Friday, May 24, 2013

Is Borussia Dortmund a 'Moneyball' Success story?

In the past 3 seasons, Borussia Dortmund has won the Bundesliga title twice, and has consistently gotten the better of traditional German and European powerhouse that is Bayern Munich.  So to followers of  the Bundesliga and die Borussen, it may not come as a surprise that they will be playing in the Champions League final. But to the casual football fan, Borussia Dortmund is like a lesser-known family restaurant that  has received rave reviews on Yelp, a marked change from the ultra-posh fusion restaurant that everyone is used to raving about.

What makes Dortmund different is that they are an example of financial recovery and a "model for the future" as many English pundits have now come to accept, when not 3 years ago, they were bashing Arsenal for doing something similar.  They reached the Champions League semifinals with a starting 11 that cost £29 million to assemble.  The team they beat, Real Madrid, spent close to £400 million on their team.  And let me be the first to tell you that Real Madrid is no slouch when it comes to European play.  Bayern Munich, Borussia's main title rivals, spent massive sums over the past few years to close the gap on Dortmund, and while it has resulted in an emphatic league title, they have only beaten this Dortmund team once.

So can we say Dortmund is the first successful 'Moneyball' story in European football?  In an era where filthy rich owners can sign anyone at will, exploiting indebted clubs during the process, our inclination is to hail Borussia Dortmund as the financially sound team who has found a way to outfox the "big money" clubs.

On one hand, I think it is incredible that within 8 years, Borussia Dortmund went from near bankruptcy to creating one of the best teams in Europe on a budget like the figures above state.  But on the other hand, they weren't so drastically removed from success because of bankruptcy. They never dropped out of the top flight, meaning they had a roughly constant revenue stream, they just had to settle their debts via loans and restructuring.  When they fell into debt, the club's supporters stepped in and bought shares of the club, paving the way for a new model of club ownership and sustainability.  While this left Borussia Dortmund with less money to spend, they were able to assemble a team through the unique scouting networks the Bundesliga has often had.  According to prominent football finance blogger Swiss Ramble, Borussia Dortmund didn't impact their cash flow significantly by the transfer market .  He also points out that Borussia Dortmund had a higher percentage of commercial revenue, meaning that they still had a lot of marketability and popularity, despite their lowly financial status at the time.

Compare that to the original "Moneyball" situation at the Oakland A's. Granted it's a different sport, but the original idea meant that the A's formed a team by using lesser known but much more valuable metrics such as on-base percentage, number of walks earned, etc.  Borussia Dortmund has done what a lot of German clubs do when it comes to assembling a team:  They had a good group of young academy players, found some players for very reasonable prices, and formed a team greater than the sum of its parts.

These concepts seem very foreign to the Premier League, and many Bundesliga clubs have taken pride in their lower ticket prices, fan-ownership, and exciting football.  But I still wouldn't deem Borussia Dortmund's success as Moneyball.  Is it a very smart and well-managed financial turn-around from a failed IPO?  Absolutely, but when it comes to team building, they weren't coerced into forming a team based around statistics and specialized play.  

Sunday, May 5, 2013

What the new Premier League TV deal means for EPL's future

The English Premier League signed a new deal with Sky Sports which will take into effect for the 2013-14 campaign.  The new deal will be worth approximately £3 billion  ($4.8 billion), which more than doubles the current deal.  There are other elements as to who has broadcasting rights in the United Kingdom (BT can broadcast 38 games, essentially breaking the BSkyB monopoly) but what's also included is that NBC will now become the primary broadcaster of Premier League games in the United States, rather than ESPN.

So what does this all mean for the Premier League's future?

Well that ultimately depends on what we're talking about. From a global viewership standpoint, we can't expect much to change in terms of accessibility, in fact it will probably improve.  The Premier League is the most watched football league in the world and consistently makes the most money by attracting viewers everywhere.  For the UK, they get more channels to watch their favorite teams, more live games, etc and I would imagine a similar effect for other countries who already have steady EPL viewership going.

What it means for United States viewers though is something different and has to be put into context.  ESPN typically gets the rights to only one game per week, and then a midweek game around once a month.  So that amounts to roughly 45 or 46 games per season.  ESPN got a lot better about distributing their viewership for all teams starting from the 2010-11 season so it wasn't all Manchester United, Arsenal, or Chelsea games being  aired; however, that's a very small sample of the 380 games per year even if we get a roughly even distribution of seeing all 20 teams play.  Fox Soccer, as a dedicated channel, offered a lot more games but there aren't that many viewers who subscribe to Fox Soccer since the game hasn't reached the point where people are willing to pay for sports packages exclusively to watch soccer.  The bundles and sports packages aren't optimal either so the Premier League hasn't fully tapped into the US market.  So the ability for NBC to get these games means more access for everybody since the network isn't under as much pressure to air other sporting events on Saturday(ESPN typically has to juggle college sports with the EPL, and occasionally Nascar)  And it lowers the need for online streaming.  NBC has promised to air more games than ever before on NBC, NBCSports, and  Accessibility won't be a problem

What will be a problem for us though is that NBC has a bit of pressure on them to maintain the quality of analysis. For established sports, like football, basketball, and baseball, we really don't care about what the commentators have to say all the time since we already have a solid understanding of what's going on in the game.  But soccer is very subjective and the sport hasn't yet reached the same level of popularity or understanding. (importance of possession, pressing, offside rules,etc.)  ESPN made a smart move in getting Ian Darke and Steve McManaman to cover their games.  Ian Darke was already popular with US viewers after covering the national team at the 2010 World Cup, and McManaman was a former elite player in England and Spain who knew enough about the game to reasonably satisfy knowledgeable soccer fans. Essentially, NBC has to find good commentators who can present the game well, otherwise people could lose interest and the overall growth of the sport could diminish.