Sunday, February 5, 2012

Football transfers and corporate M&As go out of fashion?

In football signings there is a mathematical rule: three out of five fail... Like corporate takeovers, football transfers create turbulence and uncertainty. Often a player who succeeds in one setting fails in another. Economist Stefan Szymanski has shown that what clubs spend on transfers bears little relation to their performance in the league. Net outlay on transfers explained only 16 per cent of their total variation in league position. By contrast, the correlation between a club’s wages and its league position was about 90 per cent, averaged over about 15 years. Wages buy victories; transfers don’t.

(HT: Simon Kuper in FT)

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