If you think that the football betting markets are a bit of a grin, you should check out the football transfer markets.
Highly inefficient and even more highly subjective, with no valid modelling to underpin the pricing process, the transfer market is sometimes askew by over £10 million due to the utter guesstimation of the evaluation process.
Was Michael Owen worth £16 million when he moved from Real Madrid reserves to Newcastle? How about £17 million for Darren Bent?
Both of these transfers were heavily based on the use of sabermetrics - an area of pseudo-science which is the foundation of the transfer "strategies" of many leading clubs. Images of Premiership matches are trawled over in the workhouses of India so that Opta, ProZone and the other sabermetric database firms are able to sell this allegedly valuable information to the analytically gullible.
Sabermetrics is, at best, marginally useful. It is like voting. Microfocus on peripheral data is rarely a basis for a sound evaluation model. Holistics are what you should be after.
And this is why we are launching Holistic Sabermetrics at the end of this month - just in time for Euro 2008 - a massive structural breakpoint in the transfer marketplace and one which yields value on both the buying and selling sides of the arrangement.
By focusing on the irrelevant, the current market participants develop a highly nuanced and, consequently, barely credible version of a true price. On these blog pages, we itemise some current corruptions in the footballing world - we tend to avert our gaze to historical examples and the particularly newsworthy current shenanigans that keep us all entertained. There is a whole body of proprietary knowledge which is never discussed on these blog pages nor, indeed, anywhere else other than our internal meetings. This is proprietary value to our Holistic Sabermetrics model.
With regard to betting markets, we are looking at a mature sector. For Holistic Sabermetrics, the market is still young as there has been no serious attempt to improve the efficiency as the cowboy evaluation territory allows the unscrupulous middlemen to maximise their slice of the action through a fake inflation of value.
Holistic Sabermetrics will be the first service to offer player evaluations using the big picture as the foundation. The impact of betting markets on match outcomes, the input of rogue operators on the pitch, the utilisation of performance enhancing substances, the manipulations by the institutional power bases etc etc etc - all of these areas have a far greater impact on the price of a player than the pseudo-data whizzing around the game today.
Of course, this is not to say that there are not some nuggets of value in the basic sabermetric data - yardage covered and other fitness data are always important, for example. But, these data are only a small part of the overall picture.
We were originally going to launch Holistic Sabermetrics as a joint-project with Key Sports - a London based firm of football agents. Our opening assessment was that the subjective evaluation of a player by a trained eye might have some value with respect to the model. And, it does. But certainly far less than might be expected intuitively. The built-in biases generated by personal experiences and psychologies are big negatives and subjective pricing is too noisy for our liking. Additionally, the cultures of the two groups did not dovetail - we are efficient and strategic while Key Sports are something else. But the key factor in the choice of going-it-alone was the development of an innovative and efficient business model.
Because we have no desire to proactively seek out players, the model is able to exist without inventory, so to speak. Using historical transfer data together with our proprietary inputs, we have created a highly robust model which provides us with two evaluations of a player. The first one relates to the price as dictated by the spectrum of evaluations currently accepted in the marketplace. The second value relates to the Real value of a player - for some individuals are, in Reality, worse than worthless. These rogue players are a liability!
The service will offer a 24 hour turnaround and will cover 16 territories and 28 leagues across the world. Our analyses will not only provide an evaluation of transfer prices but will also provide background and reasoning for our positions.
This is exciting. Testing the Unified Trading Model against a new market is always more interesting than run-of-the-mill trading of a mature sector. Our scenario analysis suggests that we should enjoy a considerable window of competitive advantage prior to a suitable competitive pricing system coming on to the radar. Our edge cannot be mimicked at speed, our proprietary databases are unique. By the time that we have competition, we will have established a reputation. These are good things.
We are also able to offer a more complete service than our competitors. Our second new business, Trade Hyperrealities, will offer clubs our analyses of the global football betting markets and their impact on outcomes. Clubs should do far more to protect themselves than is currently the case - points may be gained via an holistic strategy. There are other things in the pipeline too but we will save those for our selected recipients.
It is more interesting to work closely with one entity than to sleep around, so to speak. Consequently, we are seeking an exclusive arrangement with one club for the full array of Holistic Sabermetrics and Trade Hyperrealities packages. Once relegation and promotion issues have been confirmed, we will refine our shortlist of six, if necessary. By working exclusively with one team, we will demonstrate our competitive edge through the massive benefits accruing through a more multidisciplinary approach to modelling a market sector. Such relative isolationism will also be an upward pressure on the length of our window of competitive advantage.
These transfer evaluations don't only have resonance in the boardrooms but also on what used to be terraces. Not only are there positive adjustments for teams affected by corrupt inputs but also for the ratings of players. Some examples from the current season. David James was named in the Premiership XI based presumably on his high public profile and on the incredible degree of bias in favour of the Portsmouth team over the season. Our ratings show James to be no better nor worse than a whole range of keepers at similar status clubs. Indeed, over the 2007/08 season, the goalkeepers who stand out above from their accomplices in action are Howard (Everton), Friedel (Blackburn) and Kirkland (Wigan).
Managers are affected too. Wenger should be being toasted as the architect of a victory of Total Football. Not so. Obviously. He should be getting the Manager of the Year award instead of Ferguson, or god forbid, Avram Grant. That would surely be too hyperreal to be untrue!!! Running Wenger a close second should be Roy Hodgson, Juande Ramos, David Moyes or Steve Bruce and, yet, outrageously Fulham are still mired in a relegation struggle.
Anyway. Every so often, in the underground world that nowadays governs the major football leagues, a glimpse of the totality of ludicrousness is presented to us. These occurrences prove a point, so to speak. On Wednesday morning, we were alerted to one of the major market makers in the Far East who was already pricing up the Champions League Final - this was 12 hours before the start of the second Semi Final between Chelsea and Liverpool. The anonymous layer was pricing up a Man Utd/Chelsea Final only. We requested prices on the other option only to be told that he only deals in realities! Fucking perfect...
The big question of the week is this: "Who called The Sun journalists to 'Arry's place?". Is there a leak in the City of London police? Was it a deliberate leak? Is 'Arry playing games? Why doesn't 'Arry want any more hyper-owners in the light of the Thaksin Shinawatra fallout? Why did Andrew Cole get Cardiff City defender Darren Purse sent off last weekend? Did 'Arry speak to Andrew? Oh my gosh, this is proper football.
In the enhanced pyramid selling scheme that is shareholder capitalism, football takes its place as a corrupted cartel. Even The Economist is having to reframe its marketed face: "Cartels look as if they are more sophisticated and commoner than anyone thought". Really. The Office of Fair Trading should take a glance at the British bookmaking industry. Psychopaths veer towards cartels to cement their power base while, concurrently, attempting to undermine those self same colleagues in a dog-eat-dog fight to the death. As, Ray Kroc, the lovable founder of McDonalds endearingly stated about his competitors: "...if they were drowning, I'd put a hose in their mouth".
At least politics is still serious. Berlusconi, Bush, Schwarzenegger and Boris, you're messing about... Meanwhile, Rome has elected a former neo-fascist, Gianni Allemano, as mayor. At his victory rally, there were cries of "Il Duce! Il Duce!" accompanied by fascist salutes. Nice.
Manchester, being a global capital of the absurd, should go for Steve Coogan for mayor when the next illusion of local democracy is unfolded.
Only messing.
© Football Is Fixed/Dietrological
