By Stephen Brosnan
In previous blog posts I explored the relationship between Premier League club’s salaries and team performance (here, here and here). The findings generally support the hypothesis set forth by Kuper and Szymanski that spending on players’ salaries is a better predictor of performance than net spending on transfers. Furthermore, these posts suggest managers of ‘inefficient’ teams tend to get fired while mangers of ‘efficient’ teams retain their roles. This post considers these issues by exploring the relationship between Premier League club’s spending on player salaries and team performance during the 2020/21 Premier League season.
In previous blog posts I explored the relationship between Premier League club’s salaries and team performance (here, here and here). The findings generally support the hypothesis set forth by Kuper and Szymanski that spending on players’ salaries is a better predictor of performance than net spending on transfers. Furthermore, these posts suggest managers of ‘inefficient’ teams tend to get fired while mangers of ‘efficient’ teams retain their roles. This post considers these issues by exploring the relationship between Premier League club’s spending on player salaries and team performance during the 2020/21 Premier League season.
This season the average annual wage bill of Premier League clubs was approximately £78 million. Manchester United had the highest annual salary (£177 million) while relegated Sheffield United had the lowest spend on player’s salaries (£19.7 million). This represents just 25% of the league average and partly explains why the Blades were unable to overcome second season syndrome in the Premier League. Surprisingly, the club ranks second in points earned per million spent on players salaries (1.17 points per £m) which suggests the clubs fortunes may have improved with some further investment.
So which clubs have been the most efficient? The figure below shows Premier League team’s total points and spending on salaries for 2021.
So which clubs have been the most efficient? The figure below shows Premier League team’s total points and spending on salaries for 2021.
All the teams above the line can be considered ‘efficient’ while the performance of teams below the line is considered ‘inefficient’. The efficient performers include champions Manchester City, West Ham, Leicester, Leeds, Aston Villa and Everton. These clubs have outperformed their expected points based on players salaries. Leeds are the best performing team as measured by points per million spent on player salaries. Marcelo Bielsa’s side have picked up 2.63 points per million in the maiden season back in the Premier League.
It appears that efficiency matters as none of the six ‘efficient’ clubs changed manager throughout the season while six of the fourteen ‘inefficient’ clubs (43%) changed managers including the recent departures of Roy Hodgson (Crystal Palace), Nuno Santo (Wolves) and Sam Allardyce (West Brom). Even managers of inefficient teams that retained their jobs have been under intense scrutiny for much of the season which suggests Mikel Arteta, Steve Bruce and Ole Gunnar Solskjaer will be under increasing pressure to improve the performances of their teams next season or risk being the next manager facing the chop.
It appears that efficiency matters as none of the six ‘efficient’ clubs changed manager throughout the season while six of the fourteen ‘inefficient’ clubs (43%) changed managers including the recent departures of Roy Hodgson (Crystal Palace), Nuno Santo (Wolves) and Sam Allardyce (West Brom). Even managers of inefficient teams that retained their jobs have been under intense scrutiny for much of the season which suggests Mikel Arteta, Steve Bruce and Ole Gunnar Solskjaer will be under increasing pressure to improve the performances of their teams next season or risk being the next manager facing the chop.
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