Southampton and Everton best managed Premier League clubs

13 May 2016 Consultancy.uk

Southampton and Everton are, according to a study by professional services firm Organizational Maturity Services, the best managed football clubs in the Premier League. Champions Leicester City rank 13th, while the league’s richest clubs, Manchester United and Manchester City, rank only 14th and 10th respectively.

Over the past decades, the Premier League has grown into a billion pound industry. The UK’s top flight today is the world’s richest football league and, as revenue generation is set to significantly increase yet again through new TV rights, the Premier League is set to distance itself even further from European counterparts.

In the slipstream of footballs’ commercial boom, the role of finances as a means to success on the pitch has becoming increasingly important. As club budgets – and hence player budgets – play a growing role in determining the likelihood of winning silverware, clubs are increasingly indulging in a range of commercial outings, and with juicy returns looming around the corner, clubs have also become investment vehicles for wealthy investors.

There are, however, more ingredients to football success than just money. This season provides arguably the best example since the launch of the Premier League in 1992/93 – 2015/16 champion Leicester City FC seemingly emerged from nowhere as rank outsiders who confounded all of the conventional football pundits, staying ahead of much richer clubs such as Manchester United, Chelsea, Arsenal and Manchester City. One of the ingredients that stands at the heart of a club’s fortunes is the quality of leadership and management, as well as the governance in place that navigates a club through successful decision-making.

Management maturity of Premier League clubs

According to a new study by Organizational Maturity Services (OMS), a London based research and consulting firm, there are quite large differences in the way English football clubs are run. Based on a so-called ‘Organizational Maturity Index’ (OMI) the firm developed – a model that assesses how effective the human capital of clubs is deployed – the consultants ranked each Premiership club (using a 22-point scale from D to AAA) on quality of leadership and human capital management capability. The researchers found that, across the board, most Premier League football clubs remain, despite the growing stakes, poorly governed in terms of overall management quality. “Overall, there is a general lack of coherence between organisational purpose, strategy and management practice. This incoherence undermines long-term value and means that there is significant latent value currently being unrealised,” comments Stuart Woollard, Managing Partner at OMS.

Woollard says Manchester United and Arsenal serve as prime examples. Despite being the wealthiest club in the league, Manchester United is run with “strategic incoherence” as global branding and revenues have become the club’s “core focus.” In the case of Arsenal, there is little evidence that the club has systemically embedded much of what team manager Arsène Wenger has brought to the club during his long tenure, and, as a result, Arsenal may have to spend significantly to fill important gaps after Wenger’s departure.

Southampton comes out of the analysis as the best managed club in the league. The club is, according to the researchers, driven by core football values, has an organisation in place that operates as a “coherent and cohesive system” and portrays strong characteristics of a learning organisation. Everton ranks second, followed by four football teams in joint third spot: Arsenal, Swansea, Crystal Palace and Tottenham. Leicester City only ranks 13th on the list despite its shock Premiership win, but the study still gives credit to the club for not taking unnecessary risks and adopting “accurate methods of predicting and planning” for the future. Aston Villa and Newcastle score lowest in the OMI index.

Looking ahead, Woollard says that clubs face considerable room for improvement, and, if they manage to capitalise on the potential, they may see millions in additional returns flow back into their operations. The Premier League’s best performing club, Southampton, are rated A, leaving 5 maturity levels for further improvement, “in this respect clubs still have a long way to go,” concludes Woollard.

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Champions League glory hard to buy for football’s economic elite

15 March 2019 Consultancy.uk

The thrills and spills of knock-out football can still be one of the sport’s great levelling forces, with the Champions League’s second round having shown that the biggest spenders aren’t always able to buy their way to glory. While a league format broadly favours the squad depth of the beautiful game’s richest teams, half of the tournament’s wealthier teams exited in the first one-on-one elimination round.

As the Champions League burst back into life in February, following an agonising winter break, only two of the 16 teams re-launching their Champions League last-16 bid were from outside the so-called Big Five football leagues. With the exceptions of Portuguese champions FC Porto and Dutch footballing powerhouse AFC Ajax, teams from the world’s biggest spending leagues monopolised the second round. As outlined by analysis from KPMG’s Football Benchmark, the Premier League was represented by four teams, with three clubs come from La Liga and the Bundesliga respectively, while Serie A and Ligue 1 both retained two clubs.

This followed a grimly predictable group phase, which had seen the two most expensive squads progress in all but one of the eight collections of four teams. The one team to buck that trend, Ajax, had last won Europe’s premier club competition in 1995, but those halcyon days have long since faded into memory, and Ajax had failed to progress beyond the group stage in 13 years. With the second youngest squad in the tournament, what now seems to be an awakening football giant had some shocks in store for the second round too.

Group Stage values

Despite an impressive Europa League run which saw the team reach the final two years ago, Ajax had not progressed in a Champions League knockout stage tie since the 1996-97 campaign. That all changed this time, as Erik ten Hag’s men overturned a first leg deficit to trounce Real Madrid 5-3 on aggregate. Having felt hard done by in a 2-1 defeat at the Johan Cruijff ArenA, the Amsterdam club cruised to a 4-1 victory at the Santiago Bernabéu, a result which saw the tournament’s fourth most expensive squad crash out to the third cheapest remaining team.

The supremely expensive team, which had won three Champions Leagues on the trot, had crashed out in spectacular style. For many footballing purists, the end of the seemingly invincible Galacticos would have been enough to restore some of their faith in the sport – but there would soon be more schadenfreude to revel in, as a succession of Europe’s most bank-breakingly costly teams would soon join Los Blancos in their exit.

The pick of the bunch was unquestionably Paris Saint-Germain, who forfeited a 2-0 first leg advantage to somehow crash out of the Champions League. The team, who are fast becoming known as the foremost bottlers in Europe, faced a grim dissection in the French press following a 3-1 defeat by Manchester United at Le Parc de Princes. While it would be over-egging it to paint United as ‘giant killers’, the Red Devils squad is worth markedly less than the club bankrolled by Qatari oil money. PSG hold two of the most expensive players of all time in French World Cup winner Kylian Mbappe and Brazilian playboy Neymar.

Second Round values

Elsewhere, the round’s cheapest squad proved further that money is not everything, as Porto overcame Roma (the Italian club has since parted ways with manager Eusebio Di Francesco in the wake of this humbling) – while Juventus battled back to beat Atlético Madrid. The most ‘balanced’ tie of the round, there was a squad value difference of only €22 million between the two squads, in favour of the Spanish giant. With that being said, €113 million of Juve’s price-tag came from the summer acquisition of Cristiano Ronaldo. Ronaldo’s tie-settling hat-trick went to show that money spent in the right place ultimately makes the difference.

Spending wisely

At the same time, there were also four teams which lived up to their large price-tags. Manchester City pummelled Schalke over the course of two legs, hammering the German team 7-0 in the second game. With the largest squad market value in the tournament, the Citizens showed that their spending had not merely been a frenzy provoked by having large amounts of money to throw about – a la PSG – and that every penny had in fact been used to craft one of the continent’s most well-balanced and dangerous teams, to ultimately contend for the title.

Tottenham Hotspur similarly brushed off Borussia Dortmund, while Liverpool eventually overcame Bayern Munich, to leave no German teams in the tournament. Meanwhile, Barcelona similarly did for the French contingent of the Champions League, bundling out Olympique Lyonnais 5-1.

Operating Revenues

Going forward, the humbled economic superpowers of European football will take solace from the fact that their huge operating revenues will allow them to buy up talent which has emerged in this year’s Champions League. With Real Madrid having re-installed Zinidine Zidane as Head Coach, the club has already committed itself to spending big in the summer, cashing in some €50 million of its €743 billion revenue stream from last year to sign Éder Militão from Porto – who has impressed in this year's Champions League – in the summer.

Whether the PSG project is financially sustainable in the long-term remains to be seen, meanwhile, but with a huge portion of commercial revenues including shirt-sales from the club’s array of superstars, it will likely also seek to bring in more big names in the summer. The club was reportedly in the running to sign Ajax star Frenkie de Jong, before Barcelona finally secured his services from the end of the season.

The likes of Ajax will meanwhile face an uncomfortable wait, as a range of its new crop of outstanding players inevitably attract the attentions of Europe’s top spenders. With the lowest operating revenues of any team left in Europe, the club will face an uphill struggle to hang on to the likes of teenage captain Matthijs de Ligt. However, it would not be the first time that the club has been plundered for its top talent, and what Ajax and clubs of its size can take forward is that with the right eye for lower-key recruitment, they can rebuild, and still challenge Europe’s elite.