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In a world of perfect information coaching can make the difference

There are no more knowledge gaps to take advantage of. Every club in professional football has access to best practice; elite players operate in a world of perfect information.

So, what distinguishes the winner from the loser?

In a world of perfect information coaching can make the difference.

Indeed, a deep dive into player salary data presents us with an insight into the never-ending debate about how much leadership matters in sport and helps to develop our understanding of the impact that an accomplished coach like Jürgen Klopp can have on a group of players.

Coaching, a crazy idea which just might work.

Salary Data

In August 2022 (in partnership with published player salary data for the top five leagues in Europe.

Please Note: The club salary data does not include bonus and other payments made to players. Therefore, the associated patterns only represent a partial guide to how clubs and coaches performed relative to their resources.

Please see right for a visual breakdown of how the club player salaries were distributed for the 2015-22 time period – the top four clubs (in terms of salary paid) are contrasted with “Others” for illustrative purposes.

Admittedly, the key resource in football is player talent.

In Soccernomics (2009), authors Stefan Szymanski and Simon Kuper argue that 92% of the variation in the league position of Premier League teams could be explained by player wages; that there was/is a correlation between a club’s final league position and respective wage bill. Therefore, the capacity to spend on player wages represented the key predictor of success.

Essentially, it is argued that few coaches help their team to perform better than what their respective wage bill suggests that they should i.e., give any two random coaches the same financial resources, and over time, they will achieve similar results.

This rule, however, does not represent an absolute; some clubs out-perform their wage bill while others dip below the regression line. Having access to funds is no guarantee that it will be well spent (see: Manchester United). Indeed, since the 2015-16 season the club with the greatest resources in the top five European leagues (England, France, Germany, Italy and Spain) has only won the league title 62.86% of the time (22/35).

The ultimate truth? Managers matter, but mostly at the margins. The impact of coaches can be considered like a bell-curve – some coaches positively affect performance and some negatively while most fall somewhere in between.

Based on this assertion (that it is much easier to make things worse than better) you can see why clubs are inclined to hire experienced coaches as opposed to taking a chance on an inexperienced candidate with a potential higher ceiling.

But a coach who is capable of getting results above and beyond what is expected is valuable – a single factor which affects eight per cent of the outcome matters a great deal; eight per cent could mean the difference between qualifying for the Champions League (and not).

Typically, it is difficult to distinguish the performance of a coach from the playing talent at his disposal – the skill of the coach certainly cannot be determined by win percentage alone, a more nuanced approach is required.

By examining the salary data, however, we can work to identify which coaches have performed best (and indeed worst) relative to their playing resources; this approach represents a much better means of measuring manager quality.

So, the question is: can we identify which coaches are helping their teams to finish higher than what their respective player salaries suggest that they should? Who is defying gravity?

Jürgen Klopp is one such coach.

Since joining Liverpool in October 2015 Klopp’s team have out-performed squad salary in six consecutive seasons – the German must be excused the 2015-16 performance (8th) since Jürgen was appointed when the season was already underway.

Transfer market

In March 2014, to mark his 1,000th game as Arsenal manager, Arsène Wenger bemoaned the fact that trying to compete with Chelsea and Manchester City from a financial point of view was like a “race with Usain Bolt”.

John Henry and his partners at FSG, however, refused to accept that reality at Liverpool. Instead, FSG sought to think their way around the problem.

Liverpool’s commercial ability to pay top player salaries can’t be discounted, but it is also true to assert that FSG can’t afford to buy their way out of mistakes. So, Liverpool needed to figure out a way to break the chain between player salary and performance.

In a perceptive piece of analysis for the Guardian in January 2015, Jonathan Wilson declared that the transfer window was/is a “merry go-round that no one can get off”. Club owners, managers, players, agents, fans and, of course, the media all benefit from the transfer market. A debilitating consequence of the transfer culture is the assumption that the solution to almost any problem is to buy more players. Underpinning this assumption are two more: that the worth of a player to a club is fixed and that the worth of a team is simply the sum total of its constituent parts.

Wilson bemoaned the fact that clubs were prepared to buy rather than develop their playing resources despite that fact that out-going Netherlands boss Louis van Gaal long argued that organization makes the ultimate difference and that, aside from some outliers, the vast majority of players are not really all that different from one another.

Wilson concluded by asking “what would happen if a club adopted a policy of consciously disengaging from transfer activity?”

It appears reasonable to suggest that such a theory would resonate with FSG.

Liverpool decided to look for answers on the training ground rather than in the transfer market in order to deliver a competitive advantage.

Liverpool decided to invest in coaching.

Bring the vision to life

In order to bring their vision to life FSG required a coach who did not see buying players as the only way to solve problems; who could help the club to out-maneuver financial reality.

At the root of the FSG approach was a basic respect for coaching as a discipline; that an accomplished coach could diagnose what was wrong with the Liverpool team and do something effective about it; that it requires years of tactical education, for instance, to understand and coach the complexities of a unified press – you cannot simply tell your players to press harder and expect it to work.

When Jürgen Klopp was appointed as Liverpool head coach in October 2015 he talked about “preferring training to transfers”. Since then, Klopp has made good players better.

Furthermore, Klopp made Liverpool FC relevant again with an imaginative, but disciplined style of football. Klopp understands what is required in order to succeed and employed a game model which put his players in a position to do well. Critically, Jürgen Klopp believes that the game idea must come before the individual.

Mohamed Salah is most obviously the best player in the Liverpool squad, but it also quite clear that Salah is prepared to play for the team. This is key. Many still believe that the basis of the game is the individual duel; that if the opposition players are better, your team must lose. Klopp’s Liverpool have proved otherwise. Jürgen has maximized the strengths of his players and elevated his team above the sum of their parts.

Jürgen Klopp would appreciate the talent of a player like Steven Gerard, but Klopp also knows that Gerard was good at everything which is noticed by supporters. Liverpool had to move on from the Steven Gerard era. Klopp knew that Liverpool needed a team and not a mythology. It must be difficult for Gerard to watch. The performances of Liverpool under Klopp is like a reverse of the film It’s a Wonderful Life – shortly after his retirement Gerard was presented with a vision of what a Liverpool world without him would look it. And, it looked just fine.

Happy is the club which has no need for heroes.

What the future of coaching looks like

Jürgen Klopp’s Borussia Dortmund beat Bayern Munich to the Bundesliga title twice (2010-11 & 2011-12) while he also guided Dortmund, a team on a wage bill smaller than Aston Villa’s, to the 2013 Champions League final.

Meanwhile at Liverpool Jürgen Klopp has won the League Cup (2021-22), FA Cup (2021-22), Premier League (2019-20) and Champions League (2018-19) for a net transfer spend less than that of Everton. Indeed, when Liverpool won the league title the squad out-performed their salary by four positions – Klopp’s net transfer spend (£92.4 million) across five years was less than Watford’s; only Crystal Palace, Sheffield United, Southampton and Norwich City had spent less in the transfer market during that period.

Admittedly, Liverpool are struggling this season, but in 2021-22 Klopp’s enterprising side lost four out of sixty-three games and came close to winning an historic quadruple.

The way in which Liverpool have challenged the concept that professional football is a rich man’s game (where only those who spend big can hope to achieve) is genuinely refreshing.

Irrespective of what happens with Liverpool from here Jürgen Klopp represents what the future of football management looks like. Indeed, the success enjoyed by Jürgen Klopp at Liverpool represents a victory for coaching.

The key resource is player talent, but there is still room for good management. It is a fallacy to think that the best teachers cannot affect teams of people profoundly.

Indeed, the rest of the world could learn much from the example set. After all everyone works in a team. Strangely, in most corporate cultures managers are not expected to coach. Wouldn’t fewer bosses and more coaches make sense in the corporate world? Would the coaching techniques of Jürgen Klopp help to improve the performance of your team?

Oz can be built. It does not always have to be bought.

More coaches and fewer managers, please.