Why short termism is not the answer

Short termism is a British disease, but it is particularly acute in football.   It is driven by an over active stock market, now reinforced by the activities of hedge funds and private equity companies.  Short termism is not the only reason the UK has a chronic productivity problem. but it is certainly part of the picture.

I was struck by the following comment in the Financial Times yesterday about the success of Aldi and Lidl: 'Being private allows Aldi and Lidl to keep prying eyes at bay and not be held to ransom by shareholders if they do not meet their sales or profit forecasts.;

The chief executive of Aldi for the UK and Ireland said 'this is an absolutely tremendous strength of our business.  It means we can make very long-term decisions even when the road is bumpy.'

It's a different story in football and especially at Charlton these days.   The following edited extract from my book Political Football is relevant:

'Expectations in society generally of private or public services have increased, but this is particularly acute in the case of football where there is an immediate measure of success or failure in terms of results and tables. “It’s a results business” is one of the most familiar clichés used in relation to the game,

There has been an increase in managerial turnover. In the ten years to 31 December 2019, “103 different men have been in charge of Premier League clubs in the last 10 years, holding 153 posts between them” (Ridge 2019). Lower-league clubs are also unforgiving of managers that are perceived to be underperforming. There is often a brief improvement in performance after a manager is replaced. However, “eventually results regress to the mean” (Kuper & Szymanski 2012).

A manager’s success may well be affected by luck, such as refereeing decisions or injuries to key players. This, however, does not excuse what has often been a lack of professionalism in the recruitment process. Simon Kuper notes that in hiring managers, as a rule “research is usually hasty. A club owner rings a man’s mobile and offers him the job, typically days after sacking the previous incumbent” (Kuper 2020).

The process of recruitment is slowly becoming more professional. Jürgen Klopp was the subject of a 60-page report by Fenway Sports Group, and he was then interviewed for several hours at a New York law firm before his appointment at Liverpool. However, the Covid-19 pandemic may change the emphasis on external recruitment. Less well-financed clubs “will tend to give top jobs to internal hires with briefs to sell players and develop cheap youngsters” (Kuper 2020a).

The manager may not be as key a factor as some popular discussions of football assume, but that does not mean that they have no impact at all on performance. Examining data on managers that have been in charge for 30 games or more, which would tend to exclude the worst-performing managers, Szymanski (working with Thomas Peeters) found that about 20 per cent of a population of over 1,000 managers had a positive impact on their club that was statistically significant.

Any fan could produce a list of managers they considered to be outstanding and this is consistent with the finding that “most managers made little difference, while a few have a significant impact” (Szymanski 2015). There are exceptional managers, but there are fewer of them than is generally supposed which helps to explain why there is so much disappointment with the performance of managers. This is magnified by the perception of the manager as “some kind of dream maker, who ‘gives hope’ to fans” (Carter 2006).  [Carter writes extensively about Charlton and Jimmy Seed in particular].

Disposing of a manager can be expensive. Chelsea paid out £96 million in compensation to departing managers and their staffs in the 15 years to 2019. It cost Chelsea £23.1 million to sack the “special one” in 2007/8 and £8.3 million in 2015/16. It cost Manchester United £19.6 million to sack him in 2018/19. That’s a total bill of £51 million.    [Even at Charlton there is compensation to be paid].