In football, managers matter. But not as much as money does

WHISTLES were blown across stadiums of the English Premier League on May 11th, bringing the domestic football season to an end. Manchester City were crowned as champions, confirming what most pundits had anticipated at the beginning of the season. For many, it was a foregone conclusion. City are the richest club in the league (they are owned by an Emirati billionaire). This affords them the best players, and they lavish the greatest amounts on pay, spending £330m ($550m) last year. Liverpool, who valiantly fought City to the wire, spent £100m less on remunerating their team. Just how much does money matter?

The Economist has crunched the numbers on the relationship between performance (the number of points a team accumulates at the end of the season) and pay (the amount a club spends on wages as a percentage of the season’s median) for 34 clubs that have played in the Premier League since 1996. By our calculations, spending on pay explains 55% of the variation in clubs’ performance. There is evidence, too, that winning teams beget higher wages. Either way, there is still room for good management. Sir Alex Ferguson, who retired as Manchester United’s manager last year, was remarkable in his outperformance: over 19 seasons his teams gained 15 points more on average than would have been expected given the amount the club spent on wages. These margins matter. Had he been an average manager, he would have won just one title. Instead, he won eleven.

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