RACE to Goals Model: League Predictions

At the end of my introduction to the RACE to Goals Model, that you can read here, I mentioned that I would like to look at how teams performed from a defensive point of view, and to check  how reliable the metrics are year on year.

Whilst I have done those things, I haven't had the time to sit down and write about them. But I have been able to create a model (well, I created a few slightly different versions and picked what seemed the best) to predict this season's league table, so I will at least get that posted prior to the season starting so that I don't let bias from early results get in the way.

The model is a variation of the Shot Dominance model, as coined by @mixedknuts (here), which is itself a variation of the Total Shot Ratio (TSR) model that has been looked at in legnth by @JamesWGrayson (such as this), and a good summary of TSR by @TheM_L_G can be read here. What differentiates the RACE to Goals Model is that it includes the quality of chance that those metrics are missing based on the metrics from my earlier piece, and I hope to go into more detail in later posts.

For the promoted teams I did not have the data available to do the same analysis, so a simply did a regression of goals scored and conceded in the Championship since 2000 for promoted team compared to points scored the following season in the Premier League.

The model predicts that Man City are the clear favourites for the title, and that there will be another very close battle for 4th place, whilst down at the bottom, Fulham, Newcastle Southampton and Norwich could well be in trouble. Of course the model does not take into account any managerial changes or player transfers, which could change team strengths significantly. Personally, I'd expect Newcastle and Southampton to do a little better and be replaced by Sunderland down towards the bottom, whilst common sense would say that Chelsea should challenge at the top, but other than that, I think the predictions are reasonable.

Anyway, here's the predicted table.

Rate of Attack and Creative Efficiency (RACE) to Goals Model

Yes, yet another model looking at the quality of chances and finishing of football teams.

This is something that I had hoped to have finished before last season ended, unfortunately life got in the way and it got delayed. Since then there have been a number of very interesting analyses done, including those by @colinttrainor (like this) and @11tegen11 (like this), which have continued the good work done by @footballfactman (like this), where they have put in a significant amount of work to look at where shots are taken from and what the conversion rates are for shots from those areas. Hopefully I can hang on to their coattails.

Personally, I am far too lazy to collect all that data, so I have let the experts (Opta) decide upon chance quality for me, and I hope to make the model as simple as possible. In my blog so far I have looked at how Liverpool and Tottenham have performed in terms of finishing and creativity, and to add some context, I compared them to the league and Top 4 average. Whilst compiling the numbers, I noticed that the League averages were quite consistent year on year over each of the past 3 seasons, and realised that I could create a theoretical average team that I could use as a benchmark to compare the performance of all the Premier League teams.

I am sure I am not telling anyone anything new when I say that the amount of goals a team scores is essentially dependent on 3 things, the amount of shots they take, the quality of chances they create, and the quality of their finishing, and it’s against these metrics that I will be comparing teams against.

Rate of Attack

This is very simply the amount of shots a team takes, and can be measured on a per game (SpG) or per season (SpS) basis. Yes, I know that not all attacks end with a shot and I am basically just using total shots, but I wanted the model to have a 'racey' acronym, so Rate of Attack it is.

On average, each team takes about 14.5 SpG, or about 550 SpS. Between 9-10% of all shots end up with a goal, and this has been found to be consistent season upon season and across different leagues. For those that don’t know, this is called the Reep Ratio, after an amateur statistician named Charles Reep, who looked at various stats, including the conversion rate of shots, in the 1950s. 

Creative Efficiency (%CCC)

This is a measure of the creativity of the team and quality of chances they have, and this is where I am relying on Opta to decide upon what is a good chance, as I am using their Clear Cut Chance (CCC) for this. A CCC is one of Opta’s few subjective statistics, and whilst a full description is not given, a brief description is given by Opta in their Event Definitions under Big Chance (here) 

“A situation where a player should reasonably be expected to score usually in a one-on-one scenario or from very close range.”

Creative Efficiency (%CCC) is measured as a proportion of Clear Cut Chances to Total Shots.

A team with a high %CCC will, over time, create chances that are easier to score from than the average team. Whilst CCCs make up only about 13% of all shots in the Premier League, they are vitally important, as for each of the last 3 seasons, around 52% of all goals have been scored from a CCC. It should be noted that CCCs include penalties, and whilst I did consider removing them from the analysis as they have their own average conversion rate, I decided to include them for a few reasons, there will be some open play CCCs that will be easier to score from than a penalty, I also think that teams that attack more or are more creative will tend to get more penalties, at least over the long term, and that should be included in their Creative Efficiency, and finally because I want to keep the model simple and with as few adjustments as possible. 

Obviously when you multiply a team’s Rate of Attack by their %CCC, you will get the number of shots which are CCCs. The remaining shots will be what I will call, as I can’t think of a more appropriate term, the Non-CCCs. The two types of shot have their own average conversion rate, and the model analyses the quality of finishing of both types of chance by comparing the goal expectancy (number of chances multiplied by the average conversion rate) to actual goals scored for each type of chance.

CCC Conversion

To give an indication of the average difficulty of a CCC compared to the average shot, it is on average about 4x easier to score a CCC as they have an average conversion rate of just under 38%. It should be remembered though that there is a large range in the probability of a CCC being scored, Sam Green of Opta has said (here) he considers the base probability to start at about 20% and it of course goes up to 100%.

Non-CCC Conversion

The average conversion rate of Non-CCCs is slightly above 5%. The reason why I won’t classify them along the lines of a ‘difficult’ chance is that with the goal expectancy range for individual shots being between 0% and 20%, anything with an expectancy above 10% will still be easier than average.

The Numbers  

Here are the hard numbers I have collected for the past 3 seasons.

 

And these are the benchmark ratios/rates that I have either mentioned or will be using for the theoretical average team.

So, how did each team perform last season? In terms of number of shots, Liverpool lead the way by far with 740 shots over the season, 59 more than Tottenham took, the next best team, and not far off double the amount of shots that Stoke had.

It may not come as much of a surprise to see that Manchester United had the best %CCC, with 21% of the efforts being from a CCC, compared to 18.3% for 2^nd placed Manchester City. To put this difference into perspective, whilst Man City took 98 more shots than Man Utd, they only had 3 more CCCs. Liverpool had 178 more shots, but with a %CCC of ‘only’ 13.6% (still above average) had 17 less CCCs.

In terms of shot conversion, the team with the best conversion rate for CCCs was, yes you’ve guessed it, the team who scored the most goals, Manchester United with 44.1% of them scored. The team with the worst conversion of CCCs was, yes you’ve guessed it, the team who scored the least…oh, it was actually Manchester City, with only 28.9%, I didn’t guess it either. So, City had 3 more CCCs, but scored 17 fewer CCCs, a significant amount.

The team with the best conversion rate of Non-CCCs was Chelsea at 7.4% leading to goals, and this time we do find the expected QPR at the bottom of the pile with only 3.1%.

I’ll admit that the table above is a little hard to read though, we’ve got different units and magnitudes of measurement and its hard to see how well each team is doing overall, so lets add some context and measure each teams performance as the percentage change from our benchmark team.

Now things become a bit clearer. We can see that despite only taking 3% more shots more than the benchmark, Manchester United’s %CCC was a whopping 62% higher than average, which goes some way to explaining why their total shot conversion was so much stronger than everyone else at 14.2%. However they also significantly outperformed both conversion rate metrics, meaning they scored almost 13 goals more than expected if they had average finishing. If they had scored at average rates, their total conversion rate would still have been the highest in the league though at a touch under 12%.

Only 2 teams managed to beat the benchmark for all 4 metrics, Man Utd and Arsenal. Of the other top teams, Chelsea and Tottenham had a relatively poor %CCC, Man City were poor at converting their CCCs, Liverpool were poor at converting their Non-CCCs, and Everton were poor at converting both types of chances.

At the other end of the table, only 2 teams performed worse on all 4 metrics compared to the benchmark as well, unsurprisingly QPR, with the other team being Newcastle. Reading were very good at finishing their chances, its just that they struggled to create any.

So what does this all look like when we convert these metrics to expected goals and how did the teams compare? There were 3 big outperformers, Chelsea (15.7 goals above expected), Man Utd (+12.6), and Arsenal (+10.4) whilst there was 2 big underperformers in QPR (-12.3)  and Everton (-10.1). For those of you who are into your ‘proper’ statistics, I’ve calculated the Mean Absolute Percentage Error for the model over the last 3 seasons as 10% and the Root Mean Squared Error as 7 goals. Its been a loooong time since I studied statistical methods, so I may have used the wrong error measurements, but I think that shows that the model isn’t too bad.

I’ll finish with how my model differs from those I’ve mentioned which look at shot location. I’ll start with the weaknesses. The first is that my model is far less granular as I have lumped the 87% of all shots that are Non-CCCs with the same goal expectancy, which means that the type of analysis that I can do with my model probably can’t go quite as deep as the others. Due to the creative efficiency element, I think the model is only applicable to teams and won’t be able to do player analysis. There is an element of trust in Opta that they are consistent when collecting the CCC data as it is subjective, particularly as we do not know their precise definition, although having read this (here), I think its fair to assume they are consistent. And because we do not know exactly how Opta define CCC, I think it will be very difficult to see how or if the metrics change depending on the Game state as the info of when a CCC occurred is not available. Whilst on average there are just under 4 CCCs per game, so it might be possible by watching the highlights or reading the match reports to figure it out for most games, in some cases however, as shown by @analysesport (here), it would be very difficult. Another issue is the relative lack of CCC data, it is not freely available (you need to pay for a subscription at www.eplindex.com for the data), it only goes back 3 years, and as far as I am aware, there is no  CCC data publicly available for leagues other than the Premier League

The positives are that it is very easy to collect and analyse the data, you only need the number of games played by a team, their total shots and the number of CCCs they’ve had to be able to estimate the number of goals they should have scored. One of the issues with simply using shot location, as discussed by @mixedknuts (here), is that it does not take into account the positioning of the defenders. For instance a player may take a shot in the central area of the box but have 4 defenders and the keeper between him and the goal, so the probability of a goal would be low, equally a player may break an offside trap and have the ball outside the area but be 1 on 1 with the keeper, so the likelihood of scoring would be quite high. This model at least separates out those chances where the defenders are not making a significant difference to the difficulty of a goal being scored, and whilst these only make up 13% of the chances, they do make up 52% of the goals.

Hopefully, if I get enough time, I’ll look at how repeatable these metrics are and if they could be of use for predicting matches and also look at how the teams performed on these metrics from a defensive point of view.   

You can follow me on twitter at @The_Woolster


Data taken from www.eplindex.com

Liverpool's season in transition: Updated graphs

Thought I would repost some of the the graphs in my piece on Liverpool's season in transition (here) to show the full season. Nothing to say on them other than it seems end of season syndrome perhaps hit once there was nothing to play for.

Data taken from www.eplindex.com

Liverpool: Has there been progression in a season of transition?

In my first post, I looked at Liverpool’s conversion and creativity measures, and noted that when it came to converting chances, Liverpool were not only still lagging behind the average for the Top 4, but also the league as a whole. But I also pointed out that Liverpool, under the new management of Brendan Rodgers, are a team in transition and that an improvement should be expected over time as the players become used to his system, and that the recent goal tally at that point, was probably showing this improvement.

I am going to look further into this and track how these measures have changed over the season. I am also going to introduce form into the measures to show how Liverpool has performed over short term periods. To give some extra context, I will also include Liverpool’s average from the whole of previous season, and the same for the League as an average as well as the Top 4 from last season (I have used last season as it’s a complete season with all teams having played each other). For the form measure, I will be using a 6-game moving average as this is what we are used to seeing in the media, it should not give too much or little significance to individual matches, and I also believe that over 6 games you should generally see an equal number of Home and Away fixtures, which is not the case for other even numbered amount of games.

I’ll start by looking at shots per game. In my first post I mentioned my surprise that Liverpool had taken more shots than any other team in the top 5 leagues in Europe, as I had been expecting the number of shots to reduce under a more patient approach. Since then, Liverpool still have the highest shots per game in those leagues. This is one area Liverpool were relatively strong last season, with an average just slightly lower than that of the Top 4. This season the rate of shots started off more or less in line with last season up until Game 17, in which Liverpool had 29 shots against Aston Villa, and there was a big increase in form (the 9 shots against Chelsea also dropped out of the 6-game average equation), since then Liverpool’s shots per game has been at a level above what the Top 4 achieved last season, and as we know, the highest in the top leagues in Europe.

 

Shooting accuracy (this excludes blocked shots, as we don’t know if they were on target or not) started off very poorly, and the season average has only recently started to creep above the level of last season. This has been significantly affected by the poor start however, as the 6-game average has been above last season’s since match 14, although it still has not quite reached the league or Top 4 average from last season yet.

Next I will look at Shot Conversion and Shots on Target Conversion (these conversion rates exclude own goals, as its not clear from the stats alone whether an own goal came from a shot or from something like a misplaced clearance). As you might expect, they follow a very similar pattern. Two things to note are that this season's Shots on Target Conversion ratio is relatively stronger than the Shot Conversion ratio when compared to last season's League and Top 4 averages, and that between match 6 and 11 it was even stronger. As I mentioned in my previous post, I think that last season Liverpool were unlucky in that a number of goalkeepers had outstanding games against them and I think the relative improvement is down, in part, to that. If we look at the peak between game 6 an 11, we see that game 6 was the 5-2 win against Norwich, in which Liverpool had 16 shots, with only 5 on target, but 4 of those were goals (there was one own goal), and 3 were from outside the area, for a massive Shots on Target Conversion of 80%. The other thing to note is that since Match 22 for Shot Conversion, and Match 20 for SOT conversion, Liverpool have been more or less at or above the Top 4 average from last season.

  

Next up is Clear Cut Chance (CCC) Conversion. For those that don’t know what a CCC is, it is one of Opta’s few subjective stats, although they don’t give a full description, it can broadly be described as a chance where the attacker is probably central to goal with only the keeper to beat, however I don’t think it should be thought of as a chance that should be scored, as statistically speaking, just under 40% of all CCCs in the Premier League are scored, so on average they are a bit harder than a 50/50. The conversion rate for CCCs is much more variable than the other conversion rates, this is because in some games there will be few or even no CCCs, which means that both very high and very low single game conversion rates are far more likely. It is clear to see however that there has been a general improvement over the season, following a start of only 2 CCCs scored in the first 8 games, and that Liverpool have been significantly more clinical at taking easier chances than they were last season.

I will now look at a measure of how creative Liverpool have been, which is the proportion of chances that they have which are CCCs. One of the main premises of the possession based football that Brendan Rodgers likes is that the team will be patient and wait for good chances to score rather than take the first opportunity to shoot. But we’ve seen, counterintuitively, that Liverpool are taking more shots, so have they been creating better opportunities? Liverpool started the season not showing the patience that was required of them and rushing too many shots, and after that slow start, Liverpool’s season average proportion of CCCs has only just edged above last season’s in the last 2 games. However in terms of form, Liverpool have been more creative than last season since Match 20, and around or above the Top 4 average since Match 22. It should not be a surprise that conversion charts have a similar shape to this one, as the easier the chance, the more likely it is to be scored. In my view, this is the clearest indication that Rodgers’ methods, from an attacking point of view, are starting to take shape, although I still think they can often show that impatience, as this excellent forensic analysis by the Sports Analysis blog of the Swansea game shows.

The final graph is the CCCs per game, which in essence is a combination of the first graph and the last one shown. The graph has a similar shape to the one above, however due to the increase in the shots per game form from Match 15, relatively speaking, Liverpool are doing even better in this metric, and have been showing Top 4 form since Match 20.

 
If you were to just look at the averages of these conversion and creativity metrics so far this season, they would show somewhat of an improvement over last season, particularly in terms of conversion rates. They would not take into account the poor start to the season that Liverpool had however, or the steady improvements they have since made, or that they have consistently been showing the attacking strength of a Top 4 team for close to half the season (Match 18, the 4-0 win against Fulham, can probably be pinpointed as the game when things really started to click). It seems to me that Rodgers’ has decided to build from the front, and that he may now be close to having the team playing, at least offensively, how he would like. Of course football is about defence as well as attack, and it is Liverpool’s defence that has garnered the most criticism this season, and in my next post I will look to see if there has been any progression in similar stats from a defensive point of view.

Looking ahead to the final 8 games of the season, 3 of the remaining matches are against teams from the bottom 4, with only 2 teams being higher than Liverpool, so if Liverpool can maintain their recent form (losses against West Brom and Southampton aside), then they should have a relatively good run in. One thing that could of concern though is that in the last 3 games Liverpool have had only 8, 12 and most recently 10 shots in those games, which are their worst, 4^th worst and 3^rd worst totals of the season respectively. Liverpool fans will hope that this is a short term blip rather than a downward change in form.

Data taken from www.eplindex.com

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Liverpool's Annual Accouts: Will the Reds stay in the red?

Since Liverpool’s latest annual results were released last week, I’ve seen lots of questions regarding how good (or bad) they are, should we be concerned about the losses or the increasing debt, how to compare with 2011 with the reporting period now being only ten months, and what will the results for this current season look like, so I’ve decided to use what I do for my day job to attempt to show what the results might have looked like if the financial year end had not changed, and then to have a guess at what this year's results might be like.

My aim with this is not to get what our financial position will be exactly right, but to give a broad overview of what might be expected, particularly to those who don’t have a financial background, and I hope that I explain everything in a way that can be understood. I won’t be explaining all of the terminology however, but I'll assume that if you are reading this then you do at least have a partial interest in the subject

If you do have an interest in Liverpool's finances, and football finance in general, then I can highly recommend both The Swiss Ramble and the andersred blogs if you haven't come across them already, as those guys really know their stuff (and far more than me!).

A few caveats:

I’m not an accountant, so I might get some of my accounting assumptions wrong,

I’ve never analysed football accounts professionally, and they can be particularly difficult to interpret, so there may be some nuances I am missing

It’s been a couple of years since I did pure corporate analysis, so I may be a bit rusty.

I am making some guesses,

I have done this pretty quickly, and,

I have a 5 month old baby and am not getting much sleep…!

Basically, I’ve probably made some mistakes, so I am covering my arse!

But I am sure there are a number of you out there who have a bit more knowledge about these things than me though, so I am happy to be put right and make changes.

As I said above, football finance is quite difficult to interpret especially as the accounting treatment relating to, amongst other things, the amortisation of the value of player registrations, as this leads to significant non-cash expenses affecting profit levels, and in turn how to account for the profit (or loss) on player sales. A decent basic description of this can be found here.

Making a profit is of no use if you are not generating cash to cover your expenses, similarly a year on year accounting loss, whilst not great and probably not sustainable in the long term, may not be a serious issue if there is a positive operating cashflow to be able to fund the business. In terms of Liverpool’s results for 2012, a loss of £40.5m has been affected by the non-cash amortisation and impairment of player registrations by £42.7m.  

For that reason, I have stripped out all non-cash items from my analysis in an attempt to give a slightly clearer picture. In P&L terms, this means I am only going down to EBITDA, before moving on to the cashflows and then debt levels. The table below shows the last 4 years of results, with my forecast for 2012 for 12 months and 2013, and I will try to explain the adjustments I made to get these figures. Where possible I have used known information to make these adjustments, or changed figures so that they are in line with historical numbers, but in some cases, they will be plain old educated guesses. Where I have made adjustments I have tried to err on the side of caution and be conservative. I am also assuming that no work has started on the redevelopment of Anfield or any associated financing. I’ve also highlighted some of the key figures that people tend to look out for, these are Turnover, Wages, EBITDA, Operating Cash Flow, Net Debt and Wages to Turnover. I have also added a line for Cashflow before Transfers and Financing. This, in my view, is how much net cash the club will have generated after all outgoings to spend on transfers without the need for any Financing (ie increasing debt or an equity injection from the owners), and as the owners have stated we will be self financing, this is a key figure.

2012 forecasted results if they had been for 12 months

As Ian Ayre said in his FAQ on the official website, they have decided to change the accounting period to align with the football season, which made this years accounting period only 10 months. But we can make a few adjustments using information that is out there.

Turnover

In his interview with the Telegraph, Ayre mentioned that the unaudited revenue figure they gave to Deloitte for their annual football finance review was £188.7m, so I will use this as the starting point. The accounts tell us that both Media and Matchday revenue have not been affected the accounting period change, which means that the Commercial revenues must increase from £63.9m to £83.6m.

Costs

There will be costs associated with the revenues generated over the 2 months, so we should also increase Cost of Sales. Towards the bottom of the table I have given the Cost of Sales % for each period, which at 10.3% for the 10 months, is a bit lower than the average for the previous 3 years. Perhaps Liverpool have become more efficient, but my guess is there are lower profit margins on the types of revenues earnt over the summer months, so have increased the Cost of Sales % for the 12 months to 11%.

Other Cash Admin costs should also increase over those 2 months, so I have increased them to £24m to be in line with the previous 3 years.

For Wages, I have divided the figure in the accounts by 10, and then multiplied by 12 to annualise it. I think Wages may well come in below this as I presume that part of the players salaries are made up of performance bonuses for things like appearances, which won’t be paid in the summer without any games, but I’ve said I will try to be conservative and I’ll leave it at that.

This has the effect of decreasing EBITDA from £11.1m to £2.5m

Cash Flows

There will of course have be some cash flows over the 2 months, so I will adjust some of these figures as well

Changes in Working Capital

The figure for the 10 months of a Working Capital decrease of £12.2m looks out of place when compared to the previous 3 years, so I will normalise this. Year on year degree of change in working capital has been increasing, but I will assume the change to be in line with what we saw in 2011.

Net Interest Paid

We will have paid some interest over the 2 months, so I’ve increased this a bit.

Capex

Again, £2.3m looks on the low side compared to previous years, and I presume that a lot of any Capex work carried on the stadium/Melwood/The Academy is done during the off season, so I have increased this to £4.5m.

Deferred Income/Accruals

This is the biggest assumption I have made to the 2012 results. A football clubs cash flow is very seasonal, with a big increase in cash when payments for season tickets are received. The deadline for season tickets I am told is 28th June, and assuming that most people pay up during June, then much of this cash inflow will not appear in the 10 months accounts. However, season ticket revenues are recognised on a pro rata basis as matches are played, so an item in the balance sheet is created for Deferred Income. Note 1 of the accounts describes this as comprising “amounts received on sales of season tickets, sponsorship income and hospitality income. These amounts are released to the profit and loss account over the period to which income relates”.

There are also Accruals, which are expenses incurred in the period for which no invoice had been received at the end of that period. These could be things like utility usage (electricity etc), although to be honest, I am not sure why the numbers are so large (image rights perhaps?).

Looking at these two entries in the accounts (Note 16) and compared to historical amounts, 2012 again looks out of place, so I have made adjustments to normalise them. I have increased Accruals by 3% compared to 2011 to account for inflation, and I have increased Deferred Income by 4% on 2011 in line with the season ticket increase. So the adjustment I make to cash flow is the increase of Deferred Income between the audited accounts and my adjusted figure, less the difference in Accruals over the same period, which is £10.5m. It is possible that some of the Accruals have been invoiced but not paid, in which case they would become creditors and still be a liability on the balance sheet, but I will again be conservative and assume the difference has all been paid. This has the knock on affect of reducing the financing requirements (debt levels), by the same amount.

Financing

After making the above adjustment, we have a decrease in cash of £2.5m, which leads us to have only a slightly positive cash position. In reality we would probably have a little more cash in the bank and we would have made use of the banking facility, increasing our financing, but as this has no affect on the net debt figure, I have not made an adjustment here.

Overall View

Revenues increased by 2.8%, which is not too bad considering that there was no European football. The wage ratio has fallen only marginally from 70% in 2011 to 69%, and up from the ten month ratio as wages outstripped revenues in those two months. A wage ratio of 70% is considered as a rule of thumb to be the maximum sustainable level without a club needing to increase debt levels. Despite clearing out a lot of players in the summer of 2011, Liverpool also made some big money signings and had a full season from Suarez and Carroll, and probably paid a significant amount in wages for one or two players who were on loan. The biggest difference is in the Net Debt level which has now seen a more modest increase of just under £8m as opposed to the reported increase of £22m. FSG did take out £8m to pay back some of the shareholder loan, which suggests that they will look to get back some of their cash invested back over the short to medium term.

2013 Forecast

Turnover

2013 is much harder to forecast as we have to make a lot more educated guesses, starting with our revenues.

For Media revenues, I have decided to use the 2011 figure as Liverpool was also in the Europa League in that season. Really, the number of televised games should be looked at, but I don’t have that data.

For Matchday revenues, as ticket prices were frozen for this season, it is simply a case calculating the average revenues per home game last season and multiplying by the amount of home games this season (25 in 2012 Vs 26 for 2013). Again this is not perfect due to not knowing how much was received out of the gate receipts from the the two cup runs and three games at Wembley in 2012, although my guess is that its not a massive amount.

For Commercial revenues I have used my 2011 forecast as the starting point. To this I have added £12m due to the impact of the Warrior deal (a £13m increase on what Adidas paid, but 1 month of which was already in my forecast, so I’ve taken off £1m). As part of this deal, Ayre said that Liverpool now have much more control over non-branded goods, which could add another £25m per year. I think this sounds very optimistic personally, and would take a long time to generate as it would require the opening of international club shops, so I will take a stab in the dark and say this added £2m of revenue this year. We also signed a number of other sponsorship/partnership deals, most notably with Chevrolet and Garuda Airlines. No details have been given for the size of these contracts so I have assumed £4m, but an article in the Daily Mail earlier this year gives an indication of the type of size of these contracts.

This sees Liverpool break the £200m revenue mark for the first time on the back of very strong increases in commercial revenues.

Costs

Again I have used a Cost of Sales % of 11% and cash admin costs of £24m.

The forecast for wages is a bit of a leap into the unknown as exact individual player wages are not published, although ballpark figures can be guessed if you believe what you read in the press. In the summer of 2012 Liverpool sold some of the higher earners on the books in Kuyt, Rodriguez, Aquilani, and Bellamy, with Joe Cole leaving in the winter transfer window. It is rumoured that some of these players have received pay-offs from the club as their wages will be lower at their new clubs, but I have accounted for these in the Exceptionals line as they are a one-off cost. The players have been replaced by younger players who will be one less wages. Back in September Rory Smith of The Times tweeted that we had saved in the region of £450k a week in wages, or £23m over the season. Now this may not be completely accurate, but it sounds about right. However since then we have seen Suarez, Agger, Skrtel, Shelvey, Kelly, Sterling and Suso sign renegotiated contracts, whilst we have also seen Sturridge and Coutinho signed in January. My guess based on rumoured wages for players is that we will have saved in the region of £12-14m this year on wages, but I’ll be conservative, especially in light of the recent reports of Suarez’ bonus payments, and say we have saved £10m.

Finally we have Cash Exceptionals. Unfortunately Exceptionals at Liverpool have become the norm, but hopefully this will be the last season we see them at a significant level. I am basing this number on rumours or figures given in the press, which are the £5m to Swansea to get Rodgers and his staff, the £3m pay off for Joe Cole, and the £5m pay off for Aquilani. I’ve added another million for any other costs, such as other back room staff pay offs and the legal costs with regards to Damien Comolli’s unfair dismissal case.

This gives an EBITDA of £28.6m, a massive improvement.

Cash Flows

Changes in Working Capital

I will be conservative and assume that the changes in Working Capital are the same as the previous two years.

Net Interest Paid

We know from the from the “Post Balance Sheet Events” comments (page 5 of accounts) that FSG injected £46.8m into the club in the form of a non-interest bearing loan, and used the funds to repay some of the bank debt that was in place. This means that we will be paying less interest over the year. I do not have the pricing details of the bank facility, but assuming a nice round number of 5%, that would be a saving of £2.3m on the previous year.

Capex

I’ve simply assumed £4.5m again.

Net Payments from player registrations

In case this is not clear, it is the cash from buying and selling players. Payments for transfers are not always made in full at the time that the player is bought or sold, they can often be spread over 2 or 3 years, so for my forecast I have assumed that 60% of the transfer fee is paid up front, whether we have bought or sold. I have used the transfer fees as given by LFCHistory.net. Further to the payments made from this season’s transfers, there will also be amounts owed/due from previous season’s transfers. In note 16 of the accounts we see an amount for Trade Creditors falling due after more than one year (page 24) for 2011 of £18.8m, with the description below of “Trade creditors falling due after more than one year relate to the contractual payments due on the acquisition of players’ registrations”. For simplicity I have assumed this to be all paid in 2013 and this is a cash outflow. We will also be owed money for transfers, and Note 15 tells us that £12m was due after more than one year at 2011.

You’ll notice that net payments from player registrations is a couple of million more than Cashflow before Transfers and Financing and I've said these will more or less match going forwards, but at least it is in right range. I will assume that this difference is covered using the bank facility and have increased financing by £2m.

Deferred Income/Accruals

I am assuming that Accruals and Deferred Income will now be in line with the year end 2012 accounts, and have assumed them both to increase in line with inflation of 3%, and making the same adjustment as for 2011, which sees an outflow of £9.2m, and as there are not have sufficient Cash Flows to cover this directly from operations, I have assumed this will be financed via the bank facility and have increased financing by the same amount.

Financing

After the adjustments above, £12.2m of the bank facility will be utilised, but we will be in a similar position as the last set of accounts, in that we will soon be receiving the cash from season tickets and will be able to pay the facility down.

Overall View

The strong increase in revenues and the fall in wages sees the wage ratio fall to 57.4%, which is much more healthy and gives the profitability required for future transfers. Lower financing needs sees Net Debt fall by £3m compared to year end 2011, but the majority of this is now owed to FSG and is interest free.

Looking forwards to year end 2014, the new TV deal will be in place, and we could expect an increase in Media revenues of perhaps £30m or more depending on where we finish in the league. As the whole league will also see a significant increase, I expect this to be inflated away over the space of a few seasons despite the new Premier League rules, but it will leave us in a very strong position compared to our European counterparts. All else being equal, and with no more of those exceptionals, Liverpool could well have a budget of between £50-70m including wages to spend over the next 2 transfer windows, which I think should please all Liverpool fans.

Thanks to the hard work behind the scenes, as well as the marketability of the Premier League, Liverpool are now in a much healthier financial position, and despite not being in the Champions League, despite having a smaller stadium than some of our competitors, despite being run on a self financing business model, with the introduction FFP and the new Premier League rules, Liverpool should be able to compete for top quality players in the transfer market.

Can Tottenham continue to be Bale'd out in the chase for Champions League?

Apologies for the corny title, all the hyperbole about Gareth Bale over the last few weeks in press is obviously having an effect on me. Along with the over excitement, there has also been numerous Bale related stats that have been mentioned in the press and on twitter at various points, including the following;

• “Gareth Bale has scored 10 goals in his last 12 Premier League appearances”
• “Gareth Bale is 1st for PL shots on target this season (51)”
• “No player has scored more Premier League goals in 2013 than Gareth Bale”
• “Gareth Bale has scored each of Tottenham's last five PL goals”
• “Gareth Bale: Has now scored Tottenham's last 6 goals in all competitions”, and
• “Gareth Bale has been directly involved in 80% of Spurs’ goals in all competitions so far in 2013 (9 goals & 3 assists)”
    

So despite the hyperbole, it’s fair to say Bale is currently in the best form of his career. Looking at his output in the League, he has scored 15 goals in 11 games so far, of those 11 games, 6 were won by a single goal, 2 of which he scored 2 goals in, and one other was a draw, so those goals have been very important. Whilst it would be too simplistic to say that he has won them 15 points, it’s clear that he is playing a significant role, especially when you consider that he has had 22% of their shots, 29% of their shots on target, and 34% of their goals.

A look at Tottenham’s conversion rates also shows Bale’s outperformance compared to the rest of the squad. We can also see that the rest of the team are not only performing worse than the average of the top 4 teams last season, but also worse than the average of all the teams last season (I have used last season as it’s a complete season with all teams having played each other, and with Tottenham currently in the top 4, comparing to this season’s top 4 would be a bit circular with them in it).

Conversion rates exclude own goals. Shooting Accuracy excludes blocked shots. Chance = A shot on or off target, excluding blocked shots. CCC = Clear Cut Chance

However, there is nothing wrong with relying on one player if that player is an outstanding attacking talent, as it could be foolhardy not to. Suarez has taken up that role at Liverpool for most of this season, van Persie also did at Arsenal last season, and despite the quality of players throughout their squads, it can be argued that both Barcelona and Real Madrid rely on Messi and Ronaldo from a goal scoring perspective.

What should be of greater concern for Tottenham is the quality of the chances they have been creating and the narrow margins in which they have recently been winning. Positively, their shooting accuracy is the 2nd highest in the league this season, behind only Manchester United, and due to also having the 2nd highest shots per game, they have actually fired more shots on target this season than any other team. But digging deeper, we also see that they are the team with the highest proportion of shots taken from outside of the area this season at 55%. Tottenham like to break quickly using their pace and are one of the best counter attacking teams in the league, and the number of shots taken from outside the area could be as a consequence of teams sitting back, denying them the space to break into, and they are then lacking the creativity to get in behind the lines. The fact that when playing at home they are taking 60% of shots from outside at the box, and they have scored 7 more goals away from home than they have at home backs up this point of view. Other indications that they are creating poor quality shooting opportunities are that they rank 2nd lowest in terms of Clean Cut Chances as a proportion of total chances. Consequently they only rank 7th in terms of the number of clean cut chances per game.

However despite the number of more difficult chances they attempt, they are relatively good at them. Prior to the last round of games, they had the highest shooting accuracy in the league for shots from outside the area, although it probably helps that Bale is actually as accurate from outside the area as he is from inside, as shown in this blog from Squawka. In terms of conversion of those attempts from outside the area, they have scored the most in the league with 11, although this is a product of taking significantly more shots than anyone else. When you look at their conversion rate of shots from outside of the area it is only 4%, however this is still relatively good, when you take free kicks out of the equation, they score 1 goal for every 27.4 shots from outside the area, which compares favourably to the rate of 1 to 33 for all shots from outside the area since the beginning of last season as calculated by the Differentgame’s SPAM analysis. Tottenham are also slightly above average this season in terms of the conversion of chances that are not clear cut, with a rate of 8.1%, which ranks 6th in the league.

On the face of it, Tottenham are carrying some good form, having been unbeaten in 11 league games. However that run included 7 of the bottom 9 teams, and the last 6 games in the League has seen them outscored by 11 other teams and a positive goal difference of only 3. They have also left getting their results until late in the game recently. In their last 8 games in all competitions, they have scored 4 goals to win or equalise until the 90th minute or later, with a further 2 goals getting results coming after the 75th minute. Whilst this may be a sign of increasing mental fortitude and give them the confidence that they can always get a result, there is a risk that if they continue to leave themselves chasing the game into the closing stages, that the bounce of the ball does not go their way.

Obviously football is about defence as well as attack, and Tottenham’s defence is clearly playing very well having conceded the fewest goals in the league in those last 11 league games and conceded fewer shots than any other team so far this season. But they are about to start their most difficult run of games this season, facing 6 of the top 9 in their next 7 games, and whilst the teams they are playing should have a more expansive style of football, possibly giving Tottenham more space to play their natural game, they may need Bale to continue his rich vein of form if they are to get the wins needed to remain in the top 4.




Data taken from www.eplindex.com, www.whoscored.com, & www.squawka.com

Liverpool: They shoot, they score, but should less be more?

Liverpool: Have had the most shots (425) in Europe's top 5 leagues this season, but 87 of the 98 teams have a better conversion rate (7.6%)
— WhoScored.com (@WhoScored) January 19, 2013

The above tweet from WhoScored was tweeted prior to game against Norwich, and 9 goals in 3 games has seen the shot conversion rate increase to 8.4% and no doubt move Liverpool up the rankings. But it got me got me thinking, one of the premises of the patient, possession based style of football that Brendan Rodgers would like Liverpool to play is that it should in theory create better chances, but with the likely effect that less chances are actually created. So what has happened, how is it that Liverpool have created more chances than anyone else in Europe whilst also having one of the lowest conversion rates?

Whilst a relatively crude measure, as they are driven by both the quality of the finishing as well as the quality of chances created, I’ll start by looking at shooting accuracy and conversion rates, as they can give an indication of how easy the chances created are to score, as on average, a player will convert a greater proportion of easier chances.

	Shot per Game	Shooting accuracy	Total shot conversion	Chance conversion	Shots on target Conversion	CCC conversion
Liverpool 2011-12	17.6	40.2%	6.3%	8.2%	20.3%	29.3%
Liverpool 2012-13	19.1	40.5%	8.4%	11.7%	29.0%	37.9%

Conversion rates exclude own goals. Shooting Accuracy excludes blocked shots. Chance = A shot on or off target, excluding blocked shots. CCC = Clear Cut Chance

The first thing that jumps out is that Liverpool are on average taking 1.5 shots per game more this season compared to last. So much for a more patient build up play! Whilst shooting accuracy has changed little, conversion rates have seen an improvement, and what is also noticeable is the easier the chance, so shots on target conversion and CCC conversion, the greater the improvement.

Is this down to creating easier chances or just better finishing? It is well known that Liverpool’s conversion rates were poor last season, as discussed in this article on EPLIndex.com, but they become even worse when you consider that Liverpool actually created a lot of good chances. When the shot difficulty is also taken into account, as has been done at team level by Differentgame, and on individual player level by Opta, then it is clear just how bad Liverpool’s finishing was last season, so perhaps it couldn’t get any worse and the only way was up. 

I think it is important to not only compare to how Liverpool did last season, but also compared to the rest of the league, and as we can see, Liverpool are lagging behind when looking at shooting accuracy and shots and chance conversion, and its not until we again look at the easier chances that they start to look more respectable. However, Liverpool’s current aspirations are to return to being a Champions League club, and when compared to the top 4 averages, Liverpool’s shooting accuracy and conversion rates look even worse. There is clearly some work to be done.

  

	Shooting accuracy	Total shot conversion	Chance conversion	Shots on target Conversion	CCC conversion
Liverpool	40.5%	8.4%	11.7%	29.0%	37.9%
League Average	44.8%	9.8%	13.2%	29.5%	37.6%
Top 4 Average	48.0%	11.4%	15.5%	32.3%	38.4%

So what’s happened since last season? Well, for a start, 2 of Liverpool’s worst culprits are not with the club this season, Kuyt having left for Turkey and Carroll on loan at West Ham, although that was countered by two of the better finishers in Bellamy and Maxi also leaving. The other big difference is the massive improvement by Suarez’, and having taken 29% of Liverpool’s shots this season, as well as 27 more shots than anyone else in the league, it is his improvement that is driving Liverpool’s improvement. 2+2=11’s blog  has taken a closer look at Suarez’ improvement from last season to this, but when you take Suarez’ numbers out of the equation, whilst the rest of the team is converting more than the previous season, they are still not good enough when you compare to the rest of the league, although only having one recognised striker for most of the season is unlikely to have helped.

	Shooting accuracy	Total shot conversion	Chance conversion	Shots on target Conversion	CCC conversion
Liverpool 2011-12	40.2%	6.3%	8.2%	20.3%	29.3%
Liverpool 2012-13	40.5%	8.4%	11.7%	29.0%	37.9%
Liverpool 2012-13 (exc. Suarez)	38.0%	6.8%	9.7%	25.6%	26.5%

Are Liverpool creating the easier chances we would expect them to? Well, by a number of measures, they do not appear to be. If we consider that the more defenders there are between the player shooting and the goal then the harder the shot is, as there is a less clear sight of goal, possibly more pressure being applied to the person taking the shot, and more chance of a shot being blocked, then the percentage of shots being blocked is a good proxy for difficulty of the type of shots being taken. Last season 22.8% of Liverpool’s shots were blocked, this season that has increased to 28.7%. Another measure we can look at is what proportion of chances being made are Clear Cut Chances, the greater the proportion, the easier the chances in general that are being created. Last season 17.9% of Liverpool’s chances were Clear Cut Chances, this year it has fallen to 17.0%. We can also look at the rate of Clear Cut Chances per game, this has also reduced this season, although only by a small amount from 2.4 per game to 2.3 per game, using the CCC conversion rate, this could have amounted to another goal or 2 scored so far this season.

	% Shots Blocked	%CCC	CCC per Game
Liverpool 2011-12	22.8%	17.9%	2.4
Liverpool 2012-13	28.7%	17.0%	2.3

So Liverpool are not are not necessarily creating easier chances, but their conversion rates have gone up, so the quality of their finishing must have improved, right? Well, at the most basic level we’ve seen that shooting accuracy has barely increased. Another way to see if it is improved finishing that has improved is to look at shot placement and if the shots are in the corners, but in this case, shot placement between seasons is also pretty similar. Last season saw 46.4% of shots in the bottom corner and 13.0% in the top corners, whilst this season has seen 47.1% and 11.6% respectively. However it did seem that many goal keepers saved their best game of the season for Liverpool last year, and as noted in the blog by Opta posted above, both Suarez and Kuyt were particularly unlucky, missing out on an expected 11.8 goals between them due to good goal keeping by Opta’s calculations (although Bellamy was fortunate with 3 of his goals). When you also consider that Liverpool had a record breaking number of shots hit the woodwork, it becomes clear how much of a role luck, although I think the term chance is more appropriate, can play.

Perhaps counter intuitively, despite the change in style introduced by Rodgers, Liverpool are in fact creating more chances than last season, and it is this increase in chance creation, as well as a big improvement in the finishing of easier chances that should be scored that has seen Liverpool’s goal return improve this season. However they are a team in transition, and my guess is that they are now creating better quality chances than they were earlier in the season. 25 goals in the last 10 league games certainly gives that impression anyway! Where once there were few players making runs into the box and shots were taken with little chance of scoring from, they are now combining better decision making and improved movement to create easier chances. The addition of Sturridge, as we have already seen, and Coutinho, as well as the return to fitness of Borini, should help in terms of both creating and finishing chances, although we may see less shots being taken. Brendan Rodgers will hope that by this time next year, Liverpool will have a conversion rate that is better than 87 of the teams in Europe’s top 5 leagues, rather than worse.

Data taken from www.eplindex.com