"What do you mean you've hurt 'your' knee, it's Liverpool's knee" - Bill Shankly.

Tuesday, January 11, 2011

The Truth on Hicks & Benítez’s Spending


[From mid-October, but topical again, it seems]

Of course, we shouldn’t be surprised by Tom Hicks blaming Rafa Benítez for the Reds losing money; after all, he’s after scapegoats, following his scandalously disruptive time as Liverpool’s owner. But people like Mark Lawrenson, Alan Hansen, Robbie Savage and Harry Redknapp should know better.

(Okay, most of these aren’t intellectual titans, but even so.)

Hicks was never going to go quietly. As I noted in my reaction to NESV taking over, we now have owners that appear to possess some dignity and sporting savvy. But when talking about recent seasons, we must remember that Hicks and Gillett effectively made Rafa Benítez’s job twice as hard from the moment they tried to sack him in 2007 and replace him with Jurgen Klinsmann, months after the Spaniard had just led Liverpool to a second Champions League Final in three seasons. From that point, Rafa had been fatally undermined, and all trust was gone.

Despite all this, I remain baffled as to how Rafa ‘wasted loads of money’ as Liverpool manager (either since 2007, when Hicks and Gillett arrived, or dating back to 2004). Especially as his expertise generated around £100m in Champions League prize money, which far exceeded what the club was achieving before he arrived. (One run to the quarter-finals was the best under Houllier, compared with four in five seasons under Benítez.)

You cannot judge a manager only by his mistakes, and ignore all the stuff he got right. And yes, that applies vice versa, too. You look at the whole picture, then make your case.

Like any manager, Rafa wasted money on certain players, and in his case, took a hit of a few million quid on the likes of Keane, Dossena and, it seems now that he’s been loaned out, Aquilani; but you cannot just focus on those and ignore the likes of Torres, Reina and Alonso, whose values trebled at various points during his tenure.

Every manager has his Verons, Jeffers, Poborskys, Shevchenkos, Wright-Phillips and Forlans, who, for whatever reason, just don’t work out. But they also have their Anelkas, Henrys, Rooneys, Vieiras, Drogbas, Ronaldos. (Not quite sure why I’m pluralising these; multiple Jeffers? *Shudders*.)

A lot has been said about how much Rafa spent on players. But little has been said about how the likes of Torres, Reina, Agger, Kuyt, Johnson et al were part of the value of the club. (As was Mascherano, before he was sold.)

If, as many advised, Rafa had bought Darren Bent – a fine striker – instead of Torres (for a vaguely similar amount at the time, remember), the club would have a player whose value hadn’t increased to roughly £50m (at one time, £70m). It would still have a £15m-£20m striker. If Rafa had bought Michael Owen in 2007, the club would now have a virtually worthless forward, about to turn 31.

I feel like I’ve put in the homework here. My new book looks into the spending of every club and every manager during the Premier League era.

One of the reasons for doing so much work on a book like this is to understand more about the realities of the game; subsequently enabling me to share that in other areas of my writing. It’s not a case of plugging the work (though I’d like as many people to know about it as possible – a light is worthless hid under a bushel), but using it as a reference, after a year of hard work and research.

The trouble with focusing on gross spends is well known – it ignores money recouped; it pays no attention to ‘trading up’ (à la Sissoko to Mascherano, Kromkamp to Arbeloa, Bellamy to Torres). But even a net spend during a manager’s time is misleading: it depends on the quality and age of the squad he inherited. After all, a lot of it would be from selling another manager’s mistakes. (And in Houllier’s case, he left Benítez some good players, but nearly all of the best ones the Frenchman purchased were either approaching or already in their 30s; meaning limited shelf-life and little-or-no sell-on value.)

To me, the fairest way is to look only at the players bought by that manager, and what those players are now worth/what they were sold for.

Between 2004 and 2010, in buying 40 players who started a league game, Benítez spent approximately £225m.

He recouped £132m from the 25 of those purchases to have moved on.

And he left purchases conservatively worth £150m.

(Valuations courtesy of a panel of non-partisan football experts I assembled for the project, including noted international scout and transfer advisor, Tor-Kristian Karlsen. Torres, for example, was valued at £47m, Reina at £14m; you might argue that these are too low.)

To me, that makes £225m spent, £282m either recouped or currently recoupable.

Now, what about during the Hicks and Gillett years?

We make it £139.8m spent under Benítez, with those same players sold for (or now worth) a grand total of £158.7m (£51m from sales, £107m in current value of present LFC players bought in that three year period). Since Hodgson took over, a further £23m has been spent.

However, as well as the players bought between 2007 and 2010, Gillett and Hicks benefited from the sale of players bought by Benítez and Houllier during the David Moores era.

So a further £70m was brought in via the sales of Alonso, Crouch, Carson, Bellamy, Hobbs, Sissoko, Garcia, Riise and Le Tallec.

All in all, that makes for approximately £150m spent on first-team squad players, and £120m generated from the sale of first-team squad players from the day Gillett and Hicks took over to the day they left.

Or roughly, £30m net; ten times less than the figure Hicks claimed (although he switched between saying they’d invested £300m and $300m; the small matter of over £100m difference!). It is true that wages were increased, but of course, so was the income of Premier League clubs in general following a new TV deal. (And in fairness to LFC, the marketing and merchandising side of the club began to bring in a lot more money.)

On top of this, the £82m spent by Benítez on those players who remain the property of LFC (i.e. including Aquilani and Insua) are now worth an estimated £107.2m. In other words, rather than waste their money, on the whole Benítez invested it wisely. If Hicks had decided to cash in on all the players he’d allowed the Spaniard to buy, the club would have made a tidy profit; thankfully, he only got to do so with a few of them, and the likes of Torres, Reina, Agger, Kuyt et al remain.

(For the purposes of the book, we discounted the myriad youngsters clubs buy for minimal fees, many of whom never see the light of day. In Liverpool’s case, there were quite a few, going all the way down to 15-year-olds like the outrageously gifted Raheem Sterling. However, even here we think Rafa did well on the whole: although someone like Leto never started a league game, he cost £1.8m and left for £3m. Nemeth, Dalle Valle and San Jose fetched in excess of £5m between them, having cost a fraction of that amount. And Jonjo Shelvey, Danny Pacheco and Daniel Ayala are now worth £10m combined, four times what was paid.)

However, in the book we look at all prices in relation to inflation; we created the Transfer Price Index to know what players bought in previous seasons cost in today’s money. So rather than £10.5m, Xabi Alonso’s move to Liverpool in 2004 cost the equivalent of £20m when sold in 2009. So a £30m sale was only £10m ‘genuine’ profit, not £20m. His value had risen to three times the original amount; but the value of players in general had doubled in the same period.

I came up with the idea of ‘genuine profit’ (and loss) because players are bought in one market, and sold in another, in which prices are generally higher. And therefore it’s actually very hard to make genuine profits. Not one was made on any of Graeme Souness’ purchases; they all lost money when inflation was taken into account. And only two were made on all of Houllier’s signings. It’s a very different story with Benítez’s dealings.

I won’t give away the full results here (they are listed in full in the book, along with those of the major Premier League managers, in a special section), but it shows a manager who understands the transfer market, but who – like all managers – could not guarantee the success of certain purchases.

Read the book, and I can guarantee that you’ll find quite a few surprises – not just about Benítez, but about a whole host of managers.

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Quote of the moment

Defying belief however, is a market Benitez has cornered quite well. The moment you think Benitez is clueless, he defies it by pulling off a result of majesty, like the one achieved in Madrid. The moment he is hailed a genius, he masterminds toothless surrender to a team going nowhere. In the ongoing Anfield power struggle, just when he was cornered by the firing squad, the Spaniard's demise at Liverpool looking practically assured with the ominous suspension of betting by the bookmakers, he squeezes out through a narrow trapdoor and eliminates Rick Parry. Rafa Benitez is Keyzer Soze.
- Just Football blog: The Curious Beast that is Football 28 Feb 2009