It is an anomalous and fairly ridiculous situation that in many respects could only happen in football. No other business would invest that much money and then fail to use what came through. At least no business acting rationally would act that way.
The thing is that football clubs (as does any normal business, for the matter) act irrationally. There is rarely any grand strategy in place and this is evidenced by how quickly confidence in a manager can deteriorate after a run of bad results, regardless of what that manager had achieved in the past.
For the past forty years, economists have been looking at ways to explain such irrationality. The foundation of behavioural economics, this new branch in the science, was laid by two Israeli professors - Amos Tversky and Daniel Kahneman – who set economics down the path of looking at what influences people’s behaviour to determine how they act and why they do so in such a manner (for more information on these two and their work, read Michael Lewis’ fantastic book The Undoing Project).
In doing so they looked at a number of psychological factors that influence people’s decision and prevent them from acting in a rational or consistent manner.
It is such factors that have to be looked at in order to understand what stops clubs from trying to maximise the investment that they make in academies. And there’s plenty worth looking into.
One in particular stands out.
Any project like a football academy has to be based on a long term vision. That much is obvious. Yet it contrasts with most managers’ focus on the present. It is a vicious circle that clubs effectively bring on themselves by failing to stick to long term projects.
It is a behaviour that behavioural economists will be familiar with, having observed and documented it in what has become known as the present bias. This is the tendency to over-value immediate rewards at the expense of long-term ambitions, regardless of the impact that it might have later on in life.
A classic example of this is when a person fails to save up any money, opting instead to spend it in order to fully live ‘the moment’. Eventually a time will come when it is too late to start saving up and that individual has nothing on which to turn.
That is what clubs are doing with their academies. The absence of a long term project forces everyone on the playing side to focus on the immediate outcome. Managers, knowing that their job could be at risk with a series of bad results, will opt for his more experienced players on whom he can rely more heavily.
Young players are more likely to make mistakes. Regardless of their talent they may not by physically ready or might be too slow to react; making critical mistakes in the process. Those are the mistakes that in truth they need to make in order to develop and learn yet managers rarely have the luxury of allowing them that room to grow. Managers need players who can deliver immediate results.
They are biased in favour of those players who can help them in the present.
This is costing clubs heavily. It is a short term view for a number of reasons starting from the obvious that the performances of older players tend to decrease rapidly once they hit a particular age. The outcome here is that the club would then have to look for another player to replace him, thus spending more money to do so.
What’s worse is that such spend is the equivalent of throwing money away. For while that older player might ensure immediate reliability, the value of such experienced players rarely appreciates. Within a couple of years that player will have to be moved on and often only a fraction – if any – of the initial outlay is recovered.
This contrasts with the value of a young player that tends to appreciate notably as they gain experience, confidence and start to express their ability on a more consistent basis. Financially, the development of a young player is easily more beneficial than going for established ones.
Still clubs opt not to do so. Again this is hardly surprising for behavioural economists who have an explanation as to why this happens: they are falling prey to hyperbolic discounting. Without going into the technicalities of what this term means, essentially it refers to the decision making process whereby the farther away a potential return is, the more it is discounted and less it is valued.
It is only when clubs get to a situation where they have nothing to lose by trying something different that they really start to shed such bias. A typical case was that of Borussia Dortmund who, after going to the edge of bankruptcy in their bid to regain their status in German football, opted to put their faith in young players (and a young coach). Their rewards were immediate and significant: two league titles and a Champions League final.
Judging by the players that they have bought over recent months, Borussia Dortmund have made sure not to fall in their old routine – or fall back on their bias – by signing promising young players. It is a brave move but, if the rules of behavioural economics are anything to go by, it could also be the right one.
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