Moats, Innovation, and the Premier League

Sergio Badilescu-Buga
23 min readDec 9, 2019

To avoid competition from better-resourced incumbents, startups and ‘innovators’ must develop structural deterrents against imitators — aka ‘moats’. In an illuminating series of articles, venture capitalist Jerry Neumann has shed light on the value of uncertainty as one of the strongest moats that startups possess in their early years.

Uncertainty as a moat’ is an interesting and valuable mental model that can be applied in a variety of contexts; the running of any sports club is no exception.

Over the course of this article, I will take a brief look at:

  1. What moats are in a broader sense;
  2. How they protect the established teams in the context of the Premier League; and,
  3. What forms of ‘uncertainty’ exist that clubs looking to break into the establishment may rely upon.
The day football changed forever: The Guardian’s headline following Sky’s sensational £304mn capture of PL broadcast rights

When BSkyB launched a thrilling bid to secure the broadcast rights for football’s newest league in 1992, the sport changed forever. Football operations increasingly resemble the ordinary operations of a mega-business. This has produced the least competitive First Division football in English football history. And whilst the ‘Big Four’ of the early 2000s has since become the ‘Big Six’, the gulf between established clubs at the higher end of the spectrum, and those down below continues to widen.

Year-after-year, upstart clubs launch a usually-doomed assault upon the top 6 places of the Premier League table. These coveted places permit automatic entry into the two big European competitions, guaranteeing a windfall of cash and publicity. In subsequent seasons, however, these ‘disruptors’ typically regress towards their usual places in the mid-table. Some describe this yo-yoing in purely statistical terms: these are outlier challenges, and clubs will ‘regress to their mean’ in their appropriate place towards the bottom of the table.

But now and then, a club looks to break the mould a little more permanently. Over the past few years, and well into the 2019/20 season — the challenge has fallen on Wolverhampton Wanderers and Leicester City to chart a path into the European places in the PL table, and stay there. Their attempts to do so prompt an interesting strategic question: how do ‘startup’ clubs break the stranglehold currently enjoyed by incumbent ‘established clubs’ on the European places? What ‘moats’ are they able to rely on and develop into novel competitive advantages to displace incumbents, and achieve sustained success in their stead?

Moats: Protecting Success

Value is created through innovation, but how much of that value accrues to the innovator depends partly on how quickly their competitors imitate the innovation. Innovators must deter competition to get some of the value they created. These ways of deterring competition are called, in various contexts, barriers to entry, sustainable competitive advantages, or, colloquially, moats.

Jerry Neumann lecturing at Columbia

This is how venture capitalist Jerry Neumann begins the first in a series of posts on the role of structural barriers to imitating innovation. Under Neumann’s classification, the 4 taxa which comprise the broader taxonomy of these ‘moats’ are:

  1. State-Granted Advantages (legal regulation, enforcing legal rights, tariffs, etc.)
  2. Special Know-How (tacit knowledge, as opposed to merely ‘closely-held’ knowledge)
  3. Scale (economies of scale, economies of scope, network effects, etc.)
  4. System Rigidity (a phrase which sums up the interesting notion that change in a highly complex system is difficult — e.g. the cost of switching service providers, the benefit of complementary assets, social mores, etc.)

Incumbents typically enjoy several moats, which protects their dominance. Given that fact, Neumann’s argument is this: to become a self-sustaining company, startups must also aim to develop moats. The problem is that any moats that inhere in startups upon incorporation are typically fungible: for example, if a company forms to exploit a patent where the value of the patent is known, it should theoretically be sold to an existing company for at least an equivalent amount of money. Moreover, any other moats that startups can develop typically take a long time to do so.

Startups that aim to create value can’t have a moat when they begin, uncertainty is what protects them from competition until a proper moat can be built. Uncertainty becomes their moat.

The only real moat that quality startups have from their inception is uncertainty: an inherently unknowable potential, whether that’s the value of their core patent, business models, or any other truly novel thing that sets them apart from incumbents. As Neumann’s puts it elsewhere, strategies embraced by successful startups “may look obvious in retrospect, as uncertain things often do, but if it had been anything other than uncertain, incumbents would have quickly adopted” those strategies — uncertainty protects a newcomer until they can create more satisfactory moats. Thus, ‘uncertainty becomes their moat’.

In the context of most startups, uncertainty can be used by these newcomers in exploiting the system rigidity of incumbents by going down one of two paths. The first involves what Christensen calls ‘disruptive innovation’, where imitating the innovation would require incumbents to change things such that their current customer base is poorly served. The alternative is Porter’s ‘value chain innovation’, where established companies would have to abandon ways of operating that are presently enormously successful. In short, incumbents do not want to abandon a complex system that they have established, for a highly uncertain way of doing things. They will only do so when the value of switching is known or knowable. Neumann explores how a young Apple and a young Google exemplified these forms of innovation here.

Uncertainty as a moat applies across a range of contexts. Upcoming sports teams employing unusual strategies regularly benefit from uncertainty. Indeed, teams which ‘defy the odds’ typically embrace those strategies which exploit the system rigidity of established clubs against them: they employ methods that established clubs would not risk undertaking, to bridge the gap between the respective clubs.

As the English Premier League becomes less competitive, and the gulf between incumbent powerhouses and smaller clubs grows ever wider, it falls on upstart clubs to embrace uncertainty in carving a path to a consistent place in the European places of the PL table.

The Premier League Problem

The time-worn cliche that there are no easy matches in the Premier League is probably still true. Nevertheless, the league’s overall competitiveness has been on a staggering downward trend since its inception in 1992.

Plumley et. al’s 2018 report “Mind the Gap” elegantly records the decline in competition within the Premier League based on a range of different metrics, and compares it to the consistent competitiveness of the EFL competitions. The EPL’s dis-competitiveness has reached its zenith: remarkably, since Leicester’s staggering 5,000-to-1 title triumph in 2016 — an outlier in a sea of relatively stable success for ‘big’ clubs — the same six teams (the ‘Big Six’) have finished in the top six for three straight campaigns.

This has resulted in a league of haves and have-nots. The Big Six of the Manchester clubs, Liverpool, Arsenal, Chelsea and Spurs combine for a total valuation of £10.9bn — an average value just a hair under £2bn.

With these dizzying valuations, the Big Six take up 74% of the league’s value and regularly occupy (with relative certainty) the top 6 ‘European’ places of the table. Thus far, the 2019/20 season looks like this trend might be bucked slightly — but it is not yet Christmas, and clubs have the January window to right themselves.

Incumbents only.

The gap is big, and it is undeniable. This begs the question…

What moats are protecting the Big Six status of the elite clubs?

Three stick out:

State-granted advantages

By ‘State-granted advantages’ I mean that regulations by the sport’s and the league’s governing bodies favour the Big Six.

First off, larger clubs are insulated by the current iteration of Financial Fair Play (‘FFP’) — UEFA’s attempt to curb the collapse of football clubs from gluttonous spending habits.

How does FFP protect these clubs? Well, as a recent explanation of FFP puts it:

The crux of FFP regulations is the break-even requirement, where clubs are ordered to not spend more than the income that they generate, and that they must balance their books over the course of three years.

The break-even requirement, alongside the regulation at Annex IX permitting a minimum allowable deviation from a deficit, insulates the dominance of the Big Six. Bigger clubs with larger, more global fan bases (which results from their existing success) have a larger pool of money to spend. Moreover, there are reasonably inherent limits on capital expenditure in football clubs. This means that (well-run) big clubs have a disproportionate ability to service large transfer fees and wages and monopolise footballing talent.

The timing of FFP was particularly kind to Chelsea (acquired in 2003 by Russian billionaire Roman Abramovich) and Manchester City (acquired in 2008 by billionaire Emirati royal Sheik Mansour), as both were able to exploit the enormous wealth of their owners before FFP fully kicked in/was refined. This meant they could leverage their financial clout to climb quickly to the European places, but are now insulated and can stay there. Even City’s violations have thus far attracted minimal punishment because, at present, they’re able to (relatively) sustainably operate even with continued high-spending.

Secondly, the lack of a uniform salary cap is an absence of regulation that augments the insulating effect of FFP. After all, FFP was brought in specifically to stop clubs from going bankrupt but does not force them to spend equally. Burnley and Man City might be governed by the same rules requiring that both break even, but Burnley’s owners (valued at <£100mn, less than half the most expensive footballer ever) are simply unable to compete with Man City’s Emirati ownership ($22bn USD+ worth), or with Man City’s larger fan base, European income, etc.

No worries for Sheik Mansour

Contrast this state of affairs with the salary cap system in the NBA. A few injuries have left the all-time dynastic Golden State Warriors rooted firmly to the bottom of the Western Conference. Perhaps more tellingly, the New York Knicks — an NBA Franchise worth £200mn more than English football’s most valuable club — have been one of the worst-performing NBA, let alone Eastern Conference, teams since the turn of the century. Although “big market bias” provides some incentive for players to choose teams with a larger hometown population/fan-base, the regulatory compulsion for franchises to spend equally prevents franchises from acquiring a substantial number of best-in-the-league players. The players also have an incentive to acquire ‘maximum’ or ‘supermax’ contracts, which requires that they go to teams who have not committed the majority of funds to other players. The “supermax” rule, for example, was designed to favour smaller-markets, because it permits these home teams to offer longer deals, for more money than any rival team could on the open market. (Whether this is the only effect of the rule is another question entirely). Moreover, since the maximum that a player can earn under these contracts is 35% of the salary cap afforded to an individual team, there is a limit on the number of superstars that any franchise can have. The regulation — designed in the wake of Kevin Durant’s controversial move to the Warriors — suffers from severe failings, but a glance at the increasing balance of talent over the last few years in the NBA suggests that the regulations succeed in eroding any stranglehold that richer teams have over the league.


Achieving one of the European places necessarily creates a direct windfall from prize money and broadcasting rights in a new competition. Importantly, however, appearance in European competition also gives clubs access to a virtually incomparable network of free advertising, allowing clubs to exploit a ‘bandwagon effect’ where repeated exposure creates new fans. The Premier League may be the most-watched league in the world, but when teams visit a country or are broadcast in time zones more favourable to potential new fans these clubs are more likely to cheaply acquire them.

It is undeniable that participation in new competitions decreases the customer acquisition cost for clubs. After all, fans are essentially ‘customers’ who will produce regular income for their favoured clubs in the form of recurring revenue e.g. annual kit purchases. This partially explains how Liverpool was able to retain prominence throughout the Premier League, even when their league results were among the weakest of the bigger clubs during the early 2000s.

System rigidity

As Neumann points out, social mores can form a moat when tradition, or culture, creates a tendency to support one enterprise or one way of thinking. In the context of football, the almost-religious devotion of fans to the club they anoint as their own provides a degree of security of revenue for clubs with higher fan bases. Under football’s implied commandments — and especially in England — switching clubs is akin to heresy. As established, the Big Six tend to have the biggest domestic and global fan bases, affording them certainty and stability.

A recent Tifo Football podcast hosting the team from Brand Finance points out that this tradition might be gradually eroding — with an increasing number of fans (particularly from new markets in Asia and America) following players and not clubs, but the effect is still significant at present, particularly within a league. For example, Ronaldo’s move to Juventus might have made Juventus the Italian club of choice for a lot of people — but rarely will a significant intra-league move more than trivially affect the fan-base of any of the big clubs — e.g. the move of Fernando Torres from Liverpool to Chelsea.

It’s worth noting that these and other moats possessed by established Premier League clubs are primarily financial: they typically ensure that any financial clout obtained by some success is not easily lost.

In other words, football clubs are involved in a game of ‘red ocean strategy’: they are seeking a stake in a reasonably definite, enormous financial pie. This compares to the typical ‘blue ocean’ strategies that Neumann implicitly makes reference to, where market creation is not only plausible but necessary for the success of an up-and-coming business. This poses a significant problem for clubs looking to crack the European places, as there is an inherent limitation to their ability to become a new incumbent. They can’t invent something radical — at the end of the day, they have to manufacture football success. There is almost certainly no way to make money by losing.

It’s also important to note that ‘uncertainty’ in the football world is minimal, which reduces the capacity for startup-clubs to exploit a novel strategy. In reality, most strategies by clubs are not uncertain, but ‘risky’ because their potential payoff is known, or quickly knowable. Feedback is relatively quick on whether a risk has paid off or not. There is a literal table describing the success or failure of a particular approach in any given year, referable directly to the measure of footballing success: how many points a club has achieved at the end of a season relative to its rivals. The measure of that success has a maximum — a team can’t earn more than 114 points in an EPL season. This further distinguishes the football ‘sector’ from broader markets where there are theoretically ‘infinite’ profits to obtain. Like any statistic, the table will be ‘noisy’, but it has the final say on football success, so strategies that fail, will necessarily fail quick and hard.

2018/19 EPL Top 10

Moreover, when the Big 6 are playing increasingly ‘perfect’ football (in 2017–18, Manchester City won the League with 100 points, and last year did so with 98/114, besting runners-up Liverpool by 1 point) — the margin for error is minuscule, if existent at all. A strategy had better work — or at least not fail significantly — or else a manager will quickly face the sack.

So, given the narrow market opportunities for clubs, and the reduced scope for ‘uncertainty’ — what can clubs looking to break into the European places actually do?

Uncertainty available to smaller clubs


Up-start clubs/lean owners can and have employed Porter ‘value-chain’ innovation in the way that they approach recruitment. Incumbent big clubs cannot abandon big spending because of the expectations of their fan base, but smaller clubs can consistently innovate in this area to deliver outstanding results. The method that most would associate with this form of disruption is “Moneyball”.

“Moneyball” is a phrase immortalized in sports by the eponymous movie. It is also one of sport’s most over-simplified phrases. Many take it as simply meaning ‘buy low, sell high’. But its spirit refers to something more than that: first, that for a variety of (usually biased) reasons, humans are likely to mis-value certain things. Soccernomics for example — points to the World Cup as excessively inflating the valuations of players who over-performed at the tournament. Secondly, that human activities are reducible — to some extent — to statistical events, capable of being compared objectively and capable of being valued accurately.

Moneyball was applied by Billy Beane of the Oakland Athletics to enable them to compete with big-money teams in the league. He would go on to reject the advances of incumbent mega-rich team the Boston Red Sox. They would later devote their own team to its application in Boston, and in 2004 — applying Moneyball — they would claim their first World Series in 86 years.

Poetically, Fenway Sports Group — owners of the Boston Red Sox, have taken the essence of Moneyball and applied it to their ownership and management of Liverpool Football Club — the club they purchased in 2010. In the world of probability, football makes far less sense than baseball, primarily because it is not a sport of discrete events in the same way that baseball — or even American football — is. Nevertheless, like baseball, there are units of measurement which can be compared and put to good use. As a result, Liverpool was able to purchase players like Phillipe Coutinho and Andy Robertson for £8mn each and bring in players like James Milner on a free. Even their big-cost acquisitions of Alisson and Virgil Van Dijk can be attributed partially to the sales of Coutinho (whos footballing successes on a bigger stage enabled him to be sold for £142mn), allowing them to pay extensive fees to secure best-in-the-world-in-their-position players (in 2019, after their first full-seasons with Liverpool, Van Dijk would go on to come 2nd in the Ballon D’or, and Alisson would win the title for World’s Best Goalkeeper).

FSG with the Champions League Trophy (affectionately called ‘Big Ears’). Liverpool won their British record 6th European Cup in 2019.

The measure of success of ‘Moneyball’ is developing enough financial muscle through either on-field success, or the sale of well-developed players, and then quickly transitioning into sustained success. It is a model that is difficult for established clubs to replicate because their incentives keep them firmly locked into their current way of doing things. It is why when Chelsea and Arsenal invested in data departments, they had almost no bearing on the actual management of the team.

It’s important to note that Liverpool fans are more willing to accept lower-cost players acquisitions than rival clubs like Arsenal because it’s worked for them, and because their financial clout relative to other Big 6 clubs was limited. Exactly why this success occurred is difficult to pin down: it could be the quality of the analysis was better at Liverpool, or it could be that Jurgen Klopp’s unique ‘Gesamtkunstwerk’ philosophy provided a better environment for these innovations to flourish.

This is a defensible moat because clubs which attain a measure of success on the basis of its principles, gain and are able to wield financial muscle to ensure that they secure value for money in their pursuit of ‘better’ players. Consider the Red Sox and recent history. As these two moats merge, they reinforce each other.

Critically, models of player valuation — like any valuation of human capital — remain part art, part science. So there is still a degree of innovation to be had here. Even broader statistical analysis in football is in its infant stages. It has been less than a decade since the conceptualisation and application of ‘expected goals’ really first began in football. It is now an indispensable statistic for mathematical analysis of the sport.

Uncertainty in this field provides an avenue for smaller clubs to innovate and bridge the gap to senior clubs whose way of operating virtually requires that they spend big. The optics of doing so are crucial to the fan-base and culture of instant-success that they demand.

Investments in Academy Setups

It’s important to note that certain infrastructure investments are not factored into FFP calculations. This gives an advantage to clubs looking to upgrade facilities and create a pipeline of cheap, high-quality, long-term talent to the first-team. How does this work?

These investments represent another way for up-comers to exploit system rigidity and uncertainty-aversion. A young player on a team of established stars — even with bags of potential — is a potential ‘reverse salient’ inhibiting the broader developmental goals of the squad. They are therefore a player simply waiting to be exploited if that player is not of the level of their teammates. Put simply, incumbents — burdened as they are with expectation — cannot afford to upset their fan base by fielding weaker teams (Christensen disruptive innovation available to startups), or sacrifice relatively certain short-term results for uncertain long-run rewards, especially when spending big consistently has ensured success (Porter value-chain innovation). For established clubs, excess profit comes from being consistently first, not just consistently competing. These margins by-and-large prevent experimentation with uncertain academy prospects, a luxury reserved for enterprising clubs. Leicester’s reliance on youth over the past few seasons is a testament to the potential for success with the right quality of youth in the team, unburdened by the expectations of fans on big-money, instant-result signings.

Chelsea might also seem to be an exception to this rule with an overwhelming (and thus-far successful) reliance on youth talent in 2019/20 under Frank Lampard. The problem here, however, is that fans cannot meaningfully expect (or compel) the usual outlay on experienced players because of the transfer ban imposed on Chelsea until 2020 (ironically because of their attempts to tap up youth players and prevent them from joining other clubs). The best available players at the moment are being played, even if they are relatively untested youth players. This may even have the benefit of ensuring that the young players play with a degree of freedom, not fearful of being axed from their starting place. It’s also important to note that at the time of writing Chelsea is fully 14 points off league-leaders Liverpool (which can be extrapolated out to a 38 point deficit from winning the league at season’s end). This is a pace that is otherwise unacceptable for the Chelsea norm: Avram Grant and Carlo Ancelotti were both sacked within hours of finishing second in the PL, and Rafael Benitez was sacked after finishing 3rd. If this were a live experiment, unaffected by a transfer ban, fans might reasonably expect/compel a sacking.

Chelsea’s transfer ban has now been reduced to allow them to participate in the January 2020 transfer market. Whether fan expectations will shift in the wake of this announcement, and what effect this has on the squad, remains to be seen.

In terms of the role of the academy for success, a quick parallel to La Liga is, at first pass, a compelling counterpoint to the idea that incumbents will not rely on their academy. However, La Masia — the old barn converted into an academy for youth at Barcelona — represents the pinnacle of Barcelona identity, wrapped up in cultural undertones of Basque nationalism, and so on. As Damian Hughes points out in “The Barcelona Way” — it is a cultural expectation of certain clubs, Barcelona being one of them, that a pipeline from the academy to first-team be central to the first team’s continued success. Clubs like Barcelona, Liverpool, Ajax, and others rely fundamentally on this cultural approach as a way to escape the pressures of big-spending in all situations.

It probably also warrants mention that even though the Premier League is losing its ‘competitiveness’ — it is still, objectively, a much more ‘competitive’ league than La Liga. When a club like Barcelona has a monopoly on the best young players in the world, and a more disproportionate league enabling them a chance to play without as high a risk of failure, they are able to blood young players more consistently.

If this cultural force doesn’t compel the pipeline of young players, then clubs will not assume the additional uncertainty of promoting youth when the risk is their status as a regular European club.

Potential moats for lower clubs to develop

As we’ve seen, the window of opportunity to capitalise on any success is incredibly small: clubs must hope that they crack the top 6 places with an innovation — whether replicable or not — to achieve financial clout that enables them to insulate themselves against new meaningful disruption in the long-run. What follows is a suggested list of areas of uncertainty currently unavailable to, or unexploited by big clubs, with thoughts about their viability for start-up clubs.

Special know-how

Improved modelling: Innovative recruiting techniques and models will assuredly dominate the data-centres of any football club. But there are certainly other avenues for data to have their bearing on the direction and management of a Premier League club.

Tony Bloom: The next great owner?

Take Brighton, for example. Under the tenure of Tony Bloom, they are proving to be a thorny, adaptable Premier League side, and this is probably the product of a potent data machine. Bloom’s ownership of the club is an object of fascination for many. Bloom is one of the most successful professional gamblers of all time and heads the almost mythical gambling syndicate StarLizard. Brighton is a club awash in riches (Bloom has outlaid at least £250mn of his own funds into the club), and importantly: data. Many questioned Chris Hughton’s sacking, but Graham Potter’s more enterprising and adaptable football show a measure of progression and go some way to legitimising Bloom’s decision. The shrewd signing of Maupay further hints that something beyoned riches is driving the slow-but-steady Brighton engine. Bloom’s ownership is shrouded in mystery (he refuses many interviews — a necessity in his line of work), but he is a man whose entire wealth is predicated upon mathematical and statistical interpretation of football and league results. Brighton may well be a club bathed in enough data and enough riches such that they have the beginnings of a successful club in the works.

Tactical innovations: Jurgen Klopp’s enterprising decision to hire Thomas Gronnemark as a throw-in coach. With ~50 throw-ins a game, this represented a meaningful input into the probability of a win for Liverpool as the thrown-in is a form of set-piece that is under-utilised and under-analysed. The goal is always this: get to the Top 6 however a club can, and even if other teams catch on to the innovations that propelled the start-up to European football, their new financial clout enables that club to crowd-out others in an auction for talent, in order that they may entrench themselves at the top of the league. A throw-in coach might be the type of tactical innovation that ends up being the difference that a club like Wolves needs to ensure European qualification in consecutive years.

Scientific innovations: nutrition, sports science, neuro-sport science: As with other innovations here: first-mover advantage is everything. We currently know astoundingly little in the field of nutritional science, and there are lots of interesting burgeoning innovations in sport psychology, e.g. the effects of interleaving on skill acquisition. If these innovations are employed early enough, and robustly enough, they might be sufficient conditions for a club looking to ascend to the higher echelons of the EPL.


Complex corporate structure: Innovation in ownership of sports clubs has been led primarily by City Football Group. By owning clubs on each continent, CFG expands its talent base and creates certainty of support. Manchester City fans are more likely to be fans of CFG clubs around the world creating multiple streams of revenue and increasing lifetime value from a single customer at a rate far larger than the long-run corresponding increase in customer acquisition cost at the new club.

Man City is obviously an ‘incumbent’ now, but branded ownership is an interesting and potentially worthwhile strategy for up-coming clubs to employ in small leagues around the world. Consider Red Bull, for example. RB Leipzig was founded in the Bundesliga just 10 short years ago and has achieved relative success across the most recent 1/3 of its life — competing regularly for Champions League places (albeit in a more even league than the EPL).

Uncertainty relates to the choice of market/league/place of investment by these owners. First-mover advantage is therefore crucial, particularly if we accept that social mores will insulate the first-mover as the anointed club for the particular region that the new club is in.

An important caveat here is that such a structure of ownership probably relies on a degree of financial clout in the first place, and requires that the owners commit larger amounts of capital in a new, more uncertain way.

RB Leipzig have burst into the upper tier of German football

Economies of scope: Given the existence of infrastructure, facilities, fan-bases and tactical knowledge, it is relatively cheap for clubs to move early and capitalise on the relatively immature market for Women’s football (and to a lesser extent academy football, as the competitions for youth mature). The game is growing rapidly — and will continue to do so. Clubs which meaningfully invest and secure dominance in the female side of the game will grow the club as a whole and tap into the moats available for incumbents in the men’s game. It is a relatively cheap cost to move into this space. Of course, it is easy for men’s competition incumbents to dominate the women’s game too. The question here is one of first-mover advantage again. Moreover, as money flows into the Women’s game, clubs might be able to form a new incumbency which reaps rewards. The prize money for Women’s World Cup 2019 was $30mn (double 2015), and although this pales in comparison to the $400mn available in 2018 to the men, the game is on pace to have double the participation and multiples higher viewership before then. A small investment in the absolute sense in the women’s game may represent a relatively large investment in the context of money available in the game — allowing teams to entrench themselves in advance of the inevitable riches to flow over the next decade and beyond. After all: the goal is long-run profit.

Scenes at the 2019 Women’s World Cup final

Risky, but not uncertain: the lesson never learned

What advantage the Big Clubs ultimately have is this: an ability to dominate smaller clubs in the auction for any given player. This is both ‘real’ ability to do so (absolute financial domination), and ‘effective’ ability to do so (when a successful club enters the market for a particular player, that player’s valuation will swell simply because a successful club believes that player can add to their success). In essence, this inflates the price of a player unrelated to the actual ‘value’ that their play would bring.

So it is important to recall that spending big does not necessarily equate to success. Recent years have seen clubs inject funds into their squads with limited success: e.g. West Ham, Everton, Stoke, and so on. Owners who go in — particularly in the FFP era — promising massive investment in a club, ultimately rely on extremely short term success to propel the team forward, and if they miss this mark they are doomed. Innovations in recruitment outside of big-money signings are crucial if future start-up clubs are to avoid the mistakes of their forebears. Kevin de Bruyne was ‘worth’ £55mn to Manchester City, but Andy Carroll was not ‘worth’ £35mn in any certain present sense of the word. Manchester City crowded out the market for De Bruyne with their ambitious bid, whilst Liverpool simply blew the non-existent competition out of the water to flex new-found money raised from the sale of their once-talismanic Spanish striker, Fernando Torres.

If we try to play like the Yankees in here, we will lose to the Yankees out there — Brad Pitt as Billy Beane in “Moneyball”


In the cut-throat world of business, the strongest companies are those which have several, well-defined moats. For the start-up seeking to become an incumbent themselves: uncertainty is their moat.

Uncertainty can explain the success of sports teams as well as it can the exploits of unicorn startups. Neumann’s thought-provoking articles on the proper approach to sustainable competitive advantage reveals a potential menu of strategies for smaller clubs of the Premier League to embrace as part of a ‘blue ocean strategy’ to steal back ‘market share’ from the established Big Six clubs.

Bold club ownership demands that they innovate radically in their approach to talent generation, the structure of ownership, and the types of competition that the club invests in. Falling into the trap of randomized big-spending, and mimicking the strategy of the incumbents will — like any market — fail the clubs looking to shake things up.