Moneyballing the Premier League: Evaluating Player Value and Salaries

In the summer of 2022, Manchester United signed Casemiro from Real Madrid on a four-year contract. At 30 years old, Casemiro was well into his prime years as a defensive midfielder. Yet United made him one of the highest-paid players in the country, offering him a reported €406,000 per week, which equates to €21.1 million per year, or €84.4 million over the duration of the contract (before bonuses and signing-on fees).

United have undoubtedly received significant contributions from Casemiro, but the question remains whether they chose to overpay a player whose abilities may soon decline. Putting their recruitment issues aside (for now), what would have been a more reasonable salary for an EPL player of Casemiro's age and calibre? What should Manchester United have offered him?

Market Value Salaries

We can attempt to answer this question by combining two very useful datasets: the Transfermarkt.com estimate of the market value of EPL players, and the Capology.com database of their current weekly salary.

Transfermarkt uses an innovative crowd-sourcing technique to generate estimates of the perceived market (i.e., transfer) value of any professional player in Europe. Registered users on the site can submit their own estimate of a player's value; Transfermarkt then aggregates these estimates to produce the latest valuation of each player, which is updated every 6-12 months. Their player valuations are considered some of the best available, regularly quoted by major media outlets worldwide, and have been the subject of numerous academic studies.For reference, Haaland's current value is estimated at €180 m, Lamine Yamal at €90 m, and Mainoo at €50m

Figure 1 plots the current Transfermarkt market values of each player in the English Premier League last season (x-axis) against their gross weekly salary, as reported by Capology (y-axis). Valuations and salaries encompass several orders of magnitude, so the results are plotted on a logarithmic scale.

There is clearly a very strong relationship between player value and the salary they are paid. The black-dashed line shows the results of a regression of salary on value (assuming a power-law relationship), indicating the typical salary for a player of a given value. In the current EPL market, the average weekly salary for a player valued at €10m is about €50k per week. For a player valued at €50m, it is about €100k per week, and for a player valued at €100m, it is about €136k. Roughly speaking, salary increases with the square-root of market value.

Figure 1:  Weekly salary plotted against market value (as estimated by Transfermarkt) for current EPL players. Players labelled in red earn more than double their market value-implied salary; players in green earn less than half their market average salary.

The red-shaded region indicates players that are paid more than double their market value-implied salary. Casemiro is only the third most over-paid player in the English Premier League. KDB takes the top spot, his reported salary of €464k per week is close to four times the market salary of €121k/week that is implied by his current Transfermarkt valuation of €50m. Casemiro's reported salary of €406k per week is significantly higher than the market salary implied by his current Transfermarkt valuation. For instance, his market value at the time of transfer was estimated at €40m, his market-implied salary would be approximately €112k per week. Casmeiro's current market value is €20m which implies that a fair salary for him would be  €56k per week but Manchester United are currently overpaying for Casemiro by 86%

The players highlighted in green earn less than half their market-implied salary. The common characteristic of these players is that they are young: their average age is less than 22. Furgeson, Rico Lewis, and Conor Bradley have only recently broken into the first team at their respective clubs, while others are purely valued based on their potential; in both cases, their values have risen quickly, and salaries haven't caught up yet. There are some older players in this group, such as Ivan Toney and Jordan Clark. Due to this Ivan Toney is already generating a lot of transfer interest. Toney brings experience and quality.

Who are the main culprits?

Which clubs have a tendency to pay their players significantly more than the market rate? Figure 2 shows the median ratio of player salary to their market value-implied salary for each premier league squad. Values above 1 indicate that a club tends to pay above market-rate salaries; values below 1 suggest that they pay below the market rate. Scatter plots for each club (similar to Figure 1) can be found here

Figure 2:  Median ratio of player salary to market value-implied salary for each EPL squad last season. Values above 1 indicate that a club tends to pay above market-rate salaries; values below 1 suggest that they pay below the market rate.

Manchester United and Manchester City are the biggest culprits when it comes to overpaying their players: the average player in their squads earns 131.31% more than their market value says they should. There are thirteen players in United's squad (Casemiro, Varane, Rashford, Martial, Mount, Bruno, Antony, Maguire, Eriksen, Lindelof, Shaw, Jonny Evans and Tom Heaton) and nine players in City's squad (Haaland, KDB, Silva, Stones, Grealish, Kovacic, Walker, Ake and Scott Carson) that earn more than double their market-implied salary. Outside the top 6, Everton and West Ham are the biggest payers of inflated salaries. Notable high-earners include Danny Ings, who earns more than 3.13 times more than his market-implied salary, Abdoulaye Doucouré and Dele Alli.  

EPL clubs did not manage their salary roll well last season, with only 8 out of 20 clubs paying their players at or below the market salary, on average .Spurs are the most financially savvy of the top 6, typically paying their players 119% of the market-implied salary. Brighton deserve a special mention, on average they paid only 74% of the market-implied salary, and only three players -- Fati, Milner and Lallana -- earned more than their market value indicates they should. Despite this they finished 11th and it shows how great achievement this was as only five teams had a lower salary cap. Similarly Brentford paid only 63% of the market implied salary while remaining in the premier league and performing quite well against good teams

Flash the cash and fail

There are large discrepancies in the how effectively the money is being spent. In particular, United - whose levels of squad talent have fallen behind the other big-6 clubs - are throwing money at players in the hope that something clicks. The results shown above demonstrate that they are paying many of their players more than their abilities deserve (relative to the rest of the Premier League).  This strategy - if you can call it that - is failing. United have bloated wage bills that dwarf the quality of their squads. Furthermore, they have destroyed whatever kind of wage structures that they may previously have had in place. Ed Woodward and John Murtogh would both seem to have cases of financial mismanagement to answer. 

On the other hand, it is reassuring that many of the clubs with vastly fewer resources than the Big 6 are shrewdly effective in extracting value for money from their wage bill. Burnley, Luton Town and Sheffield United may have been relegated, but at least the data indicates that they didn't fall into the trap of over-paying aging stars in a short-sighted attempt to retain their Premier League status. This is where the benefits of a Moneyball-type strategy should be most effectively realised: smaller clubs aiming to outperform their resources by optimizing the ratio of their squad value to total wage bill.

To calculate the current fair market salary (FMS, £k/week) for any EPL player, plug their Transfermarkt value, V (in £m),  into this formula: FMS = 19.4 V0.42 ).