The Performance of Football Club Managers: Skill or Luck?
ICMA Centre Discussion Paper in Finance No. DP2011-24
29 Pages Posted: 21 Nov 2011 Last revised: 15 Dec 2011
Date Written: November 21, 2011
This paper evaluates the extent to which the performance of English Premier League football club managers can be attributed to skill or luck when measured separately from the characteristics of the team. We first use a specification that models managerial skill as a fixed effect and we examine the relationship between the number of points earned in league matches and the club’s wage bill, transfer spending, and the extent to which they were hit by absent players through injuries, suspensions or unavailability. We next implement a bootstrapping approach to generate a simulated distribution of average points that could have taken place after the impact of the manager has been removed. The findings suggest that there are a considerable number of highly skilled managers but also several who perform below expectations. The paper proceeds to illustrate how the approach adopted could be used to determine the optimal time for a club to part company with its manager. We are able to identify in advance several managers who the analysis suggests could have been fired earlier and others whose sackings were hard to justify based on their performances.
Keywords: English premier league, football manager performance, fixed effects, bootstrap
JEL Classification: C23, C25, M12, G11
Suggested Citation: Suggested Citation