More than Money: Lessons from the Premier League

With only eight rounds left of this season’s English Premier League (EPL) we thought we’d reflect on the world’s most popular soccer competition from a few angles. The EPL now reaches a television audience of 4.7 billion people across 185 countries, which has driven broadcast rights to increase by ~24x, from £192mm to £4,554mm in under 30 years. This is a staggering increase with the S&P 500 only managing a ~7x gain over the same period to provide some context.

Cost of English Premier League Broadcasting Rights (£mm)

Source: Sports Business Institute

Obviously with more money, EPL teams have gained access to the world’s best players, managers, facilities and competitions. In fact, half of the quarter finalists in this year’s UEFA Champions League, the world’s most lucrative club competition, are from the EPL, where 32 elite European clubs will share nearly €1.95bn (unequally!).

While having an endless river of funding may be considered the source of unbridled success in world football, it often isn’t the case. Of the top 12 most expensive squads in the world, middle of the pack, Real Madrid (#6) has won the Champions League three years in a row (2016, 2017, 2018). Effectively laying its claim as the world’s best football club despite spending just over half as much as Manchester City (#1 most expensive squad).

Most Expensive Squads in World Football

Source: CIES Football Observatory

Perhaps the most famous example of a team utilizing its resources most efficiently to achieve incredible success, came during Sir Alex Ferguson’s time as manager of Manchester United. During his 26 years with the club, Ferguson won 38 trophies, including 13 English Premier League titles, 5 FA Cups and 2 Champions League competitions, it is not surprising Sir Alex is regarded as the most successful football manager in history. Remarkably, in the last 6 seasons under Sir Alex’s reign prior to retirement, Manchester United only had the 3rd highest wage bill in the Premier League, yet won the league 3 times and reached the Champions League final 3 times.

Manchester United’s Wage Bill / Titles versus Peers

Source: FT

Often, the magnitude of outstanding performances are underappreciated while they are being achieved. Nothing could be more true than Sir Alex’s record at Manchester United. His abilities were in fact highlighted by United’s performance after his retirement, or lack of performance to be more exact. Despite the club increasing spending in the 5 seasons since his departure and making United’s wage bill the highest in the Premier League (above), performance has been dismal. The club has now cycled through 4 mangers since Ferguson left and hasn’t come close to winning the Premier League or gotten near a Champions League final. It is more evident than ever, that a team full of champion players, doesn’t make a champion team.

Quality of the Manchester United Squad Under Various Managers

Source: FT

We’ll close out today’s blog with a book recommendation written by none other, Sir Alex Ferguson. “Leading: Learning from Life and My Years at Manchester United”, it is a phenomenal memoir of Sir Alex’s time at Manchester United and how he was able to be so successful managing finite resources and getting the best of his players. It is highly recommended and several members of the Montaka Global research team enjoyed it immensely, you can find it here.

Amit Nath is a Senior Research Analyst with Montaka Global Investments. To learn more about Montaka, please call +612 7202 0100.

Leave a Comment

Your email address will not be published. Required fields are marked *

Our Montaka Active Extension strategy strives for maximised return over the long-term. Owning the Montaka long portfolio typically scaled up to approximately 130 percent - and the Montaka short portfolio typically scaled down to approximately 30 percent – this strategy results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net strategy strives for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this strategy is our flagship long-short

Our Montgomery Global strategy strives to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka strategies, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark. Branded as “Montgomery Global” in Australia to reflect a key.

Our
Strategies

Our Strategies

Our Montaka Active Extension strategy strives for maximised return over the long-term. Owning the Montaka long portfolio typically scaled up to approximately 130 percent - and the Montaka short portfolio typically scaled down to approximately 30 percent – this strategy results in a net market exposure of approximately 100 percent most of the time.

Our Montaka variable net strategy strives for significant downside protection – but with minimal upside reduction. Focused on owning the world’s great and growing businesses when they are undervalued, while managing a portfolio of short positions in businesses that are deteriorating, misperceived, and overvalued, this strategy is our flagship long-short

Our Montgomery Global strategy strives to act as a core, high conviction, global portfolio holding. Consistent with the long portfolios in our Montaka strategies, this offering is focused on owning the world’s high quality, undervalued businesses – and cash when appropriate – to outperform its benchmark. Branded as “Montgomery Global” in Australia to reflect a key.