football – Page 5 – Pertinent Observations

Revenue management at Liverpool Football Club

Liverpool Football Club, of which I’ve been a fan for nearly eleven years now, is in the midst of a storm with fans protesting against high ticket prices. The butt of the fans’ ire has been the new £77 ticket that will be introduced next season. Though there will be few tickets that will be sold at that price, the existence of the price point has been enough to provoke the fans, many of whom walked out in the 77th minute of the home draw against Sunderland last weekend.

For a stadium that routinely sells out its tickets, an increase in ticket prices should be a no-brainer – it is poor revenue management if either people are scrambling for tickets or if there are empty seats. The problem here has been the way the price increase has been handled and communicated to the fans, and also what the club is optimising for.

At the outset, it must be understood that from a pure watching point of view, being in a stadium is inferior to being in front of a television. In the latter case, you not only have the best view of the action at all points in time, but also replays of important events and (occasionally) expert commentary to help you understand the game. From this point of view, the reason people want to watch a game at the ground is for reasons other than just watching – to put it simply, they go for “the experience”.

Now the thing with stadium experience is that it is a function of the other people at the stadium. In other words, it displays network effects – your experience at the stadium is a function of who else is in the stadium along with you.

This can be complex to model – for this could involve modelling every possible interaction between every pair of spectators at the ground. For example, if your sworn nemesis is at the ground a few seats away from you, you are unlikely to enjoy the game much.

However, given the rather large number of spectators, these individual interactions can be ignored, and only aggregate interactions considered. In other words, we can look at the interaction term between each spectator (who wants to watch the game at the ground) and the “rest of the crowd” (we assume idiosyncrasies like your sworn enemy’s presence as getting averaged out).

Now we have different ways in which a particular spectator can influence the rest of the crowd – in the most trivial case, he just quietly takes his seat, watches the game and leaves without uttering a word, in which case he adds zero value. In another case, he could be a hooligan and be a pain to everyone around him, adding negative value. A third spectator could be a possible cheerleader getting people around him to contribute positively, organising Mexican waves and generally keeping everyone entertained. There can be several other such categories.

The question is what the stadium is aiming to optimise for – the trivial case would be to optimise for revenue from a particular game, but that might come at the cost of stadium “atmosphere”. Stadium atmosphere is important not only to galvanise the team but also to enthuse spectators and get them to want to come for the next game, too. These two objectives (revenue and atmosphere) are never perfectly correlated (in fact their correlation might be negative), and the challenge for the club is to price in a way that the chosen linear combination of these objectives is maximised.

Fundamental principles of pricing in two-sided markets (here it’s a multisided market) say that the price to be charged to a participant should be a negative function of the value he adds to the rest of the event (to the “rest of the crowd” in this case).

A spectator who adds value to the crowd by this metric should be given a discount, while one who subtracts value (by either being a hooligan or a prude) should be charged a premium. The challenge here is that it may not be possible to discriminate at the spectator level – other proxies might have to be used for price discrimination.

One way to do this could be to model the value added by a spectator class as a function of the historic revenues from that class – with some clever modelling it might be possible to come up with credible values for this one, and then taking this value into account while adjusting the prices.

Coming back to Liverpool, the problem seems to be that the ticket price increase (no doubt given by an intention to further maximise revenue takings) has badly hit fans who were otherwise adding positive value to the stadium atmosphere. With such fans potentially getting priced out (in favour of fans who are willing to pay more, but not necessarily adding as much value to the ground), they are trying to send a message to the club that their value (toward the stadium atmosphere) is being underestimated, and thus they need greater discounts. The stadium walkouts are a vehicle to get across this point.

Maximising for per-game revenue need not be sustainable in the long term – an element of “atmosphere” has to be added, too. It seems like the current worthies at Liverpool Football Club have failed to take this into account, resulting in the current unsavoury negotiations.

Now that I’ve moved to Barcelona, Liverpool FC need not look too far – I’ve done a fair bit of work on pricing and revenue management, and on two-sided markets, and can help them understand and analyse the kind of value added by different kinds of spectators, and how this can translate to actual revenues and atmosphere. So go ahead and hire me!

Watching the Clasico in a bar

No, this post doesn’t have to do with the current El Clasico between Real Madrid and FC Barcelona. When I’d watched the previous Clasico on March 22nd I’d formed a blog post in my head but I never got down to writing it (combination of travel and NED and enjoying my holiday) so I thought this is a good time to put it down.

On that occasion I was in Barcelona and briefly toyed with the idea of going to watch the game at the Camp Nou. That idea was quickly shelved given that tickets were going for about €500 each. Then there was hope that the game would be telecast on local TV (like the Barcelona-Ajax game I had watched at the Camp Nou was), but that wasn’t to be. The only option was to watch it at a pub.

While there were several bouts of NED due to which I had decided I won’t see that game, when Maxime, my wife’s flatmate, went out, I couldn’t help but join him. The first task was to find a suitable pub, especially given that it was a Sunday.

There is an interesting hierarchy of local businesses in Barcelona. Most Spanish-run supermarkets, for example, are closed on that day, though the Pakistani-run places (which are interestingly plentiful in the city) are open 24×7. A large number of Spanish-run bars are closed on Sundays, too, while the Chinese bars (again plentiful) are open all day.

Given that it was the Clasico and it was not broadcast on terrestrial television, there was no surprise that bars were full. Seating-only bars were thus out of question. And some of the standing-allowed places were choc-a-bloc. Finally it was this Chinese bar near the Entença station that Maxime and I went to.

The place was full, like most other bars in Barcelona that night, but there was some standing room with a view of one of the televisions. A sign at the entrance greeted us saying that each person was expected to order at least one beer for €2 (normal price for a beer in such a bar is €1,80). Estrella thus Dammed, it was time for the game.

I don’t remember much of that game, but the atmosphere in the bar was far from the kind I’d seen elsewhere. The crowd was partisan, of course, with anyone who wanted to support Real Madrid doing so silently (remember that this is a politically charged fixture, especially given renewed calls for Catalan secession). Loud cheers accompanied the Barcelona goals. The Madrid goal was met with silence, as you might expect (and people stepping out for a smoke). People stepping in and out created another problem – it was a rather cold spring evening, and every time the door opened it let in rather cold wind and disturbed the thermal balance of the bar!

There were a couple of other noteworthy sidelines on the evening. The first was how hard the bar staff worked. Expecting it to be a big night, they had pressed in extra staff, with possibly the entire family of the people who ran the bar involved. Children who looked as young as ten or twelve hurriedly ferried dishes from the kitchen to the tables (there were a few tables, which I’m assuming were pre-booked). Service was overall top notch, with our €2 beers arriving within two minutes despite the massive crowd at the bar. Considering that some bars were shut (given it was a Sunday), it was incredible how hard this one worked to make most of a good Barcelona night.

And then there were these guys at the slot machines. Like most other cheap bars in Europe, this one too had a couple of slot machines and they were all occupied, by people who couldn’t care less about what was going on around them, and whose only worry in life was to bet against the house. It could have been yet another night at the bar for them, except that the beer cost them twenty cents extra.

PS: I got distracted by the Manchester City – Liverpool game and hence took much longer to finish this post. I started writing it as soon as El Clasico started.

The many spectacles of Jurgen Klopp

I haven’t been a big fan of my last two pairs of spectacles. The last one, especially, was chosen carefully after a rather long search across several stores. Yet, within a week or two of purchase, I knew it wasn’t a great choice. Somehow it didn’t look as good on me as I imagined it would. And it’s been hardly four months since I bought it, but I’m already looking for a new pair.

While there are several people whose spectacle frames I’ve much admired, no one comes close to new Liverpool F.C. manager Jurgen Klopp. Not realising that he has several pairs of spectacles, I’ve tweeted on many occasions that I want “Jurgen Klopp spectacle frames”. And then somehow forgotten it when at the optician’s.

With Klopp scheduled to be unveiled as the new Liverpool F.C. manager today (he signed his contract yesterday), the Guardian has put out a nice graphic called “the many faces of Jurgen Klopp”. As far as I’m concerned, though, I don’t care about the faces at all. All I care about are the spectacles! Each one better than the other.

So I present to you, “the many spectacles of Jurgen Klopp”. Watch off!

And while at it, tell me where I can procure such spectacle frames – most stores in Bangalore don’t stock good big matte-finished frames. And don’t tell me LensKart or some such online seller – buying a pair of spectacles is like buying a pair of shoes – you need to feel them, try them on and feel comfortable in them before buying.

What did Brendan in? Priors? The schedule? Or the cups?

So Brendan Rodgers has been sacked as Liverpool manager, after what seems like an indifferent start to the season. The club is in tenth position with 12 points after 8 games, with commentators noting that “at the same stage last season” the club had 13 points from 8 games.

Yet, the notion of “same stage last season” is wrong, as I’d explained in this post I’d written two years back (during Liverpool’s last title chase), since the fixture list changes year on year. As I’ve explained in that post, a better way to compare a club’s performance is to compare its performance this season to corresponding fixtures from last season.

Looking at this season from such a lens (and ignoring games against promoted teams Bournemouth and Norwich), this is what Liverpool’s season so far looks like:

Fixture	This season	Last season	Difference
Stoke away	Win	Loss	+3
Arsenal away	Draw	Loss	+1
West Ham home	Loss	Win	-3
Manchester United Away	Loss	Loss	0
Aston Villa home	Win	Loss	+3
Everton away	Draw	Draw	0

In other words, compared to similar fixtures last season, Liverpool is on a +4 (winning two games and drawing one among last season’s losses, and losing one of last season’s wins). In fact, if we look at the fixture schedule, apart from the games against promoted sides (which Liverpool didn’t do wonderfully in, scraping through with an offside goal against Bournemouth and drawing with Norwich), Liverpool have had a pretty tough start to the season in terms of fixtures.

So the question is what led to Brendan Rodgers’ dismissal last night? Surely it can’t be the draw at Everton, for that has become a “standard result” of late? Maybe the fact that Liverpool didn’t win allowed the management to make the announcement last evening, but surely the decision had been made earlier?

The first possibility is that the priors had been stacked against Rodgers. Considering the indifferent performance last season in both the league (except for one brilliant spell) and the cups, and the sacking of Rodgers’ assistants, it’s likely that the benefit of the doubt before the season began was against Rodgers, and only a spectacular performance could have turned it around.

The other possibility is indifferent performances in the cups, with 1-1 home draws against FC Sion and Carlisle United being the absolute low points, in fixtures that one would have expected Liverpool to win easily (albeit with weakened sides). While Liverpool is yet to exit any cup, indifferent performances so far meant that there hasn’t been much improvement in the squad since last season.

Leaving aside a “bad prior” at the beginning of the season and cup performances (no pun intended), there’s no other reason to sack Rodgers. As my analysis above shows, his performance in the league hasn’t been particularly bad in terms of results, with only the defeat to West Ham and possibly the draw to Norwich being bad. If Fenway Sports Group (the owners of Liverpool FC) have indeed sacked Rodgers on his league performance, it simply means that they don’t fully get the “Moneyball” philosophy that they supposedly follow, and could do with some quant consulting.

And if they’re reading this, they should know who to approach for such consulting services!

Testing the counterfactual: footballers eating pizza edition

Five German under-21 footballers, including Liverpool midfielder Emre Çan, went out for pizza before their U-21 European Championship semifinal against Portugal, in which they got walloped 5-0.

https://instagram.com/p/4XTrUxHcHy/embed/captioned/?v=4

Following the wallop, these players have been pilloried for going out before an important knockout game, for not having taken it seriously enough.

To understand whether people are right or not in pillorying these players, and whether the players were wrong in going out for pizza before a game, we need to test the counterfactual (we had done this here once before with Moeen Ali’s wristbands).

What if Germany had won the game against Portugal? Had they won it, would people have still noticed that these players were out on the eve of the game (it was public information. One of them posted it to Instagram) ? Would players have still been accused of not taking the game seriously enough?

Note that I’m not defending the German players here. I’m only questioning the timing of the attack – on the back of defeat, which to me seems to be a case of correlation (players go out for pizza; lose game) being mistaken for causation (pizza caused loss, approximately).

Analysing Premier League Performance So Far

English Premier League tables can be misleading in that they are a function of the fixture list. At this point in time it doesn’t matter so much since we’re only 2 games into the second half of the season but in the middle of the half of the season it is important.

From this perspective, it is important to compare this season’s results against comparable fixtures of last season to know where teams are. Last season I had a calculator that would run every week. This year, thanks to Liverpool’s indifference performance (as you can see in the first chart), I’ve been late on this.

The list of Premier League teams changes every year, though, thanks to relegation and promotion. For this purpose, we replace teams placed 18,19,20 last year respectively with the Championship winner, runner-up and winner of playoff. So we substitute Leicester, Burnley and QPR respectively for Norwich, Fulham and Cardiff from last year’s table.

So the first graph shows the difference between a team’s points tally this year and the team’s points tally from the corresponding fixture of last year. This illustrates why as a Liverpool fan I’ve put so much NED – they’re the second worst team this year compared to last year, after city rivals Everton.

The most improved team is, of course, West Ham United. Also having improved significantly are Swansea and Chelsea. At the other end, after last year’s high-flying Liverpool and Everton, we have relegation-threatened Crystal Palace and West Brom, along with Arsenal. And QPR is worse off compared to Cardiff last year!

Next, if we assume that the rest of the season goes identically to last year’s corresponding fixtures, what will the final table look like? It will look like this:

According to this, Palace should hang on, but West Brom and Hull will go down, as will QPR. Surprisingly, this says that Arsenal and Spurs will get the last two Champions League places (notice the gap between 2 and 3 here).

Rodgers and the Ranatunga Principle

It was a wonderful display of the “Ranatunga Principle” by Brendan Rodgers last night, when he fielded what was effectively a second string Liverpool team at Real Madrid. That they lost only 1-0 shows that it wasn’t that bad a ploy, especially given the more important features coming up ahead.

Firstly, Liverpool have not given up on the Champions League. They have simply prioritised. The group they are is a rather weird one – where one team is significantly superior to the others which are approximately at the same level. It is not inconceivable at all that Real Madrid will win all their six games and get 18 points.

Before the game at Anfield two weeks back the degree of Real Madrid’s superiority over Liverpool wasn’t yet fully established and Rodgers smelt the chances of handing out an upset at home and fielded his strongest team. It backfired spectacularly as Real Madrid hammered Liverpool. The more important result of the night, though, was the unfancied but promising Ludogorets beating Basel at home. It was that result that allowed Rodgers to do what he did yesterday.

Real Madrid’s dominance means that Liverpool, Basel and Ludogorets are effectively playing a 3-team mini league the winner of which will go through to the knockouts (of course the extents of their respective thrashings by Real Madrid will matter if it comes down to goal difference). So far, in this mini group, all games have gone to the “home team”.

Liverpool’s last two games of the season see them take on Basel at home and Ludogorets away, and if they win both of them, they are through to the knockouts. Even if Liverpool had come away with a point in last night’s game, this equation would not have changed significantly (three points last night would have helped but the game at Anfield showed how impossible that was).

Liverpool have had a rather busy fixture list in the last 3 weeks. In the space of three weeks they’ve had to play QPR, Real Madrid, Hull, Swansea, Newcastle, Real Madrid and Chelsea – not an easy fixture list at all, and Liverpool’s poor form in the league has made them take even the Capital One Cup seriously, meaning not too many players could be rotated for the game against Swansea. In the loss to Newcastle on Saturday, the fatigue was evident as Liverpool’s attackers were all anonymous. A rest day was thus in order.

This, combined with the weird nature of the Champions League group that Liverpool are in meant that last night’s game was the “least important” for Liverpool in the current run of fixtures, which permitted them to rest key players and give a run out to the perennial subs. And on the evidence of the 1-0 defeat, it seems it didn’t go too badly. Now if only Liverpool can make use of this rest and beat Chelsea on the weekend!

Postscript

Gerrard came on around three-quarters into last night’s game. I have come to believe that is his best position for the team now. Come on as an “impact substitute” in the second half and play in the “old Gerrard role”.

The Steven Davis Role

The first encounter between Liverpool and Southampton in the 2013-14 English Premier League season happened at Anfield in September, and Southampton won 1-0 with a Dejan Lovren goal from a set piece. So when the two sides met again at St. Mary’s in the latter half of the season, with Liverpool chasing the title, it was known that it would be a tough game for Liverpool.

Southampton dominated the first half, playing a front four of Steven Davis, Adam Lallana, Jay Rodrigues and Rickie Lambert. However, it was Liverpool who scored in that half, and led 1-0 at the break. Here is a picture I found on twitter that was uploaded at half time:

Southampton manager Mauricio Pochettino decided to change things for the second half. He took off his most unspectacular forward player Steven Davis and replaced him with Gaston Ramirez, the promising Uruguayan. Soon, Southampton unravelled and Liverpool completely dominated the second half as they won 3-0.

Now, there is no doubt that Ramirez is more talented than Davis and is definitely a better player in general. However, in the context of the rest of Southampton’s team, Ramirez’s introduction proved to be a disaster and there was little cohesion in their attacking play from the time he came on. Southampton became a disjointed team and went out of the game.

This has led me to define what I have come to call the “Steven Davis role”. It is basically a player who is not individually the best, but provides some kind of a glue that holds the team together. The player’s key skill, rather than looking at it from traditional axes such as passing or shooting or tackling or intercepting, is to change position, and to make sure that the team holds its shape at all times. It is to make sure that any players who are out of position are covered for, and that the attack retains its shape and focus.

Now, it must be remembered that last season Southampton’s attacking play was primarily based on strong movement and interplay between their front four. They had nominal positions defined, but they hardly stuck to those as they moved around in attack. Thus, Lambert who would start upfront would sometimes appear on the wing, with the nominal “number ten” Lallana going forward, for example.

And key to this system was Davis, who wasn’t particularly talented, but who would move in a way that would balance the attack. If the other three would move left to attack, he would take up a position slightly to the right – not too far away from the attack but providing a kind of counterbalance. He never led attacks himself, but he was always available to support the others’ attacks. And this is what made Southampton dangerous.

Once Davis had gone off, Southampton had no one to play this role. The kind of interplay they had in the first half disappeared. And their attacks became toothless and each attack had only one dimension which was easy to cover even for Liverpool’s normally shaky defence, as they kept a clean sheet.

It was a similar case I saw last night at the Camp Nou, with Barcelona’s Pedro Rodriguez playing in a “Steven Davis” role. Messi started in the middle and Neymar wide on the left. Pedro nominally started on the right. But soon it became clear that he was a kind of a “wide support striker” – his job was to appear in positions that complemented the rest of the attack rather than being in positions where he led the attack (though he did lead one glorious counterattack where he hit the post). It was like a kind of balance that he offered the team, and ensured their attacks had coherence (of course this being Barcelona they had Iniesta and Rakitic just behind to offer more “focal points”).

Last night was the last game of Luis Suarez’s ban, and it will be interesting what Barcelona do with him when he gets back this weekend. The instinct will be to remove Pedro in his favour, but it is not clear if an attack of Messi-Neymar-Suarez will be able to offer the same kind of coherence as an attack of Messi-Neymar-Pedro. That said, Suarez is an extremely intelligent player and showed in his Liverpool days that he is capable of being a “fighter”, so he might as well be played. But that will mean that Neymar will have to occasionally play the Davis/Pedro role, and it is not clear if he is capable of doing that.

We are in for interesting times.

The post has so far focussed on football but it is evident that his kind of a role is necessary in other team situations, including corporate teamwork, also. Sometimes you need that one guy who need not be individually spectacular, but is versatile and mobile enough that he can do several things, fill in for different people and make sure that any team he is part of will be “complete”. And in the absence of one such guy, the team can lose coherence and fail in its task.

Brendan Rodgers makes amends

I had been highly critical of Brendan Rodgers’ handling of Liverpool in the game at Basel in mid-week. There was a flurry of criticism all over the interwebs after that game, and no doubt a lot of it reached Rodgers. And in last night’s win against West Bromwich Albion, he seemed to make some amends.

There were a number of things in last night’s game that showed that Rodgers is again showing some imagination, after having stalled (along with the rest of the team) in recent times. For starters, Philippe Coutinho played deep, almost like a regista (deep-lying playmaker) next to Steven Gerrard. This meant that the two box-to-box midfielders Jordan Henderson and Adam Lallana could actually play box-to-box than being boxed in. This led to much better cohesion in Liverpool’s play.

Then, Rickie Lambert offered something different up front than what the static Mario Balotelli had been offering in recent times. Lambert moved – more than Balotelli, though nowhere as much as the injured Daniel Sturridge would have – and provided the focal point of attack. His touch and finishing were poor, though, and he still looks nowhere close to the player he was at Southampton. But his presence helped in another way – in that his long-standing understanding with Lallana helped them play a beautiful one-two which ended up in Lallana scoring Liverpool’s opener.

One of the great tactical games of Liverpool I’ve watched (it’s unlikely anyone else will call the tactics of this game “great”, though) was the FA Cup final against Chelsea in 2012, in what turned out to be Kenny Dalglish’s last game in charge of Liverpool in his second coming. At the hour mark, Chelsea led 2-0, and Liverpool had struggled to break past the buses that Chelsea had parked. And that’s when Dalglish introduced Andy Carroll, who had long been out of favour at the club following his GBP35m transfer from Newcastle United.

Carroll is a big guy, and he suddenly offered another route for Liverpool to attack – the first ball would be played by Brad Jones (the reserve goalie) long, and Carroll would invariably get to it, and hold it up – this turned out to be a surefire way of getting past Chelsea’s buses (and Chelsea didn’t know how to react to this change in tactic), and Liverpool pulled one back, and could have had more.

Following Carroll’s sale to West Ham United, though, Liverpool have lacked this “route two”. Last season especially, when teams proceeded to park buses in front of Liverpool, there was no way to get around them apart from the usual quick-pass-and-move route. And Liverpool suffered.

The coming of Lambert and Balotelli, though, has reopened the “route two”, and it was interesting to see Liverpool take that route several times during the game yesterday. It will be interesting to see when Sturridge comes back if Liverpool might play two up front and play the same route, but it would work better as a Plan B (IMHO).

Coming back to yesterday’s game, Balotelli’s dropping seems to have inspired him and he put in a much better performance than midweek when he came on for Lambert two-thirds into the game. He held the ball up well, acted as a great focal point and tried hard not to be caught offside. Hopefully we’ll see this side of Balotelli more as we go along.

The most interesting thing about last night’s game, though, is that in the last fifteen minutes, Steven Gerrard was back to playing in the old “Gerrard role”, with Lucas having come in to the holding midfield role. Gerrard played his old role well, and created a couple of chances following interplay with Balotelli. It showed that Gerrard is still good at what we’ve known him to be good for, except that he can’t play that way (it’s a very demanding role) for ninety minutes. Given that he’s much better in attack than defence, it’s a good ploy to get in a specialist holding guy (Lucas or Emre Can) for the last part when Liverpool is trying to close out the game.

It was only a very close win, and it came against West Brom, but it was an important three points and showed that Rodgers has started thinking again. Hopefully with the return of all the injured players after the international break, Liverpool can start playing again like they did against Spurs.

The Johan Cruijff Derby

That’s the name I’m giving to my tour that starts tonight, and will last eighteen days. I’ll be spending 2-3 days in Amsterdam, after which I fly to Barcelona where I’ll spend two weeks (as you know, the wife lives there).

There are primarily two reasons I’ve given the tour this name. The first is Cruijff himself. Cruijff made his name as a footballer in the decade he played for Ajax, where Rinus Michels developed the Total Football paradigm (which incidentally is named after a “total architecture” paradigm that was popular in Holland in those days). After that he followed Michels to FC Barcelona, where he had another successful spell. While he didn’t play for Barcelona as long as he did for Ajax, he has continued to live in Barcelona. Hence, a short tour of Amsterdam followed by a much longer tour of Barcelona can be named after Johan Cruijff!

The other reason for nomenclature makes more sense – I have a ticket for a football match, to be played on the 21st of October. The ticket has set me back by more than ten thousand rupees, but it’s going to be my first stadium football experience (coming after nine years of football-watching, on TV), and so I’m quite excited. The game is at the Camp Nou, where FC Barcelona will be taking on – you guessed it – Ajax (in the UEFA Champions League). And if there is anything that deserves to be named after Cruijff, it is the game between Barcelona and Ajax!

If you’re in either of those parts and want to meet, do leave a comment. If you have any recommendations of dos and don’ts, let me know that also! I’ll keep this blog updated through the tour!

PS: I’ve downloaded Dr. Sid Lowe’s Fear and loathing in La Liga to read on my way to Barcelona – in flights, airports and all that!