Is Arsene Wenger Underperforming Relative To Wage Spend?

I often see arguments like this on Twitter:

“Arsene Wenger has done brilliantly to keep up with clubs who spend much more than Arsenal.”

“What are you talking about? Our wage bill is massive. It’s nearly as big as Man Utd’s.”

“Yes, but not quite as big, so obviously they’re ahead of us.”

“They’re 20 points ahead of us, but their wage bill is only a few million higher.”

“Well it’s still bigger. And we are always ahead of the teams who have wage bills smaller than ours.”

“Our wage bill is double Everton’s and £50m a year more than Tottenham’s, but they’re right up with us.”

“Let’s see where we finish at the end of the season.”

Well the end of the season is nearly upon us. And at the moment we are struggling to achieve the top four position that we have come to know and love. Others have come and gone, but Arsenal have remained top four for a solid 16 years, something that has never before happened in Arsenal history. (Herbert Chapman might have done it of course, had he not inconveniently died; we’ll never know.)

One thing is sure: we are certainly nearer to a couple of teams with much smaller wage bills than ours than we are to Man Utd. But then neither Chelsea or Man City are very close to Man Utd either, and their wage bills are bigger. What does that tell us? Clearly that some managers perform better than others, and in the absence of a spending cap or the implementation of my brilliant idea to get all the managers randomly swapped around to different teams in the Premier League the day before the season starts, we can only measure manager performance on how many points they should be expected to get for their budget.

So here it is, helpfully presented by Daniel Finkelstein in The Times, in his most recent ‘Fink Tank’ column. Fink tank 5May2013Well looky-here, that nice Mr Ferguson is top of the list, with a massive 16.8 points more than he should expect from his wage bill. I don’t like him, but you have to recognise and respect his level of success over so many years. (Remember when he said he was retiring about ten years ago? The lying toad.)

David Moyes and Andre Villas-Boas also do rather well, on relatively modest budgets, which shows that we should be a lot further ahead of them than we are.

The funniest statistic here is of course dear ‘Arry, bumbling along at the foot of the table, when on the wages he forks out his team should be 20 points better off. What’s that ‘Arry? It’s all nuffin to do with you? Of course not, you’re still available for that England job, aintcha? Heh heh.

Alan ‘eight-year contract’ Pardew is also failing miserably, while Brendan Rodgers isn’t doing too well either. Though he’s rebuilding, see? It’ll all work out for Liverpool soon, back to former glories. So they tell me. Though I’m not putting my house on it.

And of course right in the middle, with (prior to last weekend) 0.6 of a point fewer than you would expect given our wage bill, is Arsene Wenger. Currently he is not great, nor is he terrible. He has turned himself into an average manager.

Well I say that, but of course there are a few caveats: firstly this is wages only and takes no account of transfer spend, which in some clubs is massive. Very few spend a net figure smaller than Arsenal on transfers. Arsene supporters obviously point this out in his defence, and it’s valid – though transfers are never as good a guide to performance as wages.

Another point is that even the most die-hard Arsene fan has to admit that a fair proportion of Arsenal’s wage spend is on dross who don’t deserve it. If we could get rid of all the players who don’t actually play, then we could easily cut £20m a year off the wage bill. So on players actually playing Arsene is doing better. (Having said that: who bought the duds in the first place, and don’t all squads have some dead wood?)

Thirdly, with Arsene there is amazing consistency. And this really is amazing. You would expect at some point that Arsenal would have a really great season or a really terrible one, but we’ve had eight average ones in a row. Before that we were in a duopoly with Man Utd since the start of Wenger’s reign – we were second biggest spenders then, so sometimes outperformed by beating Man U, and sometimes stayed on par by being second. So you could say we were ‘average’ then as well, in a way, though average on a higher scale.

Since 2005 the story is much the same: Arsene has managed to remain on par or sometimes one place better, but as there are now more big spending teams than there used to be we’ve dropped a bit in the table. But other teams have a great season now and again, outperform expectations and wage bills, then the next year drop much lower. Since 2005 I think Liverpool have been as high as second and as low as seventh; so have Chelsea. Man City have risen in that time. Arsenal have let others rise and fall around them.

Sometimes one terrible season turns into several – Leeds were Champions League semi-finalists in Arsene’s reign; Newcaste played in the CL too. So it’s very easy to understate what Arsene has actually achieved with his consistency, it really isn’t as easy as some people make out, which is why I don’t bash AW as some do.

Having said that: can we have a trophy soon, please?

Follow me on twitter: @AngryOfN5

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13 thoughts on “Is Arsene Wenger Underperforming Relative To Wage Spend?

  1. Your not taking in to account the amount of additional games played in all competitions over the course of the season
    Would Moyes be as high if they were playing sat, tue/wed, sat with his squad of players, during the early part of the season?? Meaning more fatigue ect at the end of the season, I doubt it
    Pretty pointless disscussion, other than to compare with other CL sides

    • You’re not taking into account the Europa League, the extra 2 League Cup games that teams not in Europe get, or the fact that some teams get knocked out of every cup at the first hurdle while others routinely get to semi finals or better.

  2. Interesting analysis. I’d like to know how the Times did their analysis, I find the relative rankings of Mancini and Wenger tough to believe, would’ve thought that scarf wearing sissy would be a red dot.

    I think your point re: deadwood is salient, as in everyone has it, but what would really be interesting is to see an analysis of everyone’s deadwood (% of wage bill on players with less than 5 apps?) I have a funny feeling that our deadwood is more expensive than say the last five members of Moyes squad. Might not make Wenger look any better, but would truly highlight the problem. It’s not Theo on 100k that is the problem it’s the Bendtners and Squillacis that get ya. Also highlights that Arsene and Dicky Law probably need some help with wage negotiations. Or at least someone to remind them that 60k a week is actually not the minimum wage for footballers….

  3. I think one of the reasons for this is their spending habits. Ferguson spends more on players who he knows will fit in at United. Wenger looks for cheaper players and there’s more of a risk that they won’t fit in at Arsenal. Chamakh for example. Then you get wages tied up for players who aren’t good enough because Wenger was looking for a bargain. So by Ferguson spending more there’s less risk they’ll be a flop.

  4. The question posed ought to be: ‘Is ARSENAL underperforming relative to wage spend?’. And since these last two seasons the Club has not been a genuine contender for major trophies despite paying wages similar to other genuine contenders here and in Europe, then the answer must be: ‘Yes, Arsenal Football Club has underperformed’. For those who believe that Arsene dictates financial strategy, he must be the culprit. For those who believe that he is forced to work under severe financial constraints such as zero net transfer expenditure, he has done reasonably well under the circumstances – because his current squad is nowhere near a match-up to the best here or in Europe. So a more useful question night be: ‘Is Arsene underperforming relative to his (nett) transfer spend?’ And since his (nett) spend is among the lowest in PL, the answer must be: ‘No, Arsene is doing exceedingly well.’ The key question however is this: ‘Will Arsene be given the money this summer to sign the ‘exceptional’ players he told us he needs to compete with the best?’ To which we will know the answer shortly.

  5. Interesting piece. I do bash arsene mainly out of frustration but I can see some of what some who are in support say in support of arsene. My biggest gripe is that my expectations of arsenal seem to be bigger than the clubs/managers. A meeting somewhere in the middle would be great for everyone.

  6. just because our wage bill is high it doesn’t mean their actually worth that much. He isnt underachieving at all. He is failing when it comes to paying stupid wages to players who if they were plying their trade at any other club would see a wage would drop off by about a third. in some cases maybe even half. Wengers problem it would seem is making these players think they are worth more than they are. The irony is when we have players worthy of high wages Wenger doesn’t want to pay it, and they end up jumping ship at the first opportunity

  7. On the first two caveats.

    1: Transfers and wages aren’t mutually exclusive when measuring over/under achievement. You’re right that net transfers reflect performance much worse than wage bills do, but the implication that net transfers are therefore less useful is misleading. Inward transfers (i.e., ignoring sales) also reflect league position better than net transfers, but it makes little sense not to consider player sales when measuring over achievement.

    You ought to start off treating it all as part of the same budget. If a club spends £150m a year on wages and had a net profit of £20m a year from transfers, then it’s fair to say the club spent £130m on players that year. If another club spends £100m on wages and had a net loss of £40m on transfers, it’s fair to say they spent £140m on players. When you start considering budgets holistically like this, you get an even better correlation with league performances than when just using wages. Because Arsenal’s total net spending has been weakened by repeated transfer profits, our overachievement in recent years has clearly been more than what the Fink Tank chart indicates.

    2: People who chuck out this second caveat aren’t being reasonable. Clearly you’re right the management should be held to account for the ‘dross’; it is part of how well the budget is used. It’s worth bearing in mind, however, that Arsenal run their budget in an unusual way where the dross is actually intended, and is compensated by transfer profits. This article explains how it works: http://www.thebeautifulgroan.com/2012/02/22/arsenal-misconceptions-wage-bills-net-spends-and-the-71-man-squad/ . The club has repeatedly accumulated loads of cheap players on high wages to maximize the chance it internally develops a star. It knows that many of them will be flops, but the financial savings from getting the successes cheaply allow it to afford the wages wasted elsewhere. The money it wastes on every Larsson, Bradley, Denilson, Diarra, Bischoff, etc. it saves on every Song, Fabregas, or Wilshere. The money it wastes on every Lupoli, Fonte, Freeman, Simpson, Wellington Silva, etc. it saves on every Van Persie. As such, the only fair way to judge the club is to accept the dross-heavy system and only judge whether or not it’s working by assessing total (wage + transfer) spending. On that basis, it looks like it’s working fairly well.

    Both of these caveats reflect Arsenal’s wage-heavy, transfer-light model, which you can only fairly evaluate if you combine both wage and transfer spending.

    • In the event, the Club has scraped through in the black on the back of CL qualification plus profits on transfers plus inflated ticket prices – a financial strategy that may well prove to be self-defeating if revenue drops off due to endemic lack of success on the pitch. A measure of what we have lost is the huge lead Man U has attained in commercial revenue and in prestige these past ten years. Rather like a lot of Europe, we must wonder whether austerity was the right strategy.

      • Just want to point out that football is by far the most popular sport in England and Arsenal is a premier league lcub located in the capital city with a population 8 million – probably at least 50% more if you count the surrounding urban and suburban areas.

        Why am I saying this? Basically as long as Arsenal is playing attractive football, its serving up a highly attractive entertainment product that can easily draw 50-55, 000 people with no problem at all. Full capacity more if it drops ticket prices marginally. Just by playing an attractive style and being where it is. And by virtue of the cultural equity it has, which isnt purely reliant on winning. Arsenal has by no means been a dominant club over the full course of its history. But the equity remains, as a result of consistently having a certain style of football and ethics as a institution.

        To put this in perspective, Chelsea, even playing in the top 2-3 every year, would not be able to find 55,000 fans to turn up every week if you gave them a stadium that size. Arsenal can – even if it was 4th place every year.

        And in any case, Arsenal has no rich uncle with a direct pipeline to a sovereign wealth fund (Quatari City) or dodgily privatized assets (Chelski), so “austerity” – as you put it – was always the only alternative. And even Chelsea’s filthy rich uncle seems to be fairly meticulous in carefully stacking up an ominous pile of nominal debt in the holding company through which he controls CFC. Have you ever asked yourself why he does that? There is an endgame there – never any such thing as a free lunch.

  8. While I commend the analysis, its quite incomplete to cherry-pick wages and determine a manager’s performance on that one measure and asses for one year. One year and only wages is really just statistical noise, almost random to be honest.

    If the aim is to judge a managers performance relative to the resources he has employed, then:
    1) we’d really need to look at non just the operating expense (where wages + bonuses lie) but also capital employed, which is huge.
    2) Related to that, we cant really just look at one year. Premiership player contracts are probably typically 3-5 years long. So a window about that long, allows us to look about an average life cycle of contracts and the capital investment (net annual transfer fees) fully amortized over the life of that contract

    So basically look at a 5 year window and assess the total points divided by net transfer spend + wage bill. That will give you a robust picture of how the manager/club has done. If there have been many managers just take the total. Its unfair to look at just one year anyway.

    If you do that kind of analysis, I suspect
    – Ferguson/Man U would still be the top performer. And the only top performer who is also turning a profit ie performing highly within a realistic situation.
    – Chelsea and Man City, will be exposed as paying quite a lot for their points – and by the way they dont even make money at all in a 5 year window – both a bleeding red in in that picture. So they are buying “success” very at very expensive rates with a rich uncle’s money.
    – Wenger will be in the top tier, as will Moyes.
    AVB has an incomplete report card, but he would be exposed as basically riding on some huge waves of unsustainable expenditure.

    This is a fairer system to judge the manager.

    The underlying premise is also what Wenger cryptical hints at when he says CL qualification is a trophy in itself. It basically is that when you are competing every year with clubs that lose steadily LOSE more money EACH of multiple years than Arsenal MAKES in ALL those years COMBINED.And Arsenal is a fairly profitable entity, which gives you some idea of the scale of “financial doping” going on.

  9. Lads you can analyse what you like, You can criticize the spending policy of the club the attitude of the owners or the price of match tickets. But who is really in charge at Arsenal ? Who makes the decision to sign a player, AW ? To what degree does he have a say on how much should be paid for any prospective player ? And what about transfers ? Did he decide on his own to sell players like Vieira, Reyas or Fabregas ? Or was the decision made for him. What about Song and rvp last year ? Who in heavens name allowed rvp to go to Man U ? But he has to be given great credit for signing the likes of Henry, Berkamp, Pires and rvp. But what about players he brought in , Baptiste Eduardo ? Not to mention his more recent recruits Chamack ,Arshavin and Santos ? Who was responsible for signing these players AW or someone else ? These are questions that have never been properly addressed,and are at the core of my criticism of the manager and the board. Now before anyone starts to lose the rag and accuse me of being an anti Arsene s.o.b. I am not, nor am I or anything like it but let me ask one question . Who really runs Arsenal ? A great manager dosen’t become bad over night, but over nine years ???

    • You’re looking for a world of black and white that doesnt exist. At a club of this level, no one person is “responsible for bringing in player X, Y, or Z”. Ok there are rare cases like Thierry Henry, Petit, Grimandi etc where obviously Wenger had at Monaco and would have driven those transfer as he knew exactly what he was getting.

      But otherwise these days its a multistage process and driven more by need than some sort of mad genius of inspiration. In the case of Arsenal it is public knowledge that the club operates with a long term depth chart of the squad by position, including an estimate of how long they expect to keep each player. Beyond that the scouting is then driven by needs. And they seem to scout players for ages – longer than other clubs it would seem. Signing new players is then driven by outgoings. And the pricing then depends on financial budget, in which the manager is a major decided but look this is 2013: no properly run organisation lets any one man sign off on 10 or 20 million purchases with zero oversight or counter-approval. Probably not even a 3 million signing could be done on one man’s say-so.

      So we see see that many players we are signing seem to be on a scouting shortlist for a while before they turn up. Sometimes even been scouted before they signed for the club we end up signing them for. That was the case with Koscielny and Giroud. And may end up being same with Loic Remy if we get him.

      But at the end of the day it is the manager who is responsible for UTILIZING the resources. If said manager hadnt agreed to the general framework of how the resourced were acquired, he shouldnt have been there, so its fair to judge him over 3-4-5 years picture of how he made out with those resources. You cant be a chef in a seafood restaurant and then later turn around and say that the means werent great but it wasnt your fault because the owner didnt purchase beef that you demanded.

      As such its not so important what the exact detail of how a signing got approved. Just the end result over time.

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