The Hidden Costs of Luis Suarez

The Six Million Dollar Mouth (Source: Reuters)
The Six Million Dollar Mouth (Source: Reuters)

No one will ever accuse Luis Suarez of being boring. The Liverpool striker and Uruguayan international has a fiery temper on the pitch which has oft landed him in trouble while in service of both his club and country. Most recently Suarez has found himself on the receiving end of a 10-match ban for biting Chelsea defender Branislav Ivanovic.

Opinions differ on what impact Suarez’s suspension will have on Liverpool, with some calling it an opportunity for reinvention and others seeing big negatives for the club. The ultimate effect remains to be seen, but for now we can take a look at the costs we do know about. To get an estimate of the cost of Suarez’s antics we can look at the games he has been unavailable for and measure them in terms of lost wages; or instances where Liverpool has paid for no option to use Suarez’s talent.

Let’s start by counting the games he has been banned for:Ban Count

That is a total of 15 bans in the 90 league matches that Liverpool have played so far; 21 (currently) bans for the 242 league games he will play over the life of his contract. From his arrival in 2010-11 till the end of 2012-13 Suarez will have been unavailable for 17% (!) of Liverpool’s league matches. Now let’s estimate a cost in lost salary for each game.

Ban Costs

Suarez’s bans to date have (counting forward to 2013-14) cost Liverpool ~2m in lost wages. This figure does not take into account cost of fines or any other related charges. And finally, to put this in perspective with some of the investment already spent on him:

Cost Comparison

6% of the total wages Liverpool will pay Suarez over the course of his contract will be spent toward his bans. That percentage assumes that there will be no more incidents, something which seems unlikely given past history. Turns out there’s a pretty big price for mad genius.

The Hidden Costs of Luis Suarez

The Month in Soccer Business: October 2011

A monthly compilation of interesting business news related to soccer. October 2011.

Chelsea look to buy Stamford Bridge freehold to keep their options open – October 4th

Chelsea are looking to buy the freehold for the land on which their Stamford Bridge stadium is situated as they look to relocate the club.

…their 41,800-seater stadium is dwarfed by some of their main rivals such as Manchester United and Arsenal, limiting the amount they can generate from match day revenues. Continue reading “The Month in Soccer Business: October 2011”

The Month in Soccer Business: October 2011

Which Company is Liverpool Most Like…?

Culture matters, in business and in sport.  The set of principles which guide the employees, managers and shareholders of a business are what produces results and culture plays a similar role at soccer clubs.  Both clubs and corporations are organizations focused on accomplishing a set of goals, it follows that there are parallels in organizational style.  Read on for the long lost corporate twins of your favorite clubs.

The rest of the ‘Company’ series: Arsenal, Chelsea, Liverpool, Manchester City, Manchester United

Liverpool

“When you walk through a storm, Keep your chin up high, And don’t be afraid of the dark.”  So goes the anthem that rings out at the start of each Liverpool match. The lyrics are especially poignant for Liverpudlians these days as stormy weather has found its way to Anfield these past two seasons.  The Merseyside Red have a massive history with numerous domestic and international triumphs won largely during the 1970s and 80s Golden Era; however recent history was more comfortable than glorious. That all changed when Liverpool became the first club knocked out of the Sky4 oligarchy. Management problems and the arrival of Manchester City conspired to knock Liverpool from its Champions League berth in the 2009-2010 season much to the chagrin of both owners (soon to be ex-owners) and supporters. For those awaiting the resurgence of the Red Giant the Golden Age was once again a distant dream. Continue reading “Which Company is Liverpool Most Like…?”

Which Company is Liverpool Most Like…?

Moneyball Does Not Work In Soccer

When Michael Lewis’ Moneyball: The Art of Winning an Unfair Game hit shelves in 2003 booksellers could be forgiven for believing that a story about sports management and statistics might not exactly light up the mass-market audience.  Even though it was about America’s national sport it was about the Oakland Atheltics, not the Yankees.  Moneyball of course went on to be a national bestseller as Lewis’s tale of the underdog A’s and Billy Beane managed to capture the attention of baseball fans, academics and corporate executives alike.

Moneyball is about the success of a perpetually underfunded baseball franchise in the face of the financial might of historically larger baseball clubs.  Lewis’ explanation for Oakland’s success is two-fold: a rigorous application of statiscal sobriety to player selection and business acumen in player trading.  Billy Beane used these tools to outperform competitors year after year while also paying out a much smaller wage budget; it is a familiar American narrative that plays especially well in the recent times of extreme financial disparity.  But Lewis’ most important theme is emphasizing the rewards of innovation in an industry which had grown complacent and wasteful.

An environment in which major financial decisions, like player trading and wages, are divorced from reality is easily recognizable for soccer supporters because an equally ridiculous climate exists in the world of soccer.  Elite clubs owned by billionaires are able to splash mountains of cash on outsize transfer and wage budgets while the minnows who must operate within the considerations of balance sheets and income statements are resigned to the fate as perpetual middlers or relegation fodder.  The rise of Manchester City is only the most recent example of a club whose financial presence places one more brick in the wall between the tiers of clubs.  Moneyball has a following among soccer supporters because it gives hope that money is not the sole determinant of a club’s success and that disciplined management and scientific innovation can build an underdog into a giant.  It worked in baseball, can it work in soccer?  Is it possible to buy low, sell high and still win things in soccer? Continue reading “Moneyball Does Not Work In Soccer”

Moneyball Does Not Work In Soccer