In 2007, two University professors, Bernd Frick and Robert Simmons, wrote a paper entitled “The Impact of Managerial Quality on Organizational Performance: Evidence from German Soccer.” Their paper detailed the extent to which the market for head coaches is effective in the German top-flight, or more simply, it addressed the question: do the better head coaches get paid more in the Bundesliga? Their data was taken from 22 seasons of the Bundesliga, from 1981/82 through to 2002/03. Among their conclusions, one in particular is surprising: head coaches in Germany are underpaid.
The reasons are perhaps even more surprising. For the duration of the data Frick and Simmons analyzed, and up to the present day, German clubs operate with a huge bias toward head coaches who are German nationals and who have a coaching diploma, typically from accredited sports universities such as German Sport University, Cologne. Also, German head coaches rarely work abroad.
This hiring pattern means that German clubs are selecting their head coaches according to very specific criteria, and the bountiful supply of coaching trainees means clubs have plenty of graduates to choose from, which, in turn, drives the coaches’ price down. Couple this phenomenon with the lack of opportunity for German head coaches to work overseas, and their potential wage earnings are depressed even further. So, given the Bundesliga’s financial status, head coaches in Germany are being short-changed.
The presence of chiefly German head coaches has long been avowed as a positive aspect of German football, and whilst it may remain an important and identifiable feature for fans of the league, it could also hinder progress many clubs’ progress. With Bayern Munich currently European champions, this stunting effect is perhaps a difficult argument to make, but the lower the wage of a head coach in the Bundesliga is, the lower is that head coach’s incentive to perform well in his role.
As Frick and Simmons state, “As [of] 2006, there were only two (out of 18) non-German coaches working in Bundesliga 1 (Bert Van Marwijk (Dutch) at Dortmund and Marcel Koller (Swiss) at Bochum).” Even for the 2013/2014 Bundesliga season, the same proportion is broadly true. Only 4 clubs (up 2 from the previous season) have non-German head coaches: Jos Luhukay (Dutch) at Hertha BSC, Josep Guardiola (Spanish) at Bayern München, Sami Hyypiä (Finnish) at Bayer Leverkusen, and Lucien Favre (Swiss) at Borussia Mönchengladbach. It is this discrimination that is forcing down the price of head coaches, and this behaviour means, as Frick and Simmons state, “weak Bundesliga coaches are then shielded from competition [from abroad].”
In comparison, the English Premier League, Spanish’s La Liga, and Italian Serie A have different approaches to appointing their head coaches, or equivalent position, than the Bundesliga. In the Premier League for example – where it is more common to appoint a “manager” – only four clubs have English managers (although 10 clubs have managers from the home nations of England, Scotland, Wales and Northern Ireland). Spain and Italy are more comparable to Germany, with 6 and 3 non-native managers respectively. Managers from these latter 2 nations seemingly have a greater propensity to travel and coach abroad, however.
Unsuccessful German coaches tend to get recycled within the Bundesliga, as well. Frick and Simmons argue that “Bundesliga coaches that are fired have a high probability of finding a similar position at another club, largely because teams are seemingly reluctant to hire non-Germans,” Of the 16 German coaches in the Bundesliga, four have coached more than one other club in the league. Armin Veh has coached 5, while Bruno Labaddia, Robin Dutt, and Dieter Hecking have all coached 3 sides.
Unfortunately, this recycling within the Bundesliga means that German head coaches aren’t paid well, unlike everyone else at the top of the tree in European football. Similarly, none of this means that German Bundesliga clubs are weak teams; on the contrary, many of them of excellent. As television deals in Germany increase though, so will the potential earnings of head coaches.
Bayern Munich have already made a huge step forward in this direction by appointing Josep “Pep” Guardiola as coach, a move that may, if successful, spur other Bundesliga teams to appoint foreign head coaches as well, meaning a much more competitive market should be established, which could improve the quality of German sides. Whilst this could be a good thing for the remuneration of head coaches in Germany, it remains to be seen whether the fans themselves will be so keen to see non-natives in charge of their teams. Given that fan power in Germany is larger than most countries, fan response could be a huge factor in determining whether this change occurs.
Of course, it’s hard to quantify the effect that this underpayment has had on the Bundesliga. In the current climate, two teams in German fußball are doing very well in Europe. Their success, of course, has a “knock-on” effect. If rumours are to be believed about Jürgen Klopp’s admirers, then he will have a better bargaining power when re-negotiating his contract. It does appear, however, that fewer teams in the Bundesliga are willing to spend big on their head coaches.
Frick and Simmons conclude that club stinginess is misguided, as higher paid coaches lead to increased club results: “If a more successful coach can be hired, as indicated by a higher career points ratio, then we find that the team’s technical inefficiency is reduced, even after controlling for coach salary.” Therefore, Frick and Simmons conclude that “extra spending on managerial talent vested in a head coach has the impact of moving teams closer to the points ratio-relative wage bill.”
Essentially, Frick and Simmons argue that spending more on a head coach means your team does much better. There is a strong case that the Bundesliga’s frugality in regards to head coaches has cost them in Europe and domestically over the last few decades for which we have data. You never know, if Bayer Leverkusen – for example – had paid Klaus Toppmöller a little more, they could have been not so much Neverkusen, but Treberkusen instead (which doesn’t quite work as a pun though!).
All this research presupposes that the wage bill for head coaches makes a difference. On the other hand, Frick and Simmons conclusions are challenged by the likes of Simon Kuper and Stefan Szymanski, who, in their book Why England Lose: And Other Curious Phenomena Explained, assert that the role of the team manager is overstated, and completely exaggerated by the media. In fact, a clubs wage bill has a higher effect on team performance (Frick and Simmons seem to agree with this point too). Kuper even goes so far as to argue that “managers could probably be replaced by stuffed teddy bears without their club’s league position changing” in an article in the Financial Times on the subject. Kuper and Szymanski show that if each league club in England’s top division was ranked by their total wage bill, it would match their final league standing to a degree of accuracy of roughly 92% . There are different schools of thought on how much different a manager makes, but Szymanski and Kuper’s evidence is compelling, which suggests that a manager is largely just a figure-head. Their findings apply to British football exclusively, but there is little reason to assume it would vary across the continent.
Some firmer data, more applicable to the Bundesliga can be found on the topic of how much a head coaches makes a difference through the form of head coach dismissals. In early 2007, the aforementioned Frick (who must have been busy that year), Carlos Barros and José Passos, wrote a paper entitled “Coaching for Survival: The Hazards of Head Coach Careers in the German Bundesliga,” which outlined why German coaches traditionally got fired and under what circumstances. If we couple this data with a third paper, written by Sören Salomo and Kai Teichmann in 2000, called “The Relationship of Performance and Managerial Succession in the German Premier Soccer League,” we can see how much team performances changes after a dismissal, and therefore hopefully find out if it matters who the head coach actually is. Using the same data as Frick and Simmons, the “Coaching for Survival” paper reveals that head coaches who earn more in the Bundesliga are just as likely to be fired as head coaches that earn less, but that “the coaches of more expensive teams are more likely to be fired,” if results don’t go their way.
When a coach is fired then – for whatever reason – Salomo and Teichmann state that “[a]lthough the dismissal of the manager is supposed to improve team performance this effect does not seem to be supported by the data on the German premier soccer league presented here.” The data they refer to is taken from the Bundesliga between 1979 and 1998, and shows, as Kuper and Szymanski seem to suggest, that firing your head coach doesn’t really change the teams output, at least in the long term.
There is, in fact, a mountain of evidence to suggest that whilst a small, positive jump in results will occur after sacking a manager, in the long term – with no change to the squad – clubs perform as well, if not slightly worse than under the former coach – a fact that doesn’t take football fans too long to realize is true either.
Unfortunately, there is no Bundesliga-specific data to suggest that managers are as insignificant as Simon Kuper’s Financial Times comments imply. The collection of data for the Bundesliga on sackings only illustrates that it is relatively pointless to fire your head coach, and gives no real indication of how important the coaches are to the teams they lead in the first place. We know that Kuper and Szymanski’s data is transferrable though, given how similar the mechanisms of football are across the continent.
Although coaches may make less of a contribution than we first though, it is still important to try to maximise their effect, and here is where the concept of paying them more is still important. The market in the Bundesliga conspires to underpay head coaches, and so it is still important to either introduce foreign competition to drive up the standard, or pay current head coaches more money to get better performing German clubs, especially with new television money and a general increase in wealth in the Bundesliga. Perhaps German head coaches do not deserve an increase in pay because of the relatively diluted role compared to that of an English manager, or because Bundesliga teams play four less matches than the three other major European leagues. However, the players market, which Frick and Simmons claim is much more efficient, utilizes foreign competition far better, and the standard of player in the German league is enhanced as a result.
There is no doubt the standard of German coaches is very high, and although Frick and Simmons’ data expired in 2007, the mentality of German clubs when employing head coaches hasn’t changed much at all. With an increase to a head coaches wage, and perhaps the introduction of some foreign competition, which the Guardiola appointment could signal the beginning of, there is no doubt that the standard of German head coaches can be even higher still, and the success of German teams would be enhanced at home and across the continent.
Header courtesy of spiegel.de
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