Picture the scene: following an exciting performance for his country in the World Cup, your club has recently shelled out a seven-figure sum to sign a new striker. The striker is awarded a four-year contract on a base salary of £60,000 per week. Shortly after arriving, he ruptures his achilles tendon and is ruled out for six months. During this time, the club changes managers. The new coach has never rated the striker in question, who is forced to sit on the bench collecting dust (and his £60,000 per week) for the remainder of his contract. It is the sort of thing that makes fans’ blood boil, particularly if the financial standing of your club is not always rock solid.

Luckily for supporters, nightmare scenarios such as this are becoming more infrequent, as clubs seek to adopt more flexible and sophisticated pay structures. Financial Fair Play has forced clubs to re-evaluate their remuneration strategy, with a general shift towards lower basic pay and a larger variable element based on performance. Broadly, there are two main approaches to determining performance related pay. You can either reward players for team success (for example, bonus pools for promotion or qualification for the Champions League) or you can offer individual incentives for certain behaviours (for example, goal bonuses or the number of ‘duals’ won in a match). The problem with the former is that not all players make an equal contribution to the team. When Liverpool won the Champions League in 2005, few could argue that Harry Kewell was as important to that victory as Steven Gerrard. Individual incentives provide a more accurate method to reward players, but this too has its criticisms. Many feel queasy about the operation of such a individualistic approach in a team game. Ferran Soriano – CEO at Manchester City and one of the biggest proponents of performance related pay from his days working at Barcelona – has stated that “a team sport such as football requires group reward”. However the vast differences in players’ basic salaries show that football already rejects the idea of group reward. If players’ basic salaries are so different, why should the performance related element be equally distributed?

A more valid criticism of individual incentives is that current analytics are not yet sophisticated enough to reward players without affecting their conscious decision-making during games. Goal bonuses mean players will shoot instead of passing. Assist bonuses mean the opposite. Rewarding pass-completion percentage means players will play too cautiously, whilst rewarding forward passes means they’ll play too riskily. If players’ incentives become too aligned with blunt and one-dimensional metrics they will stop playing football and start playing a personal numbers game. Gilles Grimandi – Arsenal’s Chief Scout – has expressed concern that young midfield players are avoiding ‘duels’ with opposition players in order to preserve favourable statistics.

In order to buck this trend, Ian Lynam (joint head of the Sport group at Charles Russell Speechlys) has discussed the need for clubs to find football’s equivalent to on-base-percentage – the number which transformed baseball remuneration and valuation post Moneyball [1]. Of course, finding this magic metric is an extremely difficult task. It must be sophisticated enough to elude players’ conscious attempts to dictate it. It must also be flexible enough to respond to an infinite number of different circumstances and the varying requirements of coaching staff. A high intensity sprint to close the ball down might be a positive indicator in some circumstances, but a negative indicator in others (for example when the player moves out of the team shape against superior opposition). Statistical models require rules, but football tends to resist them. If you make the same run 10 times in a match, the first five or six might be damaging to the opposition but the last four are predictable. Then there is the question of quantum. Exactly how much better (or worse) is a cross than a cutback?

Overall, there is little doubt that clubs are getting smarter about their wage bills. Some players and agents may be reluctant to move away from the old flat remuneration structure of ‘£x per week’ but the days of players earning thousands to sit on their backside are numbered. Players can hardly complain; performance related pay is based on fairness – players earn what they deserve based on the contributions they make. This month the CEO at Liverpool, Ian Ayre, has reaffirmed the positive impact that performance related pay has had on the squad at Anfield. Players are properly incentivised to improve and they are a “happy bunch” as a result. In order to stay ahead of the curve, clubs should ensure that they invest heavily in football analytics whilst the area remains relatively immature. The more accurately you can tell how good a player is, the more accurately you can pay him, and the more likely you will be able to exploit inefficiency in the market by finding better players more cheaply. Meanwhile, lawyers, agents and clubs should be prepared for increasingly complex contractual negotiations and arguments about the most appropriate metrics to use in the valuation and remuneration of a particular player.