Luc Arrondel*, Richard Duhautois, Cédric Zimmer
This article was originally published in the October 2020 edition of the 5 papers… in 5 minutes.
The impact of the individual leadership of a CEO on the performance of a company has been widely discussed in the literature, but the effect remains indefinite: very strong for some companies, negligible for others. In football, the analysis of “leadership” involves the impact of a manager on his team’s results. Here again, there are mixed views. Kuper and Szymanski (1) state that managers have very little influence on the performance of their players: “They seem to add so little value that is tempting to think they could be replaced by their secretaries, or the chairman, or by stuffed teddy bears without the club’s league position changing…”. They rely on the efficiency of the market for footballers’ salaries which explains a great part of the dispersion of performance: the impact of the manager would only be part of the unexplained residual. For these two authors, the vision of a providential manager is football’s version of the (rejected) “great man theory of history”. Conversely, Anderson and Sally (2), drawing on recent literature on the importance of the CEO in company performance, believe that the level of correlation between players’ salaries and performance, while strong, nonetheless justifies managerial leadership.
To test the hypothesis of the importance of the manager we can measure the impact of a change of manager on the club’s performance. Owners of clubs commonly sack the manager when the team persists in performing poorly. The turnover of managers has become more and more common in the past few decades, especially in Europe. The two main reasons are: to improve the direction given to players, a new strategy and/or team changes, and to enhance motivation of the existing players before and after the games (psychological shock). However, there may be other reasons. For example, according to the scapegoat theory, firing the coach can be a practical tool for owners to appease frustrated stakeholders and supporters and shift the blame for poor performance away from themselves. There have been many studies addressing the impact of manager turnover on club performance. Views diverge in the empirical literature but there is a general support for the view that it makes little difference to performance. The challenge in analyzing manager change is an econometric one to control for both the “regression to the mean” and endogeneity problem: even if one uses a control group, the act of firing a manager is not random, since the decision to dismiss is made following deteriorating results.
In this paper, Luc Arrondel, Richard Duhautois and Cédric Zimmer examine the impact of within-season manager changes on club performance using information from the French Ligue 1 (1998-2018). During the 20 observed seasons 103 managers were dismissed, 5.2 per season on average. Clubs that change their manager have different characteristics from clubs that do not. Some of these characteristics may be observed (the number of points before dismissal, the characteristics of the coach, etc.), and others remain unobservable (pressure from fans or stakeholders, etc.). They use an empirical method that takes observable differences between clubs into account (through exact matching) and corrects for unobserved characteristics. The aim is to identify the causal effect of manager change (whether it is observable or not).
Their results show that overall effects of manager change on team performance are insignificant, except in the short term: there is a positive effect only on the results of the five games after the dismissal. This effect is only a short-term shock effect, not a long term one: out of ten matches the effect is nil. Moreover, when they decompose between home and away games, they observe that the effect is only positive and significant for home games, suggesting that it is more a result of fan pressure than any difference in quality between the old and the new managers.
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(1) Kuper S. & Szymanski, S. (2018), Soccernomics, Nation Books.
(2) Anderson, C. & Sally, D. (2014). The Numbers Game: Why EverythingYou Know About Soccer Is Wrong, New York: Viking/Penguin
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References
Original title of the article : Within-season dismissals of football managers: evidence from the French Ligue 1
Published in : PSE Working Paper n°2020-11
Available at : https://halshs.archives-ouvertes.fr/halshs-02505315/
* PSE Member
Credits : Shutterstock – Sergey Kuznecov