Wednesday, August 20, 2014

We Are All Bean Counters Now

Michael Lewis's 2003 book Moneyball and its 2011 feature film offspring made Oakland A's general manager Billy Beane a well known figure. The story also popularized sabermetrics, the use of specific statistics to guide personnel decisions. With the success of Oakland and the Beane-inspired Boston Red Sox, baseball observers and fans began to examine arcane measures and used those analyses to predict individual and team performance.

It's not a huge conceptual leap from sabermetrics to an ongoing, detailed assessment of the underlying sports business, particularly because Beane's approach was designed to advance a financially disadvantaged franchise through a novel application of statistics. Financial and operational scrutiny do seem to have become the new sabermetrics, as fans of many major sports teams have made fair game of studying their preferred sports businesses.

There's been resistance from the old school and from those who contend that this corporate emphasis saps the passion from sport. For me, examining the business enhances appreciation, understanding, and enjoyment of the competition, but there are dangers in obsessing about the finances and operations of sports organizations in general and Arsenal FC in particular.

The business as the source of performance risks and rewards

As it happens, Billy Beane is an Arsenal fan. This makes sense given the parallels between his approach and manager Arsène Wenger's penchant for seeking players undervalued by consensus opinion.

In an expansive conversation on last week's Arse America podcast, Beane also made a strong case for paying close attention to the underlying business. Bad business decisions can be catastrophic in European football, Beane said, because they heighten the risk of relegation and perpetual decline. The recent histories of Wolverhampton and Portsmouth in England indeed serve as cautionary examples.

Rewards on the pitch also have their foundations in the business. In particular, a strong correlation appears to exist between a Premier League club's expenditures on transfers and player salaries and its finish in the league table. (See the Pay as You Play blog and Twitter observations of Zach Slaton @the_number_game for deeper analysis.)  

Wenger recently noted this relationship and associated it with Arsenal's prospects in the league, saying "I would say that the balance of power is a bit more even than it was five or six years ago, in the Premier League. That's because of Financial Fair Play, added to us having more financial power than five years ago, that gives us a better chance."

These positive and negative effects on performance justify widespread interest in clubs' operations and accounts.

The business as a storytelling device 

Supporters should understand a club's business for an additional reason: The management of affairs expresses a value system, which should guide club officials' words and actions (I wrote about this dynamic in "The Brand's the Thing" two years ago.) When they don't, supporters are right to criticize.

Fans are reasonable, too, in their pride when business developments provide direct evidence of principles that carry meaning for them. CEO Ivan Gazidis evoked this pride to Sports Illustrated's Jeff Bradley when he emphasized the courage it took the Arsenal board to build Emirates Stadium.

"Most people would have just sat back and said, 'This is great. Everybody loves us.' But what do they do?" Gazidis said. "They throw all of that up in the air, a massive risk. They say, 'We're going to commit all the resources of this club to building a stadium that we think we are going to need 15 and 20 years from now if we want to be a really global football club.'"

Gazidis is skilled at emphasizing this compelling part of the Arsenal story, and it's worth our effort as fans to pay attention. If we as individuals share the values captured by the story -- planning for the long term, resisting the urge to rest on laurels, etc. -- we feel more closely connected to the club. At the same time, though, we should be wary that the story of the business isn't used to gloss over poor performance and unmet expectations. 

Dangers of shallow analysis

The same level of vigilance should also apply when we're faced with faulty analyses of the business. For example, even the casual Arsenal fan has probably heard that the club had more than 100 million to support transfer activity this summer.

That hefty balance seems to have convinced many that all the club needs to do was write some big checks and, presto, world-class players would arrive in droves. They draw up their own lists of targets and then criticize the manager and the club when those players don't end up donning the red and white. (A recent culprit was Elliott Smith, @YankeeGunner, who often has interesting insights but set forth completely unrealistic expectations in the season-opening Arse2Mouse podcast.)

We're wise to resist another urge when we focus on the business side of the Arsenal Football Club, that impulse to make the business a story in itself. This tendency turns the financial affairs of the club into another competition, pushing observers to view different clubs in an arms race for resources.

What's the reason to manufacture a contest on this level, stacking statements of accounts against each other? We already have contests to watch, from mid-August to mid-May. All the financial and business activity matters only if it plays out on the pitch. That's where the real drama and meaning of football happen.

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