits of $6 billion (50 times Manchester United’s), and was valued by the stock market at $34 billion. If United’s shares had still been traded on the market, they would probably have been worth less than 5 percent of Lehman’s. Yet Lehman no longer exists while United very much does.

Over the past decade, people worried a lot more about the survival of soccer clubs than of banks. Yet it was many of the world’s largest banks that disappeared. The public perception that soccer clubs are in-herently unstable businesses is wrong. Despite being incompetently run, they are some of the most stable businesses on earth.

First, some facts. In 1923 England’s Football League consisted of eighty-eight teams spread over four divisions. In the 2007–2008 season, eighty-five of these clubs still existed (97 percent), and seventy-five re-T H E W O R S T B U S I N E S S I N T H E W O R L D 89

mained in the top four divisions (85 percent). An actual majority, forty-eight clubs, were in the same division as they had been in 1923. And only nine teams still in the top four divisions were two or more divisions away from where they had been in 1923 (poor Notts County had sunk from first to fourth tier).

So almost every professional club in England had survived the Great Depression, the Second World War, recessions, corrupt chairmen, and appalling managers. It is a history of remarkable stability. By comparison, economic historian Les Hannah made a list of the top one hundred British companies in 1912, and researched what had become of them by 1995. Nearly half the companies—forty-nine—had ceased to exist. Five of these had gone bankrupt, six were nationalized, and thirty-seven were taken over by other firms. Even among the businesses that survived, many had gone into new sectors or moved to new locations.