MANAGERIAL AND DECISION ECONOMICS

Manage. Decis. Econ. 24: 403^10 (2003)

Published online 15 May 2003 in Wiley InterScience (wvv-w.interscience.wiley.com). DOI: 10.1002/mde.l 105

Productive Efficiency of English Football

TeamsA Data Envelopment
Analysis Approach
Dieter J. Haas*
Institute of Public Finance, University of Innsbruck. Austria

This paper investigates how close to their potential English Premier League Clubs play. Using
a deterministie Data Envelopment Analysis Approach, the productive efficiency of 20 teams in
the 2000/2001 season is measured and weaknesses of individual teams are disclosed. The
sensitivity of results is analyzed with regard to different model specifications and variable
combinations. Copyright 2003 John Wiley & Sons, Ltd.

INTRODUCTION From an economic perspective the transforma-

During the last decade professional football
entertainment has become a major business in
Europe andalthough to a lesser extent
throughout the world. The financially strongest
football clubs can be found in the European top
leagues in Spain, Italy, Germany and especially in
the English Premier League. Manchester United
e.g., the most valuable team in Europe, showed
revenue figures of almost 200 million in the year
2000 (Deloitte and Touche, 2001).
Year after year clubs invest in their squads in
order to improve the performance of the team in
the field, which in turn stimulates the interest of
supporters and sponsors in the respective club.
Nevertheless, some of the attempts aiming at
increasing a team's success fail and the heavy
investments do not pay off. In such a case the
supporters will be highly unsatisfied and compar-
isons between a (theoretical) potential of a team
and its actual achievements will be the conse-
quence.
'Correspondence to: Institute of Public Finance (Finanzwis-
senschaft), University of Innsbruck, Universitaetsstrasse 15/4,
A 6020 Innsbruck, Austria/Europe. E-mail: Dieter.Haas@
uibk.ac.at
tion of inputs into outputs is a production process
described by either a production function or a
production frontier. When making use of the latter
deviations of a constructed frontier can be
regarded as inefficiencies in production. In the
case of football, discussions about the possible
performance of a team with a given playing and
management talent, as well as comparisons be-
tween the actual performance and the possible one
are common. These discussions ultimately run
along one of the most fundamental economic
concepts, namely productive efficiency. Further-
more, if teams do not meet the expectations of
supporters and sponsors the question is, who
can be blamed for that. Is it the players in the
field who do not perform up to their potential? Is it
the manager who did not combine the factors of
production in an optimal way? Or is it a
combination of both?
In this paper the productive efficiency of teams
in the English Premier Leagueone of the most
important professional football leagues in the
worldis investigated. In the literature, at least
three different approaches to efficiency measure-
ment in sports can be found. These approaches
include efficiency measurement on the level of
single games (e.g., Carmichael et al, 2000),

Copyright 2003 John Wiley & Sons, Ltd.

404 D.J. HAAS
measurement of managerial or coaching efficiency
(Dawson et al, 2000; Fizel and D'itri, 1996;
Hadley et al, 2000; Koning, 2000) and the analysis
of a team's efficiency over an entire season
(Carmichael and Thomas, 1995; Hofler and Payne,
1997). The approach chosen in this paper corre-
sponds to the latter as it appears to be the most
interesting from an economic point of view
and allows to analyze the squads as well as the
coaches.
Most of the above-mentioned studies analyze
efficiency on the basis of production functions
which need to be specified in advance and
problems of misspecification may occur (e.g.,
Carmichael and Thomas, 1995). In order to avoid
the problem of misspecification, incorrect assump-
tions on distribution and wrong weighting schemes
of inputs and outputs, this study uses data
envelopment analysis (DEA) to measure the
productive efficiency of football teams. The use
of DEA has proved especially valuable when
production involves multiple inputs and/or multi-
ple outputs, in cases where non-marketed inputs or
outputs are being considered and, therefore, the
correct weighting of inputs and output cannot be
defined. DEA, originally developed by Charnes
et al (1978), estimates a production efficiency
frontier for teams and calculates the deviations
from that frontier for inefficient teams. The above
mentioned appealing properties of DEA have
made it a widely used efficiency measurement tool
in a variety of different fields, like, e.g., public
education, health care institutions (e.g. Hollings-
worth et al, 1999) or in the private transportation
sector (e.g. Fethi, 2000). The applications of DEA
in the field of sports economics have been rare up
to now (e.g. Haas et al, 2001) and most of them
concentrate on efficiency measurement on the level
of individuals (Anderson and Sharp, 1997;
Sueyoshi et al, 1999).
It appears to be straightforward to employ DEA
for revealing weaknesses and indicating areas for
potential improvement within football clubs. DEA
therefore is used in this paper to answer the
following important questions: Which Premier
League teams are on the efficiency frontier and
which teams could have performed better in the
period of observation? What are the particular
weaknesses of the inefficient teams and to which
extent should improvements be made? How robust
are the results with regard to different input/
output combinations used in the calculation?
Copyright 2003 John Wiley & Sons, Ltd.
The remainder of the paper is organized as
follows. Section 2 briefiy introduces the method of
DEA. In Section 3 the data base is described.
Section 4 presents efficiency results along with
optimization proposals using DEA and finally
Section 5 concludes.
DATA ENVELOPMENT ANALYSIS
The application of a specific DEA-model provides
a single measure of technical efficiency when
dealing with multiple inputs and multiple out-
puts, and obviates the need to assign pre-specified
weights to either. The efficiency of a decision
making unit (DMU; in this paper a football
team) is measured relative to all other DM Us
under the restriction that all DMUs lie on or
below the efficient frontier, hence measures of
relative efficiency are obtained.' The indicated
optimization, then, accords the evaluated DMU
the most favorable weighting that the constraints
allow. Note that the DEA-approach has proved
especially valuable in cases where non-marketed
inputs or outputs are taken into account and/or
where correct weighting of inputs and outputs is
unknown or cannot be derived as is supposed for
some of the variables used here.
Basically, an input-oriented DEA modeP which
can process non-discretionary variables is employed
in order to get the efficiency score assuming
constant returns to scale which represents the global
technical efficiency (TE) of a DMU. Additionally,
an input-oriented variable returns to scale model
is used to get the corresponding efficiency score,
representing local pure technical efficiency
(PTE). Decomposing global technical efficiency
into local pure technical efficiency and scale
efficiency provides valuable information on the
sources of inefficiencyeither an inefficient trans-
formation process of inputs into outputs or an
inefficiently small scale of operation, or bothfor
those teams being inefficient.
DATA
The data^ have been provided by the 'Deloitte &
Touche Football team', which publishes reviews
on the financial situation of English football
teams twice a year and the population data which
Manage. Decis. Econ. 24: 403-410 (2003)
 PRODUCTIVE EFFICIENCY OF ENGLISH FOOTBALL TEAMS
correspond to the year 1998 are taken from
www.statistics.gov.uk. As team inputs the clubs
total wages and salaries reduced by the amount
paid to the head coach and the salary of the head
coach are considered. In doing so, the approach
pioneered by Szymanski and Smith (1997) and
Szymanski and Kuypers (1999) to proxy the talent
available to a team by data on financial expendi-
tures is taken. The salary of the head-coach is a
separate input variable"* as evidence indicates that
coaches significantly influence the performance of
teams in the field (e.g. Clement and McCormick,
1989 and Ruggiero et al., 1996). Although, the
proxy for the playing talent available to a team is
not perfect in the sense that also non-playing
employees are included in the total wages and
salaries, it appears to be the best proxy available
as alternative proxies are highly subjective, like
pre-season estimates of playing success as fre-
quently published in newspapers, do not include
all players in the squad and/or depend heavily on
the average length of the contract, as e.g.
'amortisation of players registrations' where
young home-grown players are not accounted
for. Furthermore, the data on wages appear to
be the most realistic as club managers have pre-
season estimates of success in mind and will
accordingly plan the team roster.^
Some additional input variables may be applic-
able, e.g. ex ante players' ability or the manage-
ment capabilities. These possible inputs were
rejected partly because of their short-term nature,
their subjectivity or their uneven distribution
among the teams investigated. Note that not only
the value, but also the size of the player squad,
which is an important factor in determining the
performance in sport leagues, is implicitly reflected
in the variable 'total wages and salaries'. Finally,
when measuring technical efficiency of football
teams it has to be accounted for the fact that those
teams come from different parts of the country
with accordingly varying population densities and
ultimately differing demand for football entertain-
ment, which in turn influences the revenue
potential of the teams. Therefore, the population
of the clubs' home town is introduced as a non-
discretionary input variablea variable represent-
ing an input which is beyond the control of the
club management, but still has some influence on
the production process.
The outputs include points awarded during the
2000/2001 Premier League season and the season
Copyright 2003 John Wiley & Sons, Ltd.
405
total revenues. The first output variable aims at
capturing a team's athletic output in the national
league over the entire season. The number of
points lead to a ranking which determines the
national champion, those teams which qualify for
an international tournament in the following
season (usually teams ranked first to fifth), and
those two or three teams which are relegated to
Division One, the second highest league in
England, in the next year.^ From the importance
of points in the national league it is evident that
this is the core output of any (European) football
team and that this output variable is positively
correlated to fan interest and a clubs revenue
potential. Nevertheless, taking points awarded in
the national Premier League as the only output
variable would be misleading, because European
football competitions on team level are organized
hierarchically with national and international
matches played simultaneously.
Some teams, especially the big ones, not only
aim at success on the national level but also in
international competitions and are therefore will-
ing to employ more and better players. These
teams would come out very inefficient when only
variables representing national outputs are taken
into account.^ Therefore a variable capturing a
team's output, irrespective of whether the team is
engaged nationally or additionally plays on the
international level had to be found and total
revenues appear to suit best.^
Total revenue figures serve as an indicator
for a team's commercial output and include
revenues from ticket sales, merchandising, TV
rights sales, advertising and sponsoring.' Further-
more, total revenues include also revenues from
national cup tournaments and so a team which
plays only in the national league, but is rather
successful in one ofthe national cups can also raise
its total revenues significantly. Therefore, total
revenue figures promise to be a very encompassing
variable in order to measure outputs of football
teams.'"
Table 1 reports the input and output data taken
from the 2000/2001 season and ranks the teams
according to their final rank at the end of that
season. As the drawing potential of the Premier
League teams varies considerably, the absolute
number of spectators during the entire season is
indicated as an additional information. The
column 'International' in Table 1 states whether
a team had participated in an international
Manage. Decis. Econ. 24: 403^10 (2003)
406 D.J. HAAS

Table 1. Raw Data for the Premier League Season 2000/2001

Final Club Total wages Coach Home town Points Spectators Revenue in Inter-
rank and salaries salary Population'' in 1000 Mio. e national"
(excl. coach) in 1000 e in 1000 e
in Mio.
1 Manchester United 44.6 232 427 80 1282 194.6 CL
2 FC Arsenal 33.7 266 7122 70 721 101.8 CL
3 FC Liverpool 39.9 140 463 69 830 77.5 UC
4 Leeds United 27.5 276 727 68 740 94.9 CL
5 Ipswich Town 9.9 69 117 66 428 45.4
6 FC Chelsea 46.6 346 7122 61 659 127.5 UC
7 Sunderland 22.1 70 293 57 889 62.0
8 Aston Villa 21.4 138 1014 54 600 59.6
9 Charlton Athletic 10.9 104 7122 52 380 19.5
10 FC Southampton 13.7 140 215 52 287 28.7
11 Newcastle United 28.6 266 279 51 975 74.9
12 Tottenham Hotspur 25.9 208 7122 49 669 19.1
13 Leicester City 20.3 150 294 48 389 43.3 UC
14 FC Middlesbrough 24.7 138 144 42 584 46.0
15 West Ham United 25.0 125 7122 42 669 59.3
16 FC Everton 22.2 91 464 42 649 46.7
17 Derby County 17.3 191 236 42 542 36.1
18 Manchester City 14.7 166 428 34 647 52.9
19 Coventry City 15.7 111 304 34 391 33.5
20 Bradford City 21.9 96 483 26 352 12.7

"CL (Champions-League), UC (UEFA-Cup).

''Refers to the year 1998.
Source: Annual Review of Football Finance 2001, www.footballtransfers.net and www.statistics.gov.uk.

competition in 2000/2001, for which the teams
have qualified in the previous season.
RESULTS
For calculating efficiency scores the software
DEA-solver, professional version 1.0 is used.
Table 2 reports the results for both variable
returns to scale (VRS) and constant returns to
scale (CRS). The efficiency scores between teams
engaged additionally in international competition
and those which compete only on the national
level are not significantly different" and so
considering total revenueswhich includes also
revenues from international competitionas
output variable does not systematically bias
efficiency results in favor of teams competing
internationally.
Global technical efficiency (CRS) is achieved by
four teams: Charlton Athletic, Ipswich Town,
Manchester United and Sunderland. The variable
driving the efficiency of the 2000/01 champion
Manchester United is the highest total revenues of
all teams which can partly be attributed to the
performance in international competitions and the
worldwide reputation of the club. Teams like
Arsenal, Liverpool or Leeds Unitedwhich ended
up between second and fourth, thus qualifying for
international competition in 2001/2002are quite
far away from the efficiency frontier, indicating
that they had invested too much resources (inputs)
compared to the output finally achieved in the
particular year under investigation.
Teams' efficiency scores rise slightly when
allowing for variable returns to scale (VRS)'^ but
only the same four teams lie on the VRS frontier.
As already explained in Section 2, inefficiency can
be decomposed into technical inefficiency and
scale inefficiency by relating CRS-efficiency scores
to VRS-efficiency scores (see column 'scale efficiency'
in Table 2). Those teams being globally technical
efficient (CRS) are, of course, also locally technical
efficient and consequently scale efficient. One
teamAston Villais perfectly scale efficient,
although the production process as such shows
quite clear inefficiencies and some more team-
se.g. Manchester City or Tottenham Hot-
spurare inefficient under both CRS and VRS,
but are very close to the scale efficiency frontier
with efficiency scores ranging from 0.96 to 0.99.

Copyright 2003 John Wiley & Sons, Ltd. Manage. Decis. Econ. 24: 403-410 (2003)
 PRODUCTIVE EFFICIENCY OF ENGLISH FOOTBALL TEAMS 407

Table 2. DEA Results for Three Inputs and Two Outputs

Final Club CRS-efficiency VRS-efficiency Scale-efficiency reference-set V R S "
rank
1 Manchester United 1 1 1 A, = 1.00
2 FC Arsenal 0.68 0.70 0.97 A, = 0 . 3 9 , As = 0.51, A9 = 0.10
3 FC Liverpool 0.64 0.75 0.85 Ai=0.21, As = 0.78, A9 = 0.01
4 Leeds United 0.75 0.78 0.96 A, = 0 . 3 3 , As = 0.66, A9 = 0.01
5 Ipswich Town 1 1 1 As = 1 . 0 0
6 FC Chelsea 0.61 0.64 0.95 A, = 0.57, As = 0.34, A9 = 0.09
7 Sunderland 1 1 1 AT = 1 . 0 0
8 Aston Villa 0.62 0.62 1 A, = 0.09, As = 0.89, A9 = 0.01
9 Charlton Athletic 1 1 1 A9 = 1.00
10 FC Southampton 0.57 0.72 0.79 As = 0.99, A9 = 0.01
II Newcastle United 0.57 0.59 0.97 A, = 0.20, As = 0.80, A9 = 0.01
12 Tottenham Hotspur 0.70 0.71 0.98 A, = 0 . 2 5 , As = 0.65, A9 = 0.10
13 Leicester City 0.47 0.49 0.96 As = 0.99, A9 = 0.02
14 FC Middlesbrough 0.44 0.5 0.88 As = 0.95, A7 = 0.05, A9 = 0.01
15 West Ham United 0.59 0.63 0.94 A, = 0 . 0 5 , As = 0.62, A7 = 0.32, A9 = 0.01
16 FC Everton 0.68 0.79 0.86 As = 0.67, A7 = 0.23, A9 = 0.10
17 Derby County 0.45 0.57 0.79 As = 0.99, A9 = 0.01
18 Manchester City 0.78 0.79 0.99 A, = 0 . 0 5 , As = 0.95, A9 = 0.01
19 Coventry City 0.47 0.63 0.75 As = 0.99, A9 = 0.02
20 Bradford City 0.29 0.72 0.40 As = 0.99, A9 = 0.01

" Figures may not add up to 1.00 due to rounding. CRS; constant returns to scale; VRS: variable returns to scale.
Source: Own calculation.

Thus, the scale of their production is (almost)
optimal and their relatively high global inefficiency
is purely caused by inefficient operation. For all
other teams inefficiency is caused both by ineffi-
cient operation and by operating on a sub-optimal
scale. However, scale efficiencies are, on average,
very close to one, indicating that most ofthe teams
operate on, or close to, the optimal scale.
The optimal values of Xj in the outer right
column of Table 2 provide the linear combination
of teams on the efficiency frontier (assuming VRS)
closest to a particular team. The linear combina-
tion is also referred to as the 'peer group' or
'reference set' for this team. The A-subscript j
denotes the final Premier League rank of team /
The highest of the /i-values indicates to which of
the efficient teams an inefficient team is closest in
its combination of inputs and outputs.
In order to provide the inefficient clubs with
information about how to improve their perfor-
mance and how to reach the efficiency frontier, the
optimization results of the input-oriented DEA
model assuming constant returns to scale are
indicated in Table 3. The figures represent the
percentage of input-reduction ( - ) or percentage of
output-increase ( + ) necessary for the inefficient
teams to reach the efficiency frontier.
The fact that observed inefficiencies are sug-
gested to be removed mainly by input reductions
comes from employing an input-oriented DEA
model and in case the input reductions do not lead
the inefficient teams completely to the frontier,
output increases are proposed. The optimization
results suggest that none of the teams will reach
the efficient frontier by input reduction only. For
most inefficient teams, in addition to input
reductions, improvements in the points awarded
are suggested and some even should have higher
revenue figures in order to become efficient. An
extreme case is the team of Bradford City, which
shows the lowest revenue of all teams. There, only
a substantial increase in revenues and points,
together with sharp salary cuts would lead the
team to the efficient frontier. The optimization
results for that team also make clear that higher
revenues should be possible given the relatively
large home town population. Generally, no clear
optimization pattern can be detected on the input
side, where particular weaknesses of the teams
either of the players or the coach are revealed
and improvements are suggested accordingly. On
the output side, a clear tendency towards higher
proposed increases concerning the points awarded
can be seen at the lower end of the league table.
Finally, the issue of sensitivity of efficiency
scores with respect to the chosen output variables
should be addressed. As argued in Section 3, the
choice of three inputs and two outputs aimed at

Copyright 2003 John Wiley & Sons, Ltd. Manage. Decis. Econ. 24: 403^10 (2003)
408 D.J. HAAS

Table 3. DEA Optimization Results

Final rank Club Total wages Coach salary Points Revenue
and salaries
2 FC Arsenal -29.60 -48.44 + 0.25
3 FC Liverpool -56.20 -24.82 + 0.51
4 Leeds United -21.94 -55.13 + 3.76
6 FC Chelsea -36.39 -52.22 + 19.00
8 Aston Villa -37.84 -38.29 + 24.42
10 FC Southampton -27.53 -50.44 + 26.89 + 58.14
11 Newcastle United -41.23 -61.79 + 34.81
12 Tottenham Hotspur -28.39 -45.64 + 38.97
13 Leicester City -51.01 -53.72 + 37.43 + 4.81
14 FC Middlesbrough -57.68 -49.74 + 56.06
15 West Ham United -36.74 -36.74 + 52.22
16 FC Everton -42.12 -20.47 + 48.86
17 Derby County -42.78 -63.82 + 57.13 + 25.7
18 Manchester City -20.93 -53.41 + 96.09
19 Coventry City -36.75 -37.40 + 93.94 + 35.39
20 Bradford City -54.64 -28.09 + 153.57 + 257.32
Source: Own calculation.

Table 4. Comparison of DEA Results When Using Different Outputs

Final Club Outputs
rank
Points and revenue Points
CRS(2) VRS(2) CRS(I) VRS(l)
1 Manchester United 1 1 0.36 1
2 FC Arsenal 0.68 0.70 0.32 0.69
3 FC Liverpool 0.64 0,75 0.52 0.75
4 Leeds United 0.75 0.78 0.37 0.55
5 Ipswich Town 1 1 1 1
6 FC Chelsea 0.61 0.64 0.20 0.21
7 Sunderland 1 1 0.86 0.99
8 Aston Villa 0.62 0.62 0.41 0.50
9 Charlton Athletic 1 1 1 1
10 FC Southampton 0.57 0.72 0.57 0.72
11 Newcastle United 0.57 0.59 0.27 0.34
12 Tottenham Hotspur 0.70 0.71 0.29 0.39
13 Leicester City 0.47 0.49 0.36 0.49
14 FC Middlesbrough 0.44 0.5 0.32 0.5
15 West Ham United 0.59 0.63 0.35 0.55
16 FC Everton 0.68 0.79 0.53 0.79
17 Derby County 0.45 0.57 0.36 0.57
18 Manchester City 0.78 0.79 0.35 0.67
19 Coventry City 0.47 0.63 0.33 0.63
20 Bradford City 0.29 0.72 0.28 0.72
CRS: constant returns to scale; VRS: variable returns to scale.
Source: Own calculation.

capturing team efficiency in a broader way.
Therefore, athletic and commercial output vari-
ables have been included in the calculation;
furthermore, the commercial output variable has
the appealing property that it includes success in
international competitions which would otherwise,
by focusing on points awarded in the national
league, be neglected. This in turn, as can be seen in
Table 4, would systematically bias the efficiency
scores in favor of those teams which play
exclusively on the national level.
The data in Table 4 indicates rather stable
efficiency measurement results in the top English
football league which depend only to a minor
degree on the assumed type of technology (CRS or
VRS). Concerning the efficiency scores when the

Copyright 2003 John Wiley & Sons, Ltd. Manage. Decis. Econ. lA: 403-410 (2003)
 PRODUCTIVE EFFtCIENCY OF ENGLISH FOOTBALL TEAMS
output variable revenue is dropped in the calcula-
tion two remarks have to be made: first, efficiency
scores tend to decrease as the space for possible
optimization is narrowed; second, the efficiency
scores of prominent and internationally reputed
teams like Manchester United, FC Arsenal, FC
Chelsea or Leeds United drop dramatically,
especially with CRS. Therefore, when technical
efficiency is measured in the field of sports the used
variables have to be selected carefully and as long
as this is done, DEA appears to be a suitable tool
for measuring efficiency and detecting weaknesses
in the context of football teams.
DISCUSSION AND CONCLUSION
From the football supporter's point of view it can
be said, that at the end of a season 'The champion
was the best'. When trying to measure productive
efficiency of professional football teams in a
broader context by using DEA this simple state-
ment has to be revised as there is enough space for
improvementeven for very successful teams
and the Premier League ranking at the end of the
season is not significantly related to the ranking
based on efficiency scores.
Based on the 2000/2001 season in the English
Premier League the technical and scale efficiency
of football teams has been studied. Using proxies
for the playing talent and the coaching capabi-
lities available to a team as inputs and points won
and total revenues as outputs, while taking
the population size of the home town as a non-
discretionary input, it can be shown that about a
quarter to one third of the teams are on the
efficiency frontier.
Ipswich Town and Charlton Athletic are the
only teams coming out efficient in all models and
specifications. The results of those teams are
mainly driven by relatively moderate expenditures
on both, players and the coach. In contrast, the
performance of Arsenal as well as Chelsea and
especially Newcastle United is surprisingly bad,
given the success in the field of the 2nd ranked
Arsenal. Their results are mainly driven by squads,
whichin the sense of the underlying assump-
tionsare of highest quality but do not lead to the
corresponding success.
Shortfalls concerning the athletic output have
been detected first of all for Manchester City,
Copyright 2003 John Wiley & Sons, Ltd.
409
Coventry City and Bradford City; thus, for those
teams being relegated at the end of the season.
Contrary to that, a team like Liverpool would
have to reduce primarily the value of the squad
when trying to get efficient, given the attained
output level of the 2000/2001 season. The com-
mercial output levels of most teams are satisfactory
and remarkable adjustments are proposed for a
handful of teams only. Those teams are mainly at
the end of the final league table, with the
exemption of Southampton for which an almost
60 percent increase of revenuesamongst other
adjustmentsis proposed.
Finally, when global technical efficiency scores
are analyzed in more detail and the sources of
inefficiency are revealed the results indicate that
most teams operate at, or close to, the optimal
scale. It follows that inefficient operation is the
main source of overall inefficiencies. Efficiency
scores and correspondingly the ranks based on
efficiency scores only change significandy when
essential parts of the outputs are dropped and so
the hierarchical structure of European competi-
tions is not accounted for. This leads to the
conclusion that data envelopment analysis appears
to be a suitable tool for measuring efficiency of
football teams although the applicable variables
must be treated with some caution.
ACKNOWLEDGEMENTS
The author would like to thank Martin Kocher
and Matthias Sutterwithout implicating them
for their support and two anonymous referees
for their valuable comments on earlier drafts of
this paper.
NOTES
1. DEA-efficient DMUs are not necessarily efficient in
an absolute sense, but for a DEA-efficient DMU it
is impossible to detect a better performing DMU
within the same sample.
2. While output-oriented models lead to exactly the
same efficiency scores like input-oriented models
when assuming constant returns to scale and slacks
are zero, differences may occur concerning the
optimization and when variable returns to scale
are assumed (see Seiford and Thrall, 1990). In this
paper an input-oriented model is applied as inputs
appear easier to be varied in the context of football
teams.
Manage. Decis. Econ. 24: 403^10 (2003)
410 D.J. HAAS
3. The data has been taken from the 2000/01 season
only as DEA requires positive data on each DMU in
any period observed and this would not be the case
for English Premier League teams when looking at
more than one season due to promotion and
relegation.
4. Only the wage of the coach who was initially hired
for the season 2000/2001 is considered. In case a
coach was fired during the season, the wage of the
successor is disregarded. Note that Koning (2000),
for instance, does not find any econometric support
for the claim that firing a coach improves team
performance (in the Dutch football league). Hence,
the restriction on the initial coach's wage is seen as
unproblematic.
5. Dawson et al. (2000) criticized the approach to
proxy playing talent by players' wages as this
represents end-of-season data and, therefore, in-
clude bonuses depending on a team's success during
the season. This criticism does not hold for this
study as the financial data is taken from the year
2000 and bonus payments at the end ofthe 2000/01-
season are not included.
6. The reason behind taking only points of national
matches into account is that in the national
competition each team has to play the same rivals
twice. Rivals in international games, on the con-
trary, are drawn and chance plays a major role.
7. As will be seen below, if DEA is applied to the data,
excluding total revenues those teams engaged in
international competition come out very inefficient.
8. The significantly higher financial expenditures of
internationally successful teams (one-sided Mann-
Whitney {/-test, N=2Q\ /> = 0.05 for players and
p = 0.006 for coaches) is not surprising and the
direction of causality promises to be an interesting
field for further research, but appears to be out of
the scope of this paper.
9. The figures of the variables Total wages & salaries
(excl. coach)' and 'Revenue' correspond to the
financial statements of the year 2000.
10. The entertainment 'produced' by a team could be
measured by attendance figures, but as the demand
for a team is implicitly refiected in the revenue
figures, a separate variable aiming at capturing the
social output generated by a team is not employed.
11. A one-sided Mann-Whitney [/-test reveals signifi-
cance levels of (/7 = 0.59) when constant returns to
scale are assumed and of (p = 0.96) when a variable
returns to scale model is employed.
12. As noted in Section 2 the VRS is the more general
model. Both models, VRS and CRS, are indicated
because there is no theoretic rationale for one of the
models and it is necessary to have both efficiency
scores to assess scale efficiency.
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