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Moneyfarm Decodes: The business of football

Whilst many Brits understand the football industry better than their own financial decisions, the questions we ask of football managers are the same we ask of ourselves when it comes to money management. So, what can investors learn from the beautiful game? Download the free report and find out. 

With this free eBook, we worked with football finance expert Dr Rob Wilson to explore how the business of football operates and how the factors that lead to success can be translated into investment behaviour. We have decoded the business of football by focusing on how the managerial approaches of premiership teams match against investor profiles. How do the principles of premiership football club management translate into personal wealth management?

We bring to life the wins and losses resulting from business decisions and the typical financial behaviours of some of the country’s leading managers. Focusing on long- versus short-term thinkers, and high- versus low-risk tactics, we determine the right goal-based investment strategy both on the side-line and in everyday life.

 

Football managers know the decisions they make influence how their club performs in the league, but can the different managerial styles of the beautiful game be transferred from the field to wealth management? From Wenger to Guardiola, we analyse the decision-making behind past wins and losses, and match the managers to an investment style that best reflects them, from Conservative to Pioneering.

Guardiola plans and coaches with enthusiasm and his teams are bold and tenacious. He has created a new playing style, full of attacking talent, that is prepared to take a risk for the rewards on offer. This classifies him as a pioneering investor, whereas Arsène Wenger can be classified as a conservative investor, cautious about his investment decisions to protect the financial integrity of the teams he has managed.

Rather than spending significant amounts of money on experience, Arsène earned a reputation for spotting young talent. Always focused on longer-term objectives related to the club’s ambition to secure a top-four finishing position, Wenger delivered a routine return on investments. Throughout his career he remained focused on developing a youth system which identifies talent from across the world and in particular French speaking nations. These players would often be drafted into the first team with a number being sold onto other teams across Europe.

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Spend or save = success or failure

With £100m to spend, historically those promoted to the Premier League have focused on the short-term and spent heavily to try and retain their position for the following season rather than be relegated.

More recently, however, a trend has emerged whereby clubs seem to view longer term progress as more important, opting to invest approximately 50% of their TV earnings and take the calculated risk that they may get relegated (see p7). In the top half of the League, those that spend more tend to finish higher, with the manager’s influence and investment decisions being a key ingredient.

Where there are plenty of managers who spend heavily and fail to return a finishing position, there are others who spend relatively little and overachieve. The way to succeed is to invest wisely and build a team around a certain style of play. With careful planning and patience, the returns are greater in the long term.

 

We admit that the perfect manager is non-existent. There are different styles, behaviours and certain levels of risk acceptance, combined with the duration of the investment and ability to adapt. By understanding how typical financial behaviours can lead to results on and off the pitch, expert Dr Wilson has made some predictions for the current season.

  1. Young talent is on the up – Spending of top-flight football clubs has fallen, bringing a renewed focus on Academy Players rather than new signings
  2. Spend for success? – Where spending has taken place, the pressure will be on for improvements on last years positions. Expect higher spending in January to compensate.
  3. Who’s battling for the top spot? – Tottenham, Arsenal, Manchester City? Read the eBook and find out.

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