Once a Loser, Always a Loser?The effect of relegation on future career development in the England Soccer

League

Ang SunZhichao WeiOct 29, 2012

Research Question 1

• The effect of job assignment on long-term career development

A signal for future employersOpportunities for human-capital accumulation in the

work place• In the context of economic crisis Oreopoulos, Wacher and Heisz (2012)• Little empirical research on state dependence of

job quality

Research Question 2• Human-capital accumulation in the work placeEmpirical work on evaluating on-the-job

training programsLearning by doing: Argote and Epple (1990)

and Thompson (2010)

We show dominant importance of practice in the soccer industry

The closely-relegated versus closely-non-relegated research design

• Study the state dependence of job quality by exploiting the setting of relegation of the league in England.

• Compare the teams ranked 3rd-last and 4th-last.• Identifying assumption: The team on the

margin but that succeeded in maintaining its position in the Premier League forms a valid counterfactual for the team on the margin but that is relegated to the second-tier league.

Main Findings

• Main findings:No difference in turnover (dropout or transfer)The players in the relegated teams played in lower-

ranked clubs, had more appearances in the first three years after relegation, but eventually played in higher-ranked clubs four years after relegation.

This pattern is driven by players below 30. Older players are worse off in both the short run and long run.

Interpretations

• The relegated team invests less in the transfer market, and players have more appearances in which to practice. This helps the players accumulate human capital (or slows down human-capital depreciation) and land relatively good teams in the future.

External Validity

• Methodological advantages • Interesting and surprising results• The extent of practice, future career development

are easier to measure, and these measures closely mirror that in many immediately relevant domains

• The growing tradition of research that exploits the wealth of data and well-defined incentives in sports to investigate more general economic phenomena( Kotchen and Potoski, 2011)

Background on English football league system---Hierarchical format

1

2

3

4

5

6

7

8

9

18 19 20 21 22 23 24

Hierarchical format

#teams

Hierarchical revenues

• Television revenues shared exclusively among the Premier League members since 92 season

• Huge gap in revenues between the 1st -and 2nd –tier leagues

The average Premier League team receives £45 million, while the average Football League Championship club receives £1 million.

The big effect of relegation on clubs and players

• For clubs Consequent financial problems including, in some

cases, liquidation.• For relegated team players Immediate transfers are restricted Less and lower-quality on-the-job training (-)Poorer facilities and limited access to other

resources (-)Face weaker external and internal competition (?)

-20

-18

-16

-14

-12

-10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20

-100

-80

-60

-40

-20

0

20

40

60

80

100

Figure 2-Propensity of Playing in Premier League

just relegatedjust not relegateddifferences

Normalized year

%

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 990

20

40

60

80

100

120

Figure 3-Percentage of Players Staying on the Team

just relegatedjust not relegated

Months after relegation season

%

Data

• Focus on the whole career path of those who were once on the margin of relegation

• Step 1 : names of the clubs once on the margin• Step 2 : the quad of each team in the season

when on the margin of relegation• Step 3 : based on the player roster, look for the

player-level information in two relevant datasets to construct a panel by player and by time

Player-level info: data source 1

• Online dataset Soccer Base • Advantage: Rich info Date of birth, birth place, nationality, height, weight,

position, all teams on which player played, the exact period played on each team (including the team he has contract with and the teams he was loaned or swapped to), transfer fee for each transfer he experienced, appearances and goals on each team for which he played.

• Disadvantage Appearances are aggregated to club level

• Records precise time interval for experiences in each club for each player

• Match the data with yearly rankings• Use this data set for the empirical analysis

about the long-term placement of players, including the ranking of the club on which he played and signed up with at each point of change in contract.

Player-level info: data source 2

• Online dataset Player History• Advantage: aggregates players' performance

to each season instead of club• Disadvantage: No info about a loan or swap No record for transfers in the middle of a

season. No info about transfer fee.

• Use data source 2 to examine the change in appearances after relegation.

• The changes can be detected even if a player stays in the same club after relegation.

Summary statisticsSample clubs ranked third- and fourth-last during 1992-2002

#clubs 1610 On the margin

once

6 On the margin twice

#players 670By position

36.10% Defense21.9% Forward

11.03% Goal Keeper30.66% Midfield

By nationality64.24% England35.76% Others

Career length (yrs) 17.036 (8.425)#transfers 6.272 (3.521)

Third- last versus fourth-last teams19

5019

5219

5419

5619

5819

6019

6219

6419

6619

6819

7019

7219

7419

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

0620

0820

10

0

20

40

60

80

100

120Figure 1-Points by rankings in the Premier League

Champion

4th lowest team

3rd lowest team

1st lowest team

Poin

ts

Player characteristics Teams closely relegated Teams closely not relegated

Difference(1)-(2)

(1) (2) (3)

Height 1.808[.0036]

1.803[.0038]

-.0047[.0052]

Weight 76.73[.507]

76.43[.421]

-0.296[.657]

Foreigner .377[.0266]

.346[.0265]

-.019[.038]

Age at the relegation season

26.05[.27]

26.05 [.29]

.005[.395]

Years of experience before

7.357576[.3688691]

7.377778[.4017467]

-.020202[.5462223]

loaned or swapped to other clubs before

.230303[.0328767]

.2666667[.0382017]

-.0363636[.0501499]

Player’s maximum transfer fee

244059.7[31947.88]

194463.5 [28311.36] 49596.27 [43469.08]

#players 340 330

Empirical Strategy

• The relegated versus non-relegated research design suggests the following specification:

Heterogeneous effect across players

• Direct implication: Younger players should “benefit more” in

long-term job placement• A Triple-Difference Strategy will not work!• Categorize the sample into two sub-groups

according to the age at relegation season

Discussing different measures (1)

• Two measures for career development Team ranking job quality Transfer fee market value• Use rank as a measure for job quality Higher ranking also means higher wage wage=basic pay + appearance money + bonuses

Measure job quality19

92-9

3

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-040

100,000

200,000

300,000

400,000

500,000

600,000

700,000

The basic average annual pay of England’s professional players

average worker's wagePremier LeagueFirst DivisionSecond DivisionThird Division

season

£

Average UKWorkers wage, £

Season Premier League

First Division

Second Division

Third Division

(1) (2) (3) (4) (5) (6)

£18,356 1992-93 £77,083 £40,728 £21,840 £16,640

£18,824 1993-94 £93,968 £47,358 £23,745 £17,190

£19,552 1994-95 £116,448 £51,480 £24,076 £19,760

£20,332 1995-96 £130,896 £52,000 £26,000 £21,840

£21,632 1996-97 £175,066 £56,680 £28,600 £20,540

£22,828 1997-98 £244,908 £59,280 £34,060 £24,492

£23,660 1998-99 £313,959 £62,608 £39,104 £23,244

£24,596 1999-00 £383,835 £71,500 £38,532 £25,272

£26,000 2000-01 £451,274 £94,640 £52,416 £28,704

£27,300 2001-02 £566,932 £115,700 £50,336 £28,600

£28,132 2002-03 £611,068 £90,948 £59,488 £30,056

£28,600 2003-04 £651,222 £92,300 £55,052 £42,472

The basic average annual pay of England’s professional playersSources: from internal PFA union files.

Measure market value : transfer fee

Discussing different measures (2)

• Use transfer fee as a measure for market value• Selected sample? Relegated team players: 3.03 transfers Non-relegated team players: 2.94 transfers Over 90% of the players experienced at least one transfer after season 0

• Measurement error in the dependent variable: As long as the error is not correlated with relegation assignment, it only

results in a larger error variance.

Measure the degree of practice

• Total annual appearances (including substitute appearances)

• Appearances in starting line-up

• Issue of measurementAppearances may not be able to capture the

exact minutes Intensity

Graphical presentation on the primary findings

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 81

1.5

2

2.5

3

3.5

4

4.5

Figure 4: Average League Level of Players

just relegatedjust not relegated

normalized year

Leve

l

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8

-1.5

-1

-0.5

0

0.5

1

1.5

Figure 5: Differences in League Levels of Players

normalized year

diffe

renc

e

-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 81

1.5

2

2.5

3

3.5

4

4.5

Figure 6A: Average Level of League that Players joinedYoung Players: younger than 25 at the time of relegation

year

Just RelegatedJust Not Relegated

normalized year

Leve

l

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 81

1.5

2

2.5

3

3.5

4

4.5

Figure 6B: Average Level of League that Players joinedPlayers between 25 and 30 at the time of relegation year

Just RelegatedJust Not Relegated

normalized year

Leve

l

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 81

1.5

2

2.5

3

3.5

4

4.5

5

Figure 6C: Average Level of League that Players joinedPlayers older than 30 at the time of relegation year

Just RelegateJust Not Relegate

normalized year

Leve

l

Understand the mechanism

-5 -4 -3 -2 -1 0 1 2 3 4 5 69

11

13

15

17

19

21

23

25

27

Figure 7A-Annual Appearances of all players

relegate

not relegate

normalized year

year

ly A

ppea

ranc

es

-5 -4 -3 -2 -1 0 1 2 3 4 5 6

-10

-8

-6

-4

-2

0

2

4

6

8

Figure 7B-Difference in appearances for all players

normalized year

diffe

renc

e (r

eleg

ate-

non

rele

gate

)

Other outcomes

1 2 3 4 5 6 7 8 9 100

0.1

0.2

0.3

0.4

0.5

0.6

Figure 8- Dropout propensity after relegation season

relegatenon relegate

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 100

0.1

0.2

0.3

0.4

0.5

0.6

Figure 9- Propensity of transferring to other clubs

relegated

non rel-egated

-16

-15

-14

-13

-12

-11

-10

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 160

200000

400000

600000

800000

1000000

1200000

1400000

Figure 10-Transfer Fee

not relegatedrelegated

half-year period

poun

d

-16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

-1500000

-1000000

-500000

0

500000

1000000

1500000

Figure 11-Difference in Transfer Fee

Results of the statistical models

• Preview All results from fitting the Difference-In-

Difference regression are consistent with the graphical patterns shown using raw data

The regression results are robust to player fixed-effect and calendar-year fixed-effect

Table 3 Difference-In-Difference estimation on the effect of relegation on the ranking of the club signed up VARIABLES League Level Overall Ranking

(1) (2) (3) (4) (5) (6)Relegate*Season -4 -0.094 -0.121 -0.067 -2.150 -2.724 -1.584

(0.112) (0.109) (0.102) (2.566) (2.505) (2.306)Relegate*Season -3 -0.128 -0.164 -0.129 -3.595 -4.400* -3.692

(0.118) (0.116) (0.112) (2.688) (2.625) (2.535)Relegate*Season -2 -0.100 -0.155 -0.080 -0.158 -1.411 0.107

(0.116) (0.113) (0.114) (2.639) (2.559) (2.537)Relegate*Season -1 0.175 0.104 0.171 2.025 0.460 1.853

(0.111) (0.110) (0.112) (2.522) (2.483) (2.495)Relegate*Season 0 0.057 -0.026 0.040 0.790 -0.999 0.421

(0.106) (0.105) (0.112) (2.409) (2.385) (2.505)Relegate*Season 1 0.487*** 0.413*** 0.510*** 5.078** 3.516 5.634**

(0.111) (0.112) (0.118) (2.561) (2.552) (2.657)Relegate*Season 2 0.180 0.123 0.235* 1.288 0.106 2.404

(0.120) (0.120) (0.125) (2.803) (2.781) (2.854)Relegate*Season 3 -0.065 -0.107 0.044 -2.464 -3.360 -0.268

(0.132) (0.131) (0.135) (3.034) (3.002) (3.078)Relegate*Season 4 -0.179 -0.211 -0.067 -4.376 -5.087 -1.918

(0.148) (0.146) (0.151) (3.371) (3.337) (3.427)Relegate*Season 5 -0.235 -0.267* -0.232 -5.570 -6.266* -5.505

(0.156) (0.156) (0.160) (3.514) (3.494) (3.590)Relegate*Season 6 -0.333** -0.359** -0.303* -7.296* -7.865** -6.460*

(0.166) (0.166) (0.172) (3.732) (3.723) (3.832)Relegate*Season 7 -0.378** -0.384** -0.345** -8.498** -8.559** -7.450*

(0.172) (0.172) (0.173) (3.848) (3.831) (3.860)Relegate*Season 8 -0.437** -0.452** -0.384** -11.514*** -11.793*** -10.389**

(0.181) (0.180) (0.182) (4.060) (4.032) (4.071)Relegate*Season 9 -0.406** -0.437** -0.342* -10.321** -10.924*** -8.735*

(0.194) (0.191) (0.190) (4.287) (4.226) (4.189)Relegate*Season 10 -0.210 -0.230 -0.166 -5.261 -5.575 -4.093

(0.212) (0.208) (0.228) (4.761) (4.651) (4.503)Calendar Year F.E. No Yes. Yes No Yes. YesPlayer F.E. No No Yes No No YesSe clustered at player level Yes Yes Yes Yes Yes Yes

Observations 86401 86401 86401 86401 86401 86401R-squared 0.124 0.145 0.415 0.110 0.136 0.411

Table 4- DID estimation on the effect of relegation on the ranking of club played (Including the cases of being loaned or swapped to other clubs)

VARIABLES League level Overall ranking(1) (2) (3) (4) (5) (6)

Relegate*Season -4 -0.093 -0.118 -0.056 -2.096 -2.631 -1.352(0.108) (0.106) (0.100) (2.481) (2.431) (2.271)

Relegate*Season -3 -0.139 -0.172 -0.133 -3.909 -4.643* -3.847(0.114) (0.113) (0.110) (2.606) (2.559) (2.497)

Relegate*Season -2 -0.121 -0.173 -0.081 -0.717 -1.890 -0.015(0.112) (0.110) (0.111) (2.543) (2.482) (2.475)

Relegate*Season -1 0.116 0.048 0.122 0.615 -0.883 0.642(0.108) (0.107) (0.109) (2.438) (2.416) (2.430)

Relegate*Season 0 0.007 -0.073 0.000 -0.383 -2.117 -0.492(0.103) (0.103) (0.109) (2.354) (2.335) (2.434)

Relegate*Season 1 0.402*** 0.332*** 0.431*** 3.346 1.888 4.047(0.108) (0.109) (0.114) (2.493) (2.491) (2.563)

Relegate*Season 2 0.165 0.111 0.225* 0.963 -0.123 2.229(0.117) (0.117) (0.121) (2.728) (2.716) (2.775)

Relegate*Season 3 -0.080 -0.119 0.033 -2.908 -3.708 -0.618(0.128) (0.128) (0.131) (2.956) (2.938) (2.987)

Relegate*Season 4 -0.233 -0.262* -.210 -5.637* -6.254* -2.982(0.144) (0.143) (.153) (3.285) (3.265) (3.337)

Relegate*Season 5 -0.292* -0.322** -0.303* -6.826** -7.474** -7.014*(0.153) (0.153) (0 .164) (3.444) (3.437) (3.505)

Relegate*Season 6 -0.374** -0.399** -0.363** -8.280** -8.801** -7.822**(0.164) (0.164) (0.175) (3.671) (3.670) (3.754)

Relegate*Season 7 -0.398** -0.403** -0.381** -9.250** -9.289** -8.556**(0.171) (0.171) (0.181) (3.813) (3.802) (3.796)

Relegate*Season 8 -0.467*** -0.480*** -0.427** -12.218*** -12.446*** -11.354***(0.179) (0.179) (0.193) (4.014) (3.989) (3.997)

Relegate*Season 9 -0.449** -0.479** -0. 404* -11.293*** -11.867*** -10.114(0.191) (0.189) (0.207) (4.224) (4.161) (4.667)**

Relegate*Season 10 -0.247 -0.268 -0.221 -6.202 -6.515 -5.343(0.213) (0.209) (0.228) (4.775) (4.663) (5.220)

Player F.E. No No Yes No No YesCalendar year F.E. No Yes No No Yes NoSe clustered at player level Yes Yes Yes Yes Yes YesObservations 86401 86401 86401 86401 86401 86401R-squared 0.118 0.139 0.411 0.106 0.130 0.407

Table 5- Difference in difference estimation on turnoverVARIABLES Dropout Transfer

(1) (2) (3) (4) (5) (6)

Relegate*Season -4 0.007 0.007 0.008(0.006) (0.006) (0.006)

Relegate*Season -3 -0.011* -0.011* -0.010*(0.006) (0.006) (0.006)

Relegate*Season -2 -0.000 0.000 0.001(0.006) (0.006) (0.006)

Relegate*Season -1 -0.007 -0.007 -0.006(0.005) (0.005) (0.006)

Relegate*Season 0 0.001 0.001 0.002(0.005) (0.005) (0.006)

Relegate*Season 1 0.002 0.004 0.017 0.005 0.005 0.006(0.003) (0.006) (0.017) (0.005) (0.005) (0.005)

Relegate*Season 2 -0.005 -0.003 0.011 -0.004 -0.004 -0.003(0.014) (0.015) (0.024) (0.005) (0.005) (0.005)

Relegate*Season 3 -0.006 -0.004 0.009 0.000 0.000 0.002(0.020) (0.021) (0.028) (0.006) (0.006) (0.006)

Relegate*Season 4 0.001 0.002 0.016 -0.001 -0.001 -0.000(0.024) (0.025) (0.033) (0.006) (0.006) (0.006)

Relegate*Season 5 -0.007 -0.005 0.008 0.001 0.001 0.002(0.029) (0.030) (0.037) (0.006) (0.006) (0.006)

Relegate*Season 6 0.010 0.012 0.025 -0.001 -0.001 -0.001(0.032) (0.033) (0.039) (0.006) (0.006) (0.006)

Relegate*Season 7 0.021 0.023 0.036 0.001 0.002 0.002(0.035) (0.035) (0.040) (0.006) (0.006) (0.006)

Relegate*Season 8 0.010 0.012 0.025 -0.000 -0.000 0.001(0.036) (0.037) (0.040) (0.006) (0.006) (0.006)

Relegate*Season 9 0.020 0.021 0.035 0.011* 0.011* 0.012*(0.037) (0.037) (0.040) (0.007) (0.007) (0.007)

Relegate*Season 10 -0.018 -0.016 -0.003 0.012* 0.012* 0.014*(0.037) (0.037) (0.039) (0.007) (0.007) (0.008)

Player F.E. No No Yes No No YesCalendar year F.E. No Yes No No Yes NoSe clustered at player level Yes Yes Yes Yes Yes Yes

Observations 8965 8965 8965 86555 86,555 86,555

Transfer feeVARIABLES Transfer fee

(1) (2) (3)Relegate*Season -4 -48,407.177 -54,363.095 -295,124.153

(140,078.780) (140,172.362) (213,075.683)Relegate*Season -3 -82,677.053 -76,472.486 -265,909.875

(131,331.597) (127,038.489) (191,687.705)Relegate*Season -2 14,541.054 16,912.936 -46,487.679

(113,227.529) (111,555.667) (131,505.001)Relegate*Season -1 -37,341.910 -48,576.166 -138,731.819

(174,583.523) (172,264.787) (247,725.277)Relegate*Season 0 -59,308.761 -211.932 -147,310.248

(112,229.513) (110,831.593) (155,562.698)Relegate*Season 1 210,060.860 260,744.033 83,967.831

(184,266.562) (177,518.608) (181,085.527)Relegate*Season 2 -180,997.077 -233,821.726* -354,786.711**

(123,433.656) (127,034.759) (161,678.502)Relegate*Season 3 -59,203.310 -70,007.515 -63,641.260

(111,532.839) (113,629.212) (122,012.637)Relegate*Season 4 -111,566.301 -120,516.895 -323,435.679

(217,302.434) (215,477.001) (236,702.864)Relegate*Season 5 257,807.959 239,246.635 180,373.068

(242,884.018) (237,414.380) (228,568.433)Relegate*Season 6 146,866.165 143,371.901 142,849.853

(283,689.014) (272,994.684) (238,768.606)Relegate*Season 7 260,721.252 246,985.656 131,414.907

(242,084.795) (242,659.982) (213,617.193)Relegate*Season 8 172,471.458 190,129.559 124,178.822

(185,333.221) (177,373.157) (137,994.897)Relegate*Season 9 248,341.556 291,105.844 25,735.687

(242,833.961) (239,398.718) (186,480.490)Relegate*Season 10 384,006.926 316,833.964 112,553.754

(250,832.246) (255,371.252) (194,334.784)F.E. No Calendar year f.e. Player f.e.Se clustered at player level Yes Yes Yes

Observations 4,165 4,165 4,165R-squared 0.023 0.053 0.424

Appearances

VARIABLES Appearances(1) (2) (3)

Relegate*Season -4 1.153 1.098 1.252(2.115) (2.127) (2.167)

Relegate*Season -3 -2.817 -3.013 -2.801(2.222) (2.204) (2.250)

Relegate*Season -2 -0.626 -0.744 -0.571(2.285) (2.289) (2.333)

Relegate*Season -1 4.101* 3.863* 3.801(2.270) (2.276) (2.322)

Relegate*Season 0 2.140 1.999 1.382(2.097) (2.119) (2.217)

Relegate*Season 1 5.315** 5.046** 4.852**(2.223) (2.239) (2.338)

Relegate*Season 2 4.395* 4.132* 3.998*(2.243) (2.238) (2.398)

Relegate*Season 3 3.397 3.127 2.874(2.338) (2.334) (2.526)

Relegate*Season 4 1.718 1.576 1.923(2.344) (2.367) (2.544)

Relegate*Season 5 0.906 0.687 1.662(2.169) (2.174) (2.365)

Relegate*Season 6 0.840 0.653 0.899(2.333) (2.331) (2.492)

Relegate*Season 7 -1.369 -1.537 -1.378(2.522) (2.531) (2.703)

Relegate*Season 8 0.178 0.006 0.240(2.559) (2.561) (2.834)

Relegate*Season 9 1.252 0.886 2.469(2.521) (2.510) (2.780)

Relegate*Season 10 0.534 0.282 0.816(2.660) (2.689) (2.957)

Observations 5,402 5,402 5,402R-squared 0.027 0.039 0.218

Dropout ratetop panel <30; bottom panel>=30

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-1.5

-1

-0.5

0

0.5

1

1.5

2

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-2

-1

0

1

2

3

4

Transfer ratetop panel <30; bottom panel>=30

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

Ranking of the team on which one played top panel <30; bottom panel>=30

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-25

-20

-15

-10

-5

0

5

10

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10

-40

-20

0

20

40

60

80

100

Appearancestop panel <30; bottom panel>=30

-4 -3 -2 -1 0 1 2 3 4 5 6 7

-10

-5

0

5

10

15

-4 -3 -2 -1 0 1 2 3 4 5 6 7

-15

-10

-5

0

5

10

15

20

Concluding remarks

• A negative causal relationship between current job quality and future job quality.

• The big impact of practice or, more generally, learning-by-doing on human-capital accumulation in the specific industry of the English soccer league