In Defence of FSG’s Transfer Policy

In Defence of FSG’s Transfer Policy
January 10, 2015 Paul Tomkins

By Paul Tomkins.

This article on the This Is Anfield website was brought to my attention (by, amongst other people, its author, Mark Pearson, via Twitter), and I wanted to respond, as I took exception to some of the points raised. I told Mark that I’d respond via an article, and he may respond in turn. (This may lead to an infinite loop, until one of us dies.)

My problem with transfer articles like this is that they exist in the vacuum of a Liverpool’s fan’s perspectives on transfers, and come from a position of someone who seems to be a fine writer but who isn’t an expert on the subject of transfers. (See: Dunning-Kruger. Much of the work I do now is based on knowledge that other people don’t have, as they haven’t studied these things. Unless you also study transfers, I find it hard to accept that you’re not just guessing.)

For example, fans almost always think their team is crap at taking corners; ask most fans and they’ll wonder why their team doesn’t score enough, yet the average is a goal just 3% of the time. So you may score from one in 33 corners. It’s similar with transfers; people expect too many successes. With Graeme Riley and others at the Transfer Price Index, we have looked at all Premier League transfers, as well as calculating actual football inflation. We have been working on this for five years, looking at over 5,000 deals, and are currently working on a second book on the subject. Our work has been quoted in other books, and used by an EU Commission on transfers, amongst other things. And while no model is ever fully correct, we believe that we’ve proved its merit as an analytical tool. We can show strong correlations between transfer spending and success. This is not meant to sound condescending; we’ve simply done our homework.

For instance, I’ve been able to show that, for what Liverpool spend, expectations should never be for the title. Once you get this you can’t un-get it. This is important to read, not least because no matter how much you think Liverpool spend – throwing in and out net and gross figures – this shows what squads cost. I am at the stage where I struggle to talk about the subject to anyone who hasn’t read it, because this shows how things work.

It shows how much you must spend to win the title, and it shows that irrespective of net or gross spend, Liverpool’s squad (and from it, its XI) has never been expensive enough. Frankly, it’s not even been close.

Let me put it to you like this. In 2008/09, Liverpool’s £XI (all 38 XIs adjusted for inflation to 2014 money) was £142m.

Last season, Liverpool’s £XI was £143m.

Given that the teams were very different, and that the managers had very different CVs and styles, it’s a weirdly similar total that led to 2nd place finishes with 86 and 84 points respectively.

Let those figures sink in. £142m-143m. Almost identical. Now, the cheapest £XI to win the title since Arsenal in 2004? A whopping £210m. That’s the cheapest. It’s not the average. Most of the time the title-winning £XI has been over £300m, plucked from £600m squads.

Liverpool are picking £150m teams plucked from £300m squads.

Now, the article in question, Mark says:

“Where FSG and I fallout with each other is the prolonged and continued disaster in the transfer market and transfer windows, which, in my unassuming opinion, titles and league positions are decided.”

Mark is of course right, whilst being totally wrong.

Know Your Transfers

One of the things to come from our TPI work is what Dan Kennett termed “Tomkins’ Law”, which relates to my conclusion that less than half of all transfers work; around 40% being successful on average, but you could round it up to 50% if being generous.

Now, even though I used only objective data points to prove this fact, this is actually logical, as roughly only 40% of any given squad will be in the starting XI. Everyone has to buy squad players, but not all of your squad players can be seen as successful – indeed, most of them won’t be, because by virtue of being a squad player you are not in the team. Half of them are there merely as insurance – for injuries crises, flu outbreaks, emergency rotations – and yet if they aren’t playing they’re labelled flops. Think about it. Do Liverpool have 25+ players so that 25+ players can play every week?

So, just as most corners come to nothing, don’t expect too much from transfers. None of this is to say that Liverpool’s transfers have been particularly impressive on the whole since FSG arrived, but you need to view the argument fairly. Now, I’m not saying that the TIA article is purposely unfair – I’m simply saying that it’s inaccurate, even allowing for the grey areas of opinion.

For instance, see these paragraphs:

“45 players purchased in 4 years.

£352 million spent to acquire those 45 players.

Of those 45 signed players how many have become superstars, world beaters, or sold for £millions of profit? Being generous I can think of 2. Suarez and Sturridge. Both a snip, both able to change a game on a regular basis and the former being flogged at a healthy profit. People may come up with further names than me, players they feel are worthy signings, but ask yourself who really wins games for Liverpool match after match that we have procured in the last 4 years like the names I have specified or in the terms of FSG’s “Transfer Strategy”.

If you can find 2 more it’s pretty slim pickings out of 45 players right? That would make a transfer success rate of 8.8%, or another way of looking at it a 91.2% failure rate. Maybe somebody within the transfer committee or board of Directors should look at that and assess those results.”

Now, I could quite easily pick out two more: Henderson and Coutinho. If Jordan Henderson isn’t an example of a success, given that he’s become a regular, was outstanding last season and is the captain-in-waiting, we’re in trouble here. But my issue is that the author is looking to find superstars. Again, I’ve written many times over the past couple of years that only 10% of signings work out to be exceptional. Arsene Wenger didn’t sign a Thierry Henry every season, and Bolton didn’t sign a game-changer (for them) like Kevin Davies every season.


Bargain. Captain-elect.

The author is talking about game-winning players, but then that comes down to strikers mostly, yet the figure of 45 players does not relate merely to forwards. Has any club in the past four years bought strikers as successful for their club as Suarez and Sturridge, neither of whom other big clubs would touch at the time.

I’ve also shown that buying ‘world-class’ players is not as nailed-on for success as people think. But the greater number of expensive players you buy, the greater your chances of winning the coin toss. If you have more money you don’t need to worry about recouping anything, although FFP now makes that more of a requirement. City and Chelsea could do it because FFP wasn’t in effect, and then they got richer based on the success it brought; Manchester United can afford it because they are richer than some countries.

“Looking at things from a great height taking our overall spends against the number of players signed it works out to be an average of £7.8 million outlay per player during FSGs tenure. That falls quite neatly into the cost of the following players who were all purchased for around that figure: Sebastian Coates, Charlie Adam, Iago Aspas, Tiago Ilori, Luis Alberto, Jose Enrique, Fabio Borini, Emre Can – there are more, but you get the picture. No standout players there, no match winners, no huge profit to be made.”

Funnily enough, £7.8m turns out to be roughly the average cost of a Premier League player in 2014 money, and is roughly what Josemi and Nunez cost in 2004 with inflation applied. Many of the above were signed as squad players or hopes for the future, and in the case of three or four of them, they are doing no worse than expected. Was Tiago Ilori bought to go into the first team, or was he a young 5th-choice centre-back destined for a loan? Centre-backs are rarely established in top teams before the age of 25, which happens to be the age when Sami Hyypia joined Liverpool and when Jamie Carragher moved into the position. Mamadou Sakho is only now approaching that age.

Equally, has the author watched Emre Can?

“Taking this summer alone, £117 million spent on 10 players, that’s an average of £11.7 million per player. Any of this summer’s recruits bucking the trend from the above? Not so far.”

My issue here is misrepresentation. First of all it’d be hard for Divock Origi to impress for Liverpool given that the only reason he was sold to the club was if he stayed at Lille for another season. I’ve shown recently that most of the Premier League’s best goalscorers were not prolific in their teens, but that their ratios tend to improve massively in their early 20s. So to sign someone keeping a £30m striker out of the Belgium team, despite being younger, makes sense to me, no matter whether fate decrees that he succeeds or fails. (Remember, Origi is as prolific as Thierry Henry at the same age.)

I would add that, on performances, Can, aged just 20, has been almost flawless in two different positions. Remember, you don’t get many young centre-backs or many young holding midfielders. Chelsea had Matic at the same age but let him go, only to buy him again for £20m+ once he’d matured, aged 25. Can, wanted by Bayern, for whom he made his debut at 18, is a special talent. He has been eased in by Rodgers, and whilst admittedly a bit shellshocked when facing a big fat Womble on Monday, he is, based on the evidence, a clear success.

Equally, Markovic is starting to show that he’s a class act, but like many new recruits he has taken time to settle (some settle quickly, others don’t; so never write anyone off within the first year, especially youngsters).

I’d agree that, right now, none of the signings look world-class, but Manquillo, Can and Markovic are 20, Origi 19 (and not even here yet) and Moreno is 22. For their age they are exceptional players, and the next stage is to become exceptional players, full-stop. That may or may not happen. But what else can Liverpool do, at a time when it has needed to build squad numbers and add quality? Even Markovic, at £20m (aged 20) cost roughly half of what the same calibre of player – established international in his teens – would cost aged 23.

The simple fact is that, with FFP, Liverpool cannot afford massive wages and big fees; as it is, whilst maintaining an XI that only costs half as much as the top three, the club is already under investigation over turnover-to-spending. Again, you need to know this, otherwise you’re just plucking concepts from thin air. If Liverpool gambled on finishing in the top four again, and increased the wage bill to do so, then they would be doing exactly what Leeds United did – planning for something that, if it fell short, would be crippling. So it was a catch-22, and may remain one for a while yet; not least because Liverpool are the 5th-richest team in England based on turnover (see the excellent Swiss Ramble blog, with the one hyperlinked to containing the information in a piece on West Ham that contains all the relevant data).

If your turnover is top (Man United), you can bank on finishing in the top four, providing you have a manager who can handle the pressure. Even if United missed the Champions League for three or four seasons in a row they could still spend and spend, until they were back. As it happens, they spent tons in the summer, because FFP allows them to, because they are a financial behemoth.

“We were led to believe that we couldn’t attract the top players because we had no Champions League to offer. This summer we did. So how come the transfer strategy didn’t change? Who would have rather Liverpool spent £117 million on 3 or 4 world beaters than on 10 with potential? Look down the road at Old Trafford and see what pushing the boat out on top draw players does for a team.”

This is comparing apples with oranges. Indeed, it’s comparing apples with floppy disks. I’m amazed that more fans in this day and age – especially aspiring writers (who are clearly not stupid) – don’t know the difference between what Man United and Liverpool can spend. I repeat: Liverpool’s turnover is dwarfed by United’s.

“This beautiful strategy isn’t, hasn’t, and won’t work. Some will blame Rodgers for wasting money, others Dalglish before him, I’m sure the next manager would get the same bashing. The common denominator here is the owners and there preconceived ideas of what players we should be buying. Make no mistake, Rodgers has a remit, a strategy to follow in transfers and wage structure and it’s failing.”

It is true that the manager shouldn’t carry the can. But nor should FSG. They inherited a club in debt, with £50m wasted on stadium designs (but no shovels to show for it), and they had no Champions League income (or cachet), and a bunch of unhappy players and a limited manager (Hodgson). To have come within a whisker of the title last season was remarkable. (Even so, it helped that United appointed the wrong manager, to free up one space at the top of the table.)

Now, if FSG had been multi-multi-billionaires like those at Chelsea and City then the Reds could have spent big before FFP bit. But they weren’t, so they couldn’t. And were any of the world’s richest people trying to buy Liverpool? No. And would we want dubious characters owning our club? No.

“Chelsea pay big wages, Man City, Man Utd, Real Madrid, Barcelona, Bayern Munich all follow suit, and guess what, they win things as a result. They qualify for the Champions League year after year, and guess what, that Champions League money is used to offset the big wages, most still make a profit too (success and profit tend to go hand in hand in the business world).”

These seven clubs are all considerably richer than Liverpool. See the Deloitte Football Money League.

Arguably the only team in Europe to buck this trend is Atletico Madrid; they are the exception that proves the rule. And even then, there are only two richer sides than them in La Liga; in England, Liverpool are behind four others, three of whom represent a greater challenge than the two giants in Spain, even though the two Spanish teams are bigger – because overcoming two super-rich clubs is easier than overcoming three. (What Atletico have achieved is still bloody amazing, mind.)

The rich are getting richer, and Liverpool, whilst getting richer than the likes of Everton and Newcastle, are now miles behind the big boys. This is not opinion. This is fact.

“So this January I am not expecting anything different. The result of which will no doubt leave us once more outside of the top four come May. Then we will be back to the story of no Champions League to attract the top players. This summer Liverpool had a chance to look at the beautiful strategy, and the results, and to change the path, to grow the club on the field like they have off it. They refused, the chance has gone.”

Again, if Liverpool paid more money on transfers they’d have been in serious danger of breaching FFP, because they don’t bring in enough money to justify it. And if they spent big on fewer players they’d have risked small-squad syndrome (collapse in March).

If FSG pump their own money into the club (and whilst they are rich, they don’t have spare billions like other owners) they fall foul of FFP. If they spend big on ‘world-class’ players and they end up with flops like Torres and Shevchenko at Chelsea, or if those new expensive players suffered serious injury, then there is no more money to spend on anyone. (Fewer eggs into one basket.) How do you increase the size of a squad by a net of half-a-dozen players – needed because of the harder schedule – and do so with a net spend of under £40m? It’s not like Liverpool had a Champions League squad to start with, is it?

I agree that Liverpool haven’t spent as wisely as they needed in order to give themselves the unlikely chance of breaking the TPI or wages model, but then again, they finished 2nd last season with Suarez, Sturridge, Henderson and Coutinho all vital to that relative success.

To focus on 45 players when a quarter of them might have been kids ripe for loan-outs only, and almost another quarter have only been at the club a few months, is to skew the reality. I always think back to poor old Damien Comolli who, in his time at Spurs and Liverpool, bought some real duds; just like Arsene Wenger and Rafa Benítez did at Arsenal and Liverpool respectively.

But at Liverpool Comolli was in charge when Suarez and Henderson arrived. Those two alone could put his time into profit, and were two of the five most important players in a team that scored over 100 league goals (only the 4th time that’s been done in England; a shame that City also did so last season). Then think back to his ‘disastrous’ time at Spurs, which just happened to contain the purchases of Berbatov, Modric and Bale.

Everyone used to whinge about Benítez buying players like Josemi and Nunez, but he got some bargains too (Arbeloa, Garcia, Benayoun), and took a gamble with players like Alonso (too slow according to Man United scouts, I believe), Torres (no big club was fully convinced) and Mascherano (not apparently adapted to the Premier League as a West Ham reserve). None of these were considered world-class at the time. He specialised in signing 22-year-olds, not 26-year-olds. (Indeed, having researched Bob Paisley’s signings a few years back, I noted that the average age was also around 22.) Indeed, Rafa’s transfer record was excellent until he started buying players supposedly more ready-made in terms of age (Keane and Aquilani). Keane was a proven Premier League goalscorer who just couldn’t cut it in red.

Remember, Henderson almost went to Fulham aged 21 for £4m. Bale almost left Spurs at a similar age for £3m. Suarez spent two seasons at Liverpool as an exciting player but ‘wasteful finisher’ before he became prolific. Daniel Sturridge was a Chelsea reject. Digest this information, and then wonder if you are judging transfers too soon. You need to think about Rafa Benítez buying Raheem Sterling for £5m all those years ago, and how similar investments in Jordan Ibe and Sheyi Ojo in the FSG era could prove masterstrokes – but ones that take time to come to fruition.

I’ll conclude by saying that there is a danger when you buy the ‘stars of tomorrow’ that they won’t blossom, and that if they do, they’ll be sold on only for the next batch to be brought in, resulting in standing still. But what else do you do if you cannot spend as much as clubs with higher turnovers, who have attracted world-class managers, who can afford bigger fees and higher wages? What else do you do when teams like Chelsea and Manchester City can virtually guarantee players ongoing Champions League football?

It will mostly end in failure, if success is only judged as winning the title. While FFP will help Liverpool ward off clubs like Newcastle and Everton, or those who would otherwise have been bought out by the next sugar daddy if the rules still permitted it, it also protects the four clubs ahead of the Reds in the financial pecking order, some of whom have money-making stadia that only further load the dice in their favour.

As Liverpool fans we need to be patient and wait for those seasons when things click. We need to enjoy rides like last season, as they will not be the norm. And we need to know that unless FSG, the manager and the transfer committee have an unusually high success rate in the transfer market, and that the manager oversees ‘a perfect season’ which isn’t beset with injuries, then Liverpool, when everything comes to rest, are most likely to finish 5th. Because, over the past decade, the team with the 5th-costliest £XI happens to average … you guessed, it – 5th.