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Is Sir Alex Ferguson the greatest manager ever? – Part II

Categories : BusinessSport
Last week our Figure it Out blog considered whether Sir Alex Ferguson is the greatest manager of all time. Our analysis concluded that he probably is! But which football manager has added the most financial value to their club?


Adding value

After we posted a link to our Sir Alex Ferguson FiO article on the Operational Research society LinkedIn page Graham Sharp posted an interesting follow-up question:

“Interesting analyses. But since most businesses are primarily interested in their managers improving the value of their organisations, which manager has added more to the financial value of the club they've managed during their tenure, I wonder?”

This warranted further investigation.


Data hunt

Sourcing data that consistently valued football clubs overtime proved to be a challenge. The best data we found was the Forbes magazine’s annual survey of the world’s richest football clubs, conducted between 2007-2013.

In 2013 the most valuable football club was Real Madrid ($3.3 billion), closely followed by Manchester United ($3.1 billion):



Where value data was available for a club between 2007-13 we calculated the overall percentage change:



In summary:
  • Barcelona experienced the largest increase in club value between 2007 and 2013.
  • Manchester City’s transformation from a midtable side in 2007 to title winners in 2012, backed by significant investment from Abu Dhabi, has seen their club’s value increase substantially.
  • Sir Alex Ferguson’s Manchester United had the 5th largest increase in value between 2007 and 2013.

Matching club value to managers

We took this Forbes data and matched it to the foremost managers at these clubs between 2007-13:



During Jose Mourinho’s 3 seasons at Real Madrid the club’s value has increased by 149%, from $1.3billion to $3.3billion. Sir Alex Ferguson, our winning manager from last week’s FiO, comes in third.

However should Jose Mourinho be adding these statistics to his CV?! Can he claim to be the man that personally oversaw this increase in value?! If we cast our eyes to the bottom of the chart Mourinho appears again, but with Inter, where he managed for two seasons from 2008-10. Here the value of Inter only increased by 2%!

Another interesting observation relates to the latest Barcelona manager Tito Vilanova. He has been in charge for just one year and therefore doesn’t appear in our analysis above. However in the single season he has managed the value of Barcelona has risen from $1.3billion to $2.6billion, an increase of 99%. So equally, should Tito Vilanova take any credit with this increase in the value of the club? Probably not.


Does it even matter who’s in charge?!

At this stage we wondered whether there was any relationship between the number of managers a club had between 2007-13 and the change in that club’s value.



This scatter graph seems to show, admittedly with a small sample size, that the change in a football club’s value is independent of the number of manager’s they’ve had. The correlation coefficient, a measure of the strength of the linear relationship between these two variables, was -0.07 i.e. practically no relationship.

Conclusion

So what have we learnt from our quickfire analysis?
  • Last week we concluded that Sir Alex Ferguson was probably the greatest manager of all time.
  • Has Sir Alex Ferguson added the most value to his club between 2007-13? No, more value was added to Real Madrid during Jose Mourinho’s tenure.
  • However there are clearly more factors coming into play in relation to a club’s value. Our analysis has shown that the value of 16 of the world’s large clubs appears to have changed independently to the number of managers over the period 2007-13.
There is obviously a lot more analysis that could be done in this space. There are many ways to measure the value of clubs, from revenue generated to stock market valuations. For example Ferguson’s resignation was linked to a 2% fall in the Manchester United share price:

http://www.goal.com/en-gb/news/2896/premier-league/2013/05/08/3963658/manchester-united-share-price-down-176-after-sir-alex

Perhaps a future Figure it Out edition might revisit this topic!

About the author

Jonathan Chadwick
Jonathan Chadwick
Jon has worked for 18 years as an analytical consultant in the UK, USA and Europe for a diverse range of sectors, most recently Financial, Oil & Gas and Government. Jon has extensive experience in benefits realisation, modelling, business analytics, portfolio management and change management. Jon devised and created Figure It Out.

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2 Comments Leave a comment
Interesting, Jonathan. But, fyi there should be no apostrophe in the word "manager's" - "the value of 16 of the world’s large clubs appears to have changed independently to the number of manager’s over the period..."
who has the pudding?????

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