Transfers and the winner's curse
Big transfers depend on atypical performance to work out
This graphic was making the rounds asking which of these players could be classified as a success.
This is a hard question but the answer is probably few of them. I think there would be no doubt that Virgil van Dijk has been, after that it is really hard to say. I would include Jack Grealish, and potentially Kai Havertz. I think you could say Paul Pogba as well but I think what this really shows is that with transfers, but especially big transfers, the team that wins the bidding for the player are the ones with the most optimistic expectations.
There is a concept in economics called the winner’s curse. This describes auction-type markets where there isn’t a set market value, the person or company that comes out the winner is the one where they have the highest estimated value and most optimistic view of the outcome. I think this is a good description of the player transfer market.
What this leads to is that the players that have these big transfers have incredibly high and potentially unrealistic expectations attached to them. On top of this a player will typically make a big move after a “career” year and a team will have to make a tough call on if this jump in performance is a new level or just a blip that he will return to previous performance. Looking at this it seems like players really need to hit their 75th percentile or higher outcomes to have their transfer come out as a success in these types of situations.
While that can and does happen, almost by definition that means that these are more likely than not to come out as a disappointment.
Transfers are already hard, as a team you can get all the talent ID things right but still have a transfer not work out for any number of reasons that you can’t know. Players might not settle in a new City/Country, might not mesh with the team culture, might not work in the role that was envisioned, a team might change coaches or style, etc.
There isn’t a big grand point in this post, but it is something that is part of my unease with Arsenal’s pursuit of Mykhailo Mudryk. As the bidding is pushed higher and higher I do worry that Arsenal are considerably narrowing the avenues for this to be a success should he come to London.
The interesting thing to me is that outside of Pogba, you can easily argue all of United's big-money moves were disasters. Yet they can keep spending. And likely aren't spending now due to plans to by the Glazers to sell the team. The issue to me is that the risk is just exponentially bigger when you're a club that can't keep affording to pay retail time and after time.
It's interesting that this critique was made when Arsenal signed Ozil. Andrew had a guest on the Arsecast who made that point at the time, saying that Arsenal signing Ozil for their then-record-high fee was impressive, but they were unlikely to replicate it. While United, City, and Chelsea could do it over and over again. Nothing much has really changed in the nearly 10 years since.