Slideshows | July 12, 2018

Paying to win in the football World Cup

Star footballers are valued for huge sums. But strong performances don’t always follow.

At the FIFA World Cup 2018, some $12 billion of talent was on show. Transfermarkt’s estimates before kick-off valued the Spanish team at $1.21 billion, Brazil’s at $1.03 billion and the Germans at $1.02 billion. Yet these previous champions didn’t even make the semi-finals. Instead, France, Belgium, Croatia and England battled it out for the right to challenge in the final.

ING analysis suggests that France will be crowned world football champions on Sunday 15 July if the most expensive team left in the contest prevails. The French squad has been valued at around $1.15 billion.

Will this represent value for money? It will take on Croatia, which beat England in the semi-final, and the Croatian team has been valued at just $405 million.

Priced to win?
This article looks at why football transfer costs are sky-high. Football players may only switch teams within two “transfer window” periods each year. This creates artificial scarcity, like in a sale where if you don’t “buy now” you will miss out. In such a situation, it can be easy to pay too much.

Football agents, like the rest of us, are also prey to common thinking traps such as present bias, which may encourage spending on whoever is available rather than waiting for a better investment. Meanwhile, any exceptional performance is almost by definition difficult to repeat. An amazing result can be a misleading outlier – giving a false impression of what might happen in future.

Tournament theory can also have an effect on earnings and transfer values. This is when, for example, people are promoted for being better than their peers, rather than simply being good at their jobs. It happens partly because it is difficult to calculate how pay should relate to actual performance. Paying more cannot guarantee a win.

Regardless, studies have shown that the level of footballer pay, generally speaking, does correlate with earnings.  

And after the World Cup?
Did you know the worst time to buy players can be just after they have done well at a big tournament? One reason is because players doing well are likely to have reached peak performance – and the only way for them to go in future is down.

 Read on for even more interesting findings on the “cuponomics” of sport and professional football.

 

1

Have they peaked?
Football might pay well – but players peak early.

2

Risky business
Football jobs can be risky – even if you’re a coach or manager

3

Shrinking pay
Did you know football pay packets can shrink year on year? 

4

Do the sums
It can work out to be better to earn less for longer. 

5

Cost of stardom
Is bankruptcy written in footballer stars? Many end in debt.

6

First, second or third?
Third place at big events can be better than second. 

7

Investing future
What if you had a football star's wage? Here's how to invest it

InvestingSportIncomeGlobal

eZonomics team
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