Category Archives: football

Derivatives trading in football players

I love it! It’s a dream come true!! It’s official!!!

Football clubs have finally wisened up to trading in derivatives on players’ contracts, it is apparent based on the transfer deadline news of yesterday. Alvaro Negredo has been loaned out by Manchester City to Valencia, but at the end of the year Valencia have an obligation to make the deal permanent. The same article mentions Fiorentina taking Micah Richards on loan, also from Manchester City. In this case, however, Fiorentina has the option to make the deal permanent after a year.

In fact, thinking about it, this kind of option trading in football contracts is not all that new. When Brendan Rodgers was initially appointed by Liverpool in 2012, he was given a three year deal, with the club having an option of extending it by a year (the deal has since been revised).

It’s all very interesting. I’ve constantly lamented that some of the great concepts in finance which are well applicable to everyday life are not applied to the extent that is required. Option valuation is one such concept, for example. I wrote to a friend just now asking why I should join a club he is exhorting me to join, given it’s not doing much now. His reply can be condensed to “option value”.

Option valuation is not the only thing. There is the concept of liquidity. A very commonly used concept within financial markets, it is surprisingly absent in general economic literature. For example, in finance it is a well understood concept that the more the number of active market participants the less is the transaction cost (measured as the bid-ask spread). The same concept can be used to analyze markets for taxis, housing, cooks (why a cook costs much more in Rajajinagar where demand is much lower than in Jayanagar), etc. You never see too many economists talking about it, though.

The problem might be that practitioners of financial economics concepts find finance too lucrative to apply their concepts elsewhere, while mainstream or left-leaning economists might find finance (especially complex derivative finance) abhorrent, and thus are loathe to borrow concepts from that (generally speculating)!

In terms of liquidity, though, things seem to be changing. My old friend Sangeet has been practically making a living over the last couple of years evangelizing the concept of liquidity, through his excellent blog on platform economics. Check out his recent post on Uber, for example. Platform economics is nothing but the economics of liquidity. The success of Sangeet’s blog shows that people are finally beginning to take the concept seriously. Still not mainstream economists, though!

Levels of polymorphism

Different languages have different levels of polymorphism, and it is a function of the environment in which the language developed. I discovered this last night when someone wrote on twitter that there is no word in Tamil for snow:

That got me thinking as to whether Kannada has a word for snow. Thinking of words for all the super-rain things in Kannada, I figured that “hima” is the word for fog, and “manju” means mist. But there is no word for snow in Kannada!

I put up the question on twitter, and the answers again were variations of the list I’ve put up earlier – some suggested “hima”, others “hani” (means “drops”, as in “raindrops”). One suggested “tushaara” for snow, but it’s not a commonly used word, so while it might be valid, I was looking for more commonly used words.

It then dawned on me that like the Tamil country, “solid rain” (apart from hailstones – which has its own Kannada word Anekal – translates to “elephant stone”) is not all that common in the Kannada country too. Yes, the Kannada country is cooler than Tamil country, and “solid rain” does happen, but it doesn’t happen on a regular enough basis for each type to have a word of its own. So, while I might think that “hima” is fog (since that’s the context in which it’s used in Bangalore), it also stands for “snow”! It’s all solid rain, and since it’s not all that common, you can have one word that describes it all! Interestingly, I can’t think of a Kannada word for “ice” also (again I haven’t learnt Kannada formally, though I speak the language at home. So what i know is the everyday spoken language)!

On a different note, in Japanese, the same word “Ao” is used to describe both blue and green! I’m again not sure if this because Japanese people are blue-green colour-blind, but the level of polymorphism in colour is interesting. At the other end of the scale, Italian has at least three words to describe different shades of blue (my knowledge of Italy, and Italian, I must mention, is mostly from football).

First, you have “celesti” or sky blue, as in the Biancocelesti of Lazio:

Then you have the blue of the sea or “azzure”, as in Inter Milan’s Nerazzuri

And finally, the word “Blu” is used for dark blue, as in Genoa’s Rossoblu. 

As if all this was not enough, they have Viola for purple!

It is interesting how different languages use different levels of polymorphism for different things!

Liverpool FC, this season

For a Liverpool fan, this has easily been the best footballing season since 2008-09. Based on the performance so far, however, I would still rate the 2008-09 performance higher – primarily because Liverpool came back to win several games that season – something they’ve not managed this season. Here are some pertinent observations from the season so far:

  • Aly Cissokho is the new Djimi Traore (for those who don’t remember, he was Liverpool’s left back in the Champions League winning team in 2005. He’s been branded as ‘the worst player ever to win the Champions League’. Among other things he played Crespo onside twice for Milan’s second and third goals in that game)
  • Liverpool against Aston Villa two weekends back reminded me of Liverpool versus Milan in 2005. Back then, Rafa Benitez had dropped holding midfielder Dietmar Hamann and played Xabi Alonso and Steven Gerrard as central midfielders, and they got badly overrun.

    Here, Brendan Rodgers went with a midfield of Jordan Henderson (the new Gerrard, more on that later) and Gerrard (now a wannabe Alonso), and they got similarly overrun. The only time Liverpool looked threatening was when Lucas Leiva was on the pitch for 20 minutes of the second half

  • When Kenny Dalglish bought Henderson in 2011, it seemed like the Liverpool team had too many “Gerrards”. There was Gerrard himself, there was Alberto Aquilani (remember?) and there was Raul Meireles (yet another player in the traditional “Gerrard role”) when Henderson came in. And Jonjo Shelvey was coming up the ranks.

    Two and a half years hence, Henderson has established himself as the Number One Gerrard, ahead of Gerrard himself, who now plays more like the 4 he wears for his country than the 8 he wears for his club. Meireles and Aquilani were sold soon after Henderson arrived, Shelvey went last season (a mistake IMHO. He should’ve been loaned out) and Gerrard has moved back.

  • With Liverpool gifting West Brom a goal after not playing out properly from the back, one of the two monkeys on Liverpool’s back has bitten.  Simon Mignolet is nowhere as good as Pepe Reina as a distributor (though he’s much much better as a shot stopper), and the Toure-Skrtel partnership has always looked vulnerable playing out from the back. This was bound to happen and it’s good it happened. They’ll be more careful playing out from the back henceforth.
  • The other monkey on Liverpool’s back waiting to bite is Skrtel at set pieces. His natural strategy this season has been to grab the opponent’s tallest player. So far referees have overlooked it, and a penalty is waiting to be conceded. Hope that happens such that Liverpool don’t drop points on account of it
  • A big issue with Aly Cissokho at left back is that when he ventures forward (typically with little success), he doesn’t track back quickly enough and leaves Liverpool short of support in case the opponent breaks on a counterattack. Hence in the game against West Brom it was pleasing to see Daniel Sturridge having moved back into a left back position to cover when Cissokho got isolated on one of his ventures forward.
  • Once Jon Flanagan is fit enough to last 90 minutes (he isn’t yet, it seems), Cissokho should be dropped, Flanagan should go to left back and Kelly should play at right back. Cissokho is an abomination.
  • Liverpool’s injury list currently reads: Right back: Glen Johnson, Centre backs: Mamadou Sakho and Daniel Agger, Left back: Jose Enrique, Holding midfield: Lucas Leiva.  Another central midfielder Joe Allen recently came off that list. Gerrard, Sturridge and Coutinho have also been injured at some point in time this season.
  • The most joyous thing about watching Liverpool in 2008-09 was their comebacks. They came back from a goal down to beat Manchester United 2-1 at Old Trafford (I still remember that Ryan Babel strike that settled that game). Then came back from 2-0 down to beat Manchester City 3-2, and repeated that effort against Wigan. They almost repeated it against Hull but could only draw 2-2. Apart from the Villa game, such comebacks have been absent this season. And Liverpool have let leads slip way too many times.
  • I’m not saying anything about the Suarez-Sturridge partnership up front – the results are there to see. One thing I’ll say, though, is that I don’t like the “SAS” acronym – simply because the “A” stands for “and”. Now if only Iago Aspas could magically improve next season and become the A in SAS..
  • I have this tracker going all season that tries to predict where Liverpool will end up. This is based on quality of opposition faced. Liverpool have been a consistent fifth according to this tracker. Look at the MS Score here.

Why I became a Liverpool fan

In mid-April 2005, I was on the District Line train from Mansion House to South Kensington, in London, and in the Victoria station, a huge number of people got on to the train. They were all dressed in red, and carrying Liverpool scarves and cans of Carlsberg beer. They were on their way to Stamford Bridge, to watch Liverpool take on Chelski in the Champions League semis at Stamford Bridge. And they started singing. 

It was magical, as they first sang “you never walk alone”, and then followed it up with personalized songs for each of the players, and for the coach Rafa Benitez. I remember one going “Steve Gerrard Gerrard, pass the ball forty yards .. ” . And another, to the tune of “La Bamba”, going “Rarararararafa Benitez, Xabi Alonso, Garcia and Nunez” (honouring all the Spaniards in the team). I was sold.
Till then, I hadn’t been much of a football fan, though I would watch the odd World Cup or Euro game. I had never really followed club football, and never supported any team. That day, things changed. I went to a crowded pub in Kensington to watch the game, perhaps I was the only Red fan there. I got to know the names of the Liverpool players (I’d heard of Gerrard and Milan Baros thanks to their exploits in Euro ’04, and I knew Alonso, Garcia and Nunez (never saw him play) thanks to the song). And quietly cheered for Liverpool in that semi final.
It has been a roller coaster ride for the last eight odd years, with more downs than ups. The undoubted high came just a month after I’d declared myself a Liverpool fan, when they came back from 0-3 down to beat Milan in the Champions League finals in Istanbul. There have been several low points, the one that hurts the most is them failing to win the Premiership in 2008-09, when they came a close second. And then, they were to sell Xabi Alonso, who had been my favourite player.
The kind of passion I feel when I watch Liverpool play is unmatched, even by what I feel when I watch the Indian Test cricket team. There is a kind of tension that develops that I seldom feel otherwise. The disappointment when they lose (or fail to win) is the kind that I normally reserve for personal debacles.
And to think it all started with a random train ride with a bunch of loud drunks.

Football Forecasts

Based on the performance of teams in the English Premier League so far in the season, I’ve developed a model which predicts how each of the remaining matches in the league will go. While predictions on individual matches might be shaky and hence not very accurate, I want to publish my prediction on what the league table will look like at the end of the season. If my predictions turn out to be right, I can claim later on to be a master sports predictor and hope for some business to come my way because of this. Of course I’m taking the risk of putting my predictive reputation on the line by coming out with these predictions, but sometimes such risks need to be taken.

I last ran my model on April 1st, and this is my prediction of the final tally of the Premier League.

My prediction of what the EPL table will be like at the end of the season. As of 1st April 2013
My prediction of what the EPL table will be like at the end of the season. As of 1st April 2013

Some notes

1. This is a purely statistical model based on goals scored so far in the season. For each time I’ve modeled how many goals they’ll score given the number of points their opponents have racked up in the league so far

2. I know this is wildly optimistic for Manchester United as the model thinks they will win each of their next 8 games. I don’t think this is going to happen. So disregard that prediction

3. Interestingly the top of the table according to my prediction is identical to the top of the table now.

Goalkeeper Mishmash

So one of the comments on my previous post about goalkeepers talked about how the relegated teams (Wolves, Bolton and Blackburn) had the worst keepers. So I wondered how they would have done had they had better goalies. I’ve still not figured out how to correlate a goalie’s distribution success to goals scored and so I’ll simply stick to shot stopping criteria.

I use the ratio of big chances to goals in each game to figure out how a different goalkeeper would have reacted. So if I have a goalie with a 90% shot-stopping ability and the opposing team has 10 big chances in the game, then I concede 1 goal. However, if my goalie has a 50% stopping ability I let in 5.

Based on the shot-stopping success ratio of each goalkeeper and the number of big chances faced by each team in each game, I have estimated the number of goals the team would have let in in each game. Comparing this against goals scored, I have come up with a hypothetical points tally for the season.

I know I abuse excel graphics a lot but I couldn’t think of any non-excel method to present the data here. I paired each goalie who played at least 1000 minutes during the season with each team and estimated how many points the team would have raked up.

Goalie Mishmash

Some pertinent observations.

1. The teams on whom the quality of goalie had the most impact are Arsenal, Blackburn, Wigan and Wolves. This goes to show how much Arsenal have to credit Sczsesny for their ability to reach the Champions’ League.

2. Everton is the team where the maximum and minimum possible points due to change in goalie is minimum (4, opposed to 14 for Arsenal). Shows that they have a pretty compact and tight defence, and what stops them from a top four slot is the quality of attack.

3. Due to the low number of big chances that occur in each game and due to rounding of goals conceded, you see some kind of a discontinuity in scores as you go down the list, as well as lots of ties. There is no mistake in the data or the calculations.

4. Manchester United has a much lower “goalkeeper impact” than Manchester City. With a lesser goalie than Joe Hart, it is unlikely City would have won the title.

5. Since we use overall averages of a goalie’s shot stopping ability, these simulations show different numbers for “real” goalie-team pairs than what the teams actually achieved.

6. The difference in maximum and minimum possible points as a function of a goalkeeper is a good indication of the overall quality of a team’s defense. The table below ranks the teams as per quality of defense.


7. While Blackburn and Wolves both had poor defence, part of Bolton’s relegation blame can be attributed to the quality (or otherwise) of their goalkeepers (Adam Bogdan and Juusi Jaaskaleinen). Which makes it even more surprising that West Ham (upon re-entry to the Premier League) sold Robert Green (to QPR, where he warms the bench) and recruited Jaaskaleinen in his place.

8. Last season, Liverpool had a pretty good defence (especially their first-choice back four of Johnson-Skrtel-Agger-Enrique). Their attacking ability (and especially their finishing – same story this season) let them down badly.

Comparing Goalies in the Premier League: Shot-stopping ability versus passing ability

How does one compare the goalies of the Premier League? Based on Opta data released by Manchester City last year, I have compared the goalkeepers of the 2011-12 season on two parameters – percentage of shots blocked and success in distribution. This shows the relative successes of the goalkeepers in defence and attack respectively.

So who are the successful goalkeepers in the league? If you look for at this data, you will find that Pepe Reina, Wojciech Szczesny, Petr Cech and Joe Hart form a “convex hull”. What this means is that every other goalkeeper in the premier league is inferior to at least one of these four. So the best goalie has to be one of these.


How do goalkeepers in the premier league stack up against each other?
How do goalkeepers in the premier league stack up against each other?


As for who the absolute best is, that will depend on the relative weights that we give to shot-stopping and distributional ability. Intuitively, a 10% improvement in distribution is likely to result in less goals than a 10% improvement in shot stopping saves. So by that metric, it can be argued that one of Cech and Hart, who are far superior in terms of shot stopping ability is the best goalkeeper.

It is also interesting to note that even in Kenny Dalglish’s time as manager, Reina had a vastly superior distribution success, suggesting that it would not have been that difficult for Liverpool to adapt to Brendan Rodgers’s style of play.

PS: Click on the image to see a larger version

PS2: I’m writing this post sitting in the office room of one of my clients, who also happens to be a frequent visitor to this blog.

Analyzing #LFC

It’s been yet another frustrating season as a Liverpool FC fan. You might say that this can be said but just about every season, but unlike in the last two seasons when we played shit and there was no hope, we have actually been playing well this season, and just haven’t been able to convert that into goals. I didn’t watch the loss to Fulham and I agree we  were absolute shit against Spurs, but King Kenny’s statement that we “deserved” to have won every game apart from that Spurs game does have some merit.

I don’t remember the exact stats right now, but two things stand out. LFC has the maximum number of shots that have hit the post or crossbar this season (eighteen, if I’m not wrong). And we also have the lowest ratio in terms of goals to shots on goal. So basically it seems like we’ve been doing pretty well getting the ball into the D, but have been quite wasteful from there. The other notable stat that comes to mind is that we have conceded the least goals this season among all teams (13, I think), and that includes the time when Johnson and Agger were injured, when we had become somewhat porous. Now, with a settled back five, we seem to be doing quite well defensively despite the season-long loss of Lucas Leiva.

Despite the attacking opportunities and number of shots on goal that we’ve got, I’ve felt throughout this season that there has been something missing about this team. There’s something disjointed about the attacking moves. There’s a lack of cohesion. Back when we had Xabi, we had a natural route to switch flanks on the attack – simply pass the ball back to Xabi who will control the game. Unfortunately, good though he is, Adam is not in the same class, and so this route doesn’t seem to be that fluid.

For the first month, I thought the missing piece in the jigsaw puzzle was Gerrard, and though he was good (against Man U, etc.) after seeing him play I realized he was not the answer I was looking for. To be absolutely frank, I don’t think his absence from the team (from a purely sporting perspective, without taking into account leadership and morale) has had that much of an impact.

The win against Aston Villa came quite easy (after the couple of early goals, the game was won on autopilot), but I think the big gain from the game was the performance of Jonjo Shelvey. Of course, he wasn’t involved too much, but the little I saw of him (including that back-heel that set up the first goal) showed immense promise, and hopefully he can be developed into a fine advanced midfielder. Speaking of which…

So, I think, the missing piece in the jigsaw is a clever advanced playmaker. A classic number ten, as they would call him in South America. Someone like Juan Roman Riquelme, or Mesut Ozil, or even Iniesta. Someone who plays high up the pitch, and can distribute intelligently and pass accurately. It seems now that Adam has taken on this role, but he seems a bit too slow at times, and not accurate enough. I think he is suited for a more withdrawn playmaking role, and a good number ten in front of him can do a great job of tying the team together.

It is for this reason that I was sad to see Raul Meireles go, for I thought he was someone who was quite capable of being developed for that role (I quite enjoyed how the Arsenal game transformed after he came on). Gerrard has the drive and ambition and pace and all that, but I don’t think he’s smart enough for that. Shelvey might be developed there but for now he’s too young. I’ve seen Henderson play there but again he seems to play much more like Gerrard and much less like an advanced playmaker.

That leaves two players in the squad who are capable of playing that role, but both are away on loan, and both displayed horrible form when they played for LFC. Hopefully the loan spell will help either or both of Joe Cole and Alberto Aquilani to get back to form, and hope that King Kenny and co realize that the advanced playmaker role is the one that they’ve been sorely missing, and are able to keep either or both of these two when it comes to next season.

For now, though, there are other worries, with Suarez having been banned for eight games. I guess the season will continue to frustrate.

Big forward, little forward

When most teams play a front two, it comprises of a small quick guy (called the Number Ten) and a big guy (called the Number Nine). The convention is that when the team is defending, one of these two stays up ahead (just beating the off-side mark, wherever the opposition defence line is), while the other tracks back in order to help out with the defence. The worldwide convention in this regard is for the Number Nine to stay up front in anticipation of an attack while the Number Ten drops back to defend.

Liverpool, of late, however, have played differently. Their Number Ten (figuratively, since he wears seven on his back) Luis Suarez is the one usually left alone upfront when the team is defending, while the number Nine Andy Carroll tracks back to help out in defence.

The logic of this policy is two-fold. One, an additional big player coming back to defend means greater ability to win defensive headers within the box (think of it in terms of winning rebounds in basketball). Secondly, Liverpool under Dalglish have preferred a pass-the-ball-out-of-defence method rather than clearances. This means that when the offence breaks and a counterattack is to be launched, the ball is more likely to be played along the ground to the forward rather than up in the air. And Suarez is the more likely of the pair of forwards more likely to make use of that.

So what is the concept behind the conventional wisdom of leaving Nine upfront with Ten dropping back into defence? The typical strategy in English football is to clear the ball out of defence rather than passing it out, and the big number nine is well positioned to receive it upfront. The big nines usually also have the ability to ‘hold up’ the ball, to allow his team-mates to join him. The number ten, being quick, is able to quickly join the number nine in attack.

The other factor behind leaving the number nine upfront is that they are usually one-dimensional players, with the only abilities being to win headers and hold up the ball. They are either no good in defence, or have big strikers’ egos that prevents from joining defence effectively. Number tens, on the other hand are more skilled all-round and are more likely to come of use in defence.

In this sense, Carroll is not bad at defence, and more importantly he is young and out of form, which makes it easy for Dalglish to force him to track back while defending. So far, it seems to be working.

Copa Format

The ongoing copa america is probably the worst designed sporting event I’ve ever seen, in terms of tournament format. Yes, there have been tournaments that have come close in the past, like the Asia Cup 08, which had a funny format so as to ensure at least two India-Pakistan matches (but that ensured that the chances of an India-Pakistan FINAL were really low). Then there was Euro 2008, where teams qualifying for the knockout from the same group ended up in the same half of the draw. And then, in hindsight, there was the Cricket World Cup 2007, when two upsets threw out two of the favourites before the “real tournament” had begun.

But in the face of the current Copa America, all of those can be described as being extremely well-designed tournaments. The Copa format is so bad that I seriously doubt that this post is going to be exhaustive in listing out all its flaws. Since there are so many of them, and I don’t want to keep saying “moreover”, “next” or “furthermore”, I’ll do it in bullet points. The points are in random order

  • You have 12 countries in the first round which you want to reduce to 8 for the second round. What do you do? Four groups of three with top two from each qualifying right? Instead, they have 3 groups of 4, with the two best third placed teams also qualifying. So you spend 18 matches (2/3rd of the tournament) throwing out one-third of the teams! Ok but I understand (as Atul Mathew points out on twitter) this is the standard format of Copa so I guess I’ll let it be
  • The organizers seem to have clearly drawn from the experience of 2007 CWC, when India and Pakistan went out in the first round. And given how the first two rounds of matches played out, it wouldn’t have been hard to imagine one or both of Argentina and Brazil going out, which would have killed the competition. I guess that’s the reason the Copa adopts this tamasha of third placed teams and stuff.
  • The last matches in each group are not simultaneously played, and the “seeded teams” in each group (Argentina, Uruguay, Brazil) got to play the last games, and thus figure out what exactly they needed to do (fix it even, maybe?) so that they got a favourable draw in the quarters. Actually, as I’ll explain in a subsequent tweet, it was more like “favourable opponent” rather than “favourable draw”. Check out Jonathan Wilson’s piece on watching Brazil-Ecuador with a bunch of Chile fans
  • Now you have in the second round Brazil taking on Paraguay, whom they’ve faced once before in the group stages. Again, daft format that allows a team to play the third placed team in its own group in the second round itself. I remember FIFA 1994 handling third placed teams well, to make sure they didn’t meet teams they’d played before in the second round
  • Take a look at the quarter-finals fixtures, and do  a sensitivity analysis of what would have happened if either Brazil had done slightly worse or Argentina had done better. You will notice that as long as Argentina and Brazil finished their respective groups as either number 1 or number 2, they would end up in different halves of the tournament! Oh, the lengths the organizers have gone to ensure they maximize the chances of getting a Brazil-Argentina final. Another off-shoot is again teams from the same group having to meet in the semis. For example, if Venezuela beat Chile this weekend, then either Brazil or Paraguay could get to the final of the tournament by not ever facing a team that started anywhere outside of group B!!
As I mentioned this list is unlikely to be exhaustive. And I hope for the sake of giving the organizers a kick in the butt, Paraguay and Uruguay will do the needful and throw out Brazil and Argentina respectively. They’re fully capable of doing that, based on tournament form.