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CIES Football Observatory Value Report

Analysing the transfer market with the CIES Football Observatory

17Dec

The rise of the Galácticos marked a turning point in player valuation. Since Luis Figo’s transfer to the Real Madrid, the Spanish side have continually upped the ante, breaking the highest transfer fee record a further four times, with their most recent acquisition, Gareth Bale, costing them a reported 100m euros.

With these enormous sums being spent, actually valuating a player is difficult. Increasingly, clubs pay what they need to in order to guarantee they get the player they want. This often means paying well over the odds for a player and this acceptance of overpayment has had a considerable effect on player valuation in the common market. If we factor in inflation, Ronaldo, the Brazilian striker, regarded as an all-time great, transferred for around 4,000,000 euros less than Andy Carroll, a player who at the age of 25 failed to make England’s World Cup squad.

Comparing Andy Carroll and Ronaldo isn’t an attempt to shame current football managers or even their financial advisors; players are just worth more than they were 15 years ago. Many would argue that the worlds of football and economics have become synonymous, after all, analysing a player’s value solely on his on-pitch ability is short-sighted. This is perhaps the main reason why FC Barcelona opted to sign Neymar, instead of a much-needed defender. By having Brazil’s standout player, in a year in which Brazil are hosting the World Cup, it keeps your club fresh in the minds of millions, regardless of how well you’re doing on the pitch. Neymar’s’ former club, Santos, would have known this and therefore would have held out for as long as possible knowing his importance to Barcelona.

The CIES Football Observatory recently conducted a rankings table that profiled the Top 60 most valuable players plying their trade in Europe. It’s an interesting list that on first glance will shock a few people as it is anything but a run down of the Top 60 players in the world, instead, it takes into account an eclectic mix of metrics that allow it to give a truer reflection of a player’s valuation.

Their powerful econometrical model is based on the analysis of 1,500 players that have been transferred from the English, Spanish, French, Italian and German leagues since the 2009/2010 season. In order to determine the individual value of the players that were in the table, a number of metrics are considered, including; age, contract length, stature of current club and player performance.

On first viewing the table isn’t that surprising – the general consensus is that Lionel Messi, Cristiano Ronaldo and Luis Suarez are the three best players in the world and they head up the list. It’s not even that strange to see Lionel Messi valued at almost the twice of Ronaldo (Messi being 26 and Ronaldo nearly 30).

It’s not until you reach the sixth position that things start to become a little harder to comprehend – Paul Pogba, the 21-year old, France international has an upper valuation of 70.4 million euros, a figure that is surely grossly over exaggerated and a sum more suited to the back pages of tabloid newspapers. However, from an analytical standpoint the figure is incredibly conceivable. He’s young, played a pivotal role for Juventus, one of Europe’s premier clubs, a fully-fledged French international primed to play a central role in France’s World Cup bid and has a contract to 2016. When put like this it becomes clear why CIES’ economic model values him higher than say, Yaya Toure, a player who’s widely considered to be more accomplished in Pogba’s position at the moment. Pogba, quite rightly, is viewed as an investment, whereas Yaya Toure would be a short-term fix.

The comparison of these two players brings a number of invaluable insights that go a long way to prove the reliability of this model. If we put ourselves in the shoes of a manager at a top European Club who’s looking to purchase a powerful central midfielder. The two players available on the market, Pogba and Toure, have differing values of over 30 million euros; Pogba valued at 70.4 million euros and Toure 33.3 million euros. If we take it as fact that both player will retire at the age of 34 (or cease to play a pivotal role in their respective clubs), Toure, aged 31 will play around 3 more seasons at the top level, putting his value per season at 11.1 million euros. Pogba on the other hand, at 21 years of age will cost around 5.4 million euros per season – and with that the club will get him throughout his late twenties, a period of time when players are considered to be at their prime. When put in this context, the analytical model of CIES becomes remarkably accurate.

The beauty of this analytical model is that it values youth over experience in an era when clubs are more than willing to invest heavily in young players rather than take the risk on the academy roll-out. From a Premier League perspective, it is also really interesting to see the higher valuation of young English players. The model seems to have considered the fact that English players tend to stay within their home league and that big English clubs are happy to pay a premium to attract the best English talent. This is evident in the valuation of Ross Barkley, a player who has burst onto the scene this season as a raw 20-year old talent – his valuation is higher than Thomas Muller who is also young, a Champions League winner and an experienced German international. The CIES table reflects clubs preference to sign younger players and in these situations it is incredibly valuable for home club’s to have statistical knowledge that can paint an accurate picture as to the kind of bid that should be deemed acceptable.

The table is also dominated by so called ‘big clubs’ barring perhaps Southampton, Everton, Fiorentina, Schalke and Monaco (who have 6 players on the list between them). The financial status of clubs like Chelsea, Real Madrid, Paris SG and Manchester City means that in order to attract one of their players a bid well in excess of their true value would be needed to sway them into letting them go, as bringing in extra money is less important than keeping their top talent. This sentiment is unlikely to be shared by the smaller clubs who have less financial clout. This represents yet another reason to celebrate the accuracy of the econometrical model deployed by CIES observatory.

One drawback of the model is that it can’t predict whether there will be multiple bids for a player coming from differing clubs. If this happens, like it did with Neymar, where a whole host of large European teams were courting the player, his valuation, by the very virtue of the bidding process, will increase. From an analytical standpoint this would be incredibly difficult to incorporate but nevertheless marks a slight flaw in its workings.

It remains to be seen whether any of the players on the list will be sold in the summer transfer window, but you can guarantee that one of themwill be up for grabs. Big name players like; Luis Suarez, Eden Hazard and even Lionel Messi have been rumored to be on the move and it will be really interesting to see whether the CIES Football Observatory econometric model stands up to the unpredictability of the transfer market.

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