afl team performance and expenditure (full)
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AFL team performance and expenditure (FULL)TRANSCRIPT
AFL team performance and expenditure: Is it how much money your club
spends, or how they spend it, that matters?**
Initial version: December 14, 2013
This version: February 3, 2014
Jeff Borland*
Department of Economics
University of Melbourne
Ross Booth
Department of Economics
Monash University
Abstract
This study examines the relation between spending by Australian Football League (AFL)
clubs and their performances from 1994 to 2011. Differences in football spending between
AFL clubs are found to be related to the number of games that their teams win and whether
they make finals or win the premiership – but only in recent years. The case of the AFL is
shown to fit neatly into the international literature on the effects of spending on performance
of sporting teams: Similar to other competitions where the labour market is highly regulated,
we find that the role of clubs’ spending in explaining variation in teams’ performances is
relatively small. A potential criticism of salary cap mechanisms is addressed and rebutted by
showing that ‘undoing’ of the cap on player payments in the AFL via growing differences in
spending on other dimensions of football operations has been limited. Our study also
suggests that it is important to recognise that clubs’ performances depend on other influences
apart from how much they spend – such as how well they spend their money. Improving
competitive balance should therefore take account of equalising those other influences.
*Corresponding author: Jeff Borland; [email protected]
**In constructing the data set on club spending we are grateful for assistance from Brad
Potter and Matt Pinnuck, Shane McCurry and Rob Macdonald. Some of the data we use in
the paper is proprietary to the Australian Football League. We are grateful to Dean Pagonis
for research assistance and to Rob Macdonald for helpful discussions. The opinions
expressed in the paper are those of the authors only.
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1.Introduction
Understanding what explains the performance of sporting teams and competitors is a major
topic of interest for sports economists. One line of research has examined the relation
between performance and the amount of money spent by teams (for example, Hall et al., 2002;
Szymanski, 2003; Jones, 2013). The idea that spending matters for team performance is
implicit in regulations that sporting leagues impose on clubs’ expenditure in order to promote
competitive balance – such as the salary cap and luxury tax.
This study examines the relation between spending by Australian Football League (AFL)
clubs and their performances from 1994 to 2011. The AFL is notable for having had a
relatively extensive set of labour market controls since the mid-1980s; including a salary cap
on player payments, a reverse-order draft for recruiting new players and regulations of player
mobility, and a limit on the size of each club’s playing list. Our study uses several alternative
measures of team performance – seasonal winning percentage, and whether a team makes the
finals or wins the premiership. We are also able to examine different measures of spending
by clubs – a measure of total football spending as well as the disaggregated categories of
spending on player salaries and on football operations.
Our study makes several contributions. First, it provides an additional data point to the cross-
country analysis of the effect of spending on performance of sporting teams. Previous studies
have, for example, used cross-country variation in the strength of relation between spending
and performance to make inferences on how labour market regulations affect the
determinants of performance of sporting clubs. However, these studies have been confined to
the US and Europe. Hence an observation from a sporting league in Australia can give extra
power for identifying the determinants of performance. Second, it contributes to debate on
the effectiveness of salary cap mechanisms. One criticism of using a salary cap to achieve
competitive balance is that it can be undone by differences between clubs in their spending
on football operations – such as the number and quality of coaches and medical staff hired, or
the quality of training activities and facilities (for example, Fort and Quirk, 1995). By
tracking the relation between clubs’ spending and performance in the AFL since the mid-
1990s, and by separately analysing the effects of total spending and spending only on football
operations, we are able to evaluate whether the AFL salary cap is being undone by clubs’
spending on football operations. This issue is currently of considerable relevance in the AFL
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where there has been substantial debate about the effect of an ‘arms race in spending’ on
competitive balance and the adequacy of existing equalisation policy (for example, Niall,
2012; Quayle, 2013; Baker, 2014).
In our study we do find evidence that spending by AFL clubs matters for their performance –
how many games they win, and whether they make the finals or are premiers. However, this
relation only becomes significant in the final years of our sample period, from 2009 to 2011.
As well, the proportion of the variation in performance between clubs that is explained by
differences in their spending is relatively small. This is in line with international studies
which find that differences in spending between clubs matter less for performance in leagues
where there is more extensive labour market regulation. Our findings suggest that regulations
such as salary caps can be relatively effective over extended periods in ensuring equalisation
of spending and hence competitive balance between clubs. They also inform the suggestion
in the title of our paper: that how clubs spend their money may be as important as how much
they spend for understanding their performance.
An outline of the paper is as follows. Section 2 describes the main elements of labour market
regulation in the AFL. Section 3 describes the data we use in the study. Section 4 presents
descriptive statistics on spending by AFL clubs between 1994 and 2011. Section 5 presents
the results from analysis of the relation between clubs’ spending and their performances.
Section 6 provides concluding thoughts.
2. Labour market regulations in the AFL
The Australian Football League (AFL) is the premier Australian rules football competition.
It currently includes 16 clubs from the five major states in Australia, having evolved from the
Victorian Football League (VFL) competition in 1990. The structure of the competition
involves teams competing in a set of regular season (home-and-away) matches, after which a
finals (playoff) series involving the top-ranked clubs from the regular season determines the
winner of the league Premiership.
In the mid-1990s a variety of labour market controls were introduced into the VFL
competition as a response to a combination of problems that had arisen in the Australian
football competition in the early 1980s. These problems centred around the issue of
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competitive balance – and included financial instability of the VFL and its clubs, escalating
and unsustainable player salaries and transfer fees, declining match attendances, and several
challenges to the legality of the VFL’s labour market controls.
A salary cap on player payments for each club was introduced for the 1985 season and
remains in place today - At the end of our sample period in 2011 the cap was $?? per club. A
reverse-order player draft was introduced in 1986 with players chosen then being eligible to
play for clubs in the 1987 season. Initially the scope of the player draft was restricted, but
within a few years assignment of new players to clubs had come to occur almost exclusively
through that mechanism. The capacity of players to move between clubs and the timing of
moves is also highly regulated in the AFL. For example, in the period covered by our study
players who were contracted to a club could only move to another club with the agreement of
their current club, and that move could only occur between seasons; and the medium of
exchange for a trade was limited to other players or choices in the next season’s player draft.
The size of a club’s playing list, was set at a maximum level of 50 players in 1983, and has
subsequently been adjusted downwards to the current maximum of 40 players (plus the
‘emergency’ rookie list players). (For more details on labour market regulations in the AFL,
see Booth, 2006; Macdonald and Booth, 2007; and Borland et al., 2009).
3. Data
Data used in this study are on AFL clubs’ spending and their performances. From a variety
of sources (the AFL and AFL media releases) we have been able to construct measures of
football spending by AFL clubs from 1994 to 2011. We have a measure of total football
spending by each club; and we also have separate series for its components: player payments
and for football operations spending. Player payments are the salaries paid to a clubs’
playing list. Spending on football operations include items such as payments to coaching,
fitness and medical staff, player recruitment costs, and other team expenditure such as travel
costs, medical expenses and team maintenance. We exclude one club, Fitzroy, from the
analysis because we only had data on it for one year out of the period from 1994 to 1996 in
which it was in the AFL competition. We also exclude the Gold Coast club from our study as
it is only in our sample period for one year (2011). As well, missing data for prior years
mean we are only able to include Fremantle in our sample from 1997 onwards. The effect of
these exclusions on our sample is minor – We have data for 281 out of the potential 288
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observations. Data on clubs’ winning percentages in home-and-away matches, and whether
they make the finals and win the premiership, are taken or calculated from AFL (2012). To
have a definition of ‘making finals’ that consistent across time, we apply the rule from the
end of our sample period, and in each year define a team to have made the finals if it finished
the regular season in the top eight on the AFL ladder.
4. The amount of spending by AFL clubs
Trends in average spending
Figure 1 shows the average real spending by AFL clubs from 1994 to 2011 (expressed in
constant 2011 dollars). Total football spending increased from $5.9m to $17.2m over the
period, an average increase of about 6.5 per cent each year. Spending on football operations
increased at much the same rate, 6.7 per cent per annum, from $2.3m to $6.8m.
Differences in spending between clubs
Figure 2 shows the relative spending by the top four and bottom four spending clubs in each
year from 1994 to 2011. In recent years total football spending by the top four clubs has been
about 25 per cent higher than the bottom four clubs. Due to the salary cap restriction on
player payments, there is greater scope for football operations spending to vary between clubs.
Hence, it is not surprising that the gap between the top four and bottom four clubs in football
operations spending has been higher – about 60 per cent. Interestingly, these spending gaps
have been relatively constant over the past decade – that is, there is no evidence of an
increasing difference in spending between the top four and bottom four clubs. The same
result is obtained using other measures of dispersion, such as the coefficient of variation. In
the 1990s, if anything, it appears that spending differences between the top and bottom
spending clubs actually declined.
Who are the high and low spending clubs?
There has been a relatively high degree of stability in the identity of the high and low
spending clubs. One perspective on this issue is available from Figure 3 which shows the
rank-order in total football spending for eight selected clubs. The persistence in identities of
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high and low spending is evident. For example, Collingwood, Sydney and West Coast are in
the top six spending clubs in every year between 1994 and 2011; whereas at the other end of
the spectrum, the Western Bulldogs, and over the last decade Melbourne and the North
Melbourne Kangaroos, were in the bottom six spending clubs in every year. An alternative
perspective is from Figure 4 which shows the year-to-year correlation in clubs’ rank-order in
total football spending. Especially over the past decade the correlation has been very high –
at 80 to 90 percent.
4. The effect of spending on team performance
Methodology
Our empirical method to examine the relation between spending by AFL clubs and their
teams’ performances is straightforward. We estimate a linear model for the relation between
a measure of team performance and a club’s spending relative to average spending:
it it itPERF = + RELSPEND + α β ε (1)
itPERF is a measure of the performance of club i in year t, and itRELSPEND is the ratio of
spending by club i in year t to average spending by clubs in that year.
We use three alternative measures of team performance – seasonal winning percentage in
home-and-away matches; whether a club made the finals in that year; and whether it won the
premiership in that year. The relation between clubs’ performances and their total football
spending and spending on football operations is tested. The relation is tested for the whole of
our sample period and within three sub-periods: 2006-11, 2000-05 and 1994-99, chosen to be
of equal length.
Spending and winning percentage
We begin by examining the relation between AFL teams’ seasonal winning percentages and
their clubs’ relative total football spending. The results are reported in Table 1. Beginning
with the whole period from 1994 to 2011 (column (1)) there is a significant relation between
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a club’s relative total spending and its winning percentage. However, by looking at the sub-
periods (columns (2) to (4)) it is evident that this effect is driven entirely by the period after
the mid-2000s. For 1994-99 and 2000-05 the relation between club spending and winning
percentage is not significant. It is only for 2006-11 that a significant relation exists. In that
period, by increasing its spending relative to the average by 10 percent, a club’s winning
percentage would have been higher by 6.8 percentage points. For example, this means that in
2011, increasing its expenditure by about $1.15m would be associated with a club winning
one more match.
The idea that the relation between club spending and performance has grown stronger over
time is reinforced by looking at graphs of average spending and performance of clubs for
each of the sub-periods. Figures 5a to 5c show this information using measures of total
football spending and average games won by each club. In 1994-99 and 2000-05 the
observations are relatively clustered and there is no clear relation between spending and
games won; but in 2000-11 a positive relation between spending and games won is apparent.
It is also possible to investigate in some more detail how the relation between team spending
and performance has changed across time by breaking up the final sub-period. Doing this
(columns (5) and (6)) shows that in fact the significant relation between team spending and
performance is only observed at the very end of the sample period – from 2009 to 2011.
The other aspect of our analysis of seasonal winning percentage is to examine its relation to
football operations spending. These results are reported in Table 2. The findings are
qualitatively the same as when total football spending is used. There is a significant relation
between clubs’ spending on football operations and their teams’ performance over the whole
sample period. However, this is again entirely due to there being a significant relation at the
end of the period. Taking into account that a given percent rise in spending on football
operations relative to the average is only about one-third the amount of money as the same
percent rise in total football spending, it seems that the effect of spending an extra dollar on
football operations is about the same as spending an extra dollar on player salary payments.
Spending and the finals
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Having found that clubs’ spending affects the percentage of games they win during the home-
and-away season, it follows that spending is also likely to affect whether a club makes the
finals and whether it wins the premiership. In Table 3 we report the findings from estimating
our basic model with these alternative dependent variables and clubs’ relative total football
spending as the explanatory variable.
The same pattern of a relation between performance and spending that strengthens over time
is apparent. In the initial sub-period from 1994-99 there is no significant relation between a
club’s total football spending and whether its team makes finals or wins the premiership. But
by the final sub-period , 2006-11, an increase in a club’s total football spending had a
significant effect on its team’s performance. For example, having total football spending that
was 10 percent higher relative to the average raised the probability of a club making the finals
by 23 percentage points and raised the probability of winning the premiership by 7.6
percentage points. In fact, the association between clubs’ spending and making the finals or
winning the premiership becomes statistically significant in the second sub-period from
2000-05. Hence differences in clubs’ spending have a significant effect on these measures
before there is found to be a significant effect on clubs’ winning percentages. Perhaps this is
because making the finals and winning the premiership are coarser measures of club
performance than seasonal winning percentage.
How much of differences in AFL teams’ performances are explained by differences in clubs’
spending ?
So far it has been found that differences in spending between AFL clubs – at least in recent
seasons - are a factor that can explain differences in their teams’ performances. The next
logical question to ask is how much of the overall differences in performance between AFL
teams can be explained in this way. The answer is a relatively small proportion.
As one ‘back-of-the-envelope’ perspective on this issue, consider the relation between clubs’
total football spending and their winning percentages. In 2011 the difference between the
highest and lowest spending clubs relative to average spending was about 25 percent. Using
the result on the effect of relative spending on winning percentage (Table 1, column (2)) this
translates into a difference in winning percentage of 17 percentage points. In that season the
actual difference in winning percentage between the top four and bottom four clubs was
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about 68 percentage points. Hence, in this way, differences in total football spending can be
interpreted to explain about one-quarter of the total gap in winning percentage between top
and bottom teams.
An alternative, and more rigorous and comprehensive, perspective on the explanatory power
of clubs’ spending is to use the R-squared measure from our regression models. Table 4
reports the R-squareds from regression models for the relation between the alternative
measures of football spending by clubs and their teams’ winning percentages. The main
impression is that this percentage explained by differences in football spending is relatively
minimal. Even in the period where differences in spending have their greatest impact on
clubs’ performance, 2006-11, those differences are only able to explain 5 to 9 per cent of the
variation in winning percentage between clubs.
That differences in spending between clubs explain a relatively small proportion of the
variation in winning percentage is a common finding in sporting leagues with a relatively
high degree of labour market regulation. To make this point Table 5 contrasts the findings
for the AFL with similar analyses for the NFL in the US and the Premier League in the UK
reported in Szymanski (2003). In both the AFL and the NFL, which have a high degree of
labour market regulation, the proportion of the variation in winning percentage between clubs
that is explained by differences in their spending is small – about 5 percent. By contrast, in
the Premier League, where there is much less labour market regulation, differences in clubs’
spending explain about one-third of variation in the percentage of games won.
In a way this conclusion on the limited role of differences in spending in explaining the
performance of AFL teams should not be surprising. In this study it has been found that the
identity of high and low spending clubs did not change much from 1994 to 2011. Yet we
also know that there has been a relatively high degree of ‘churning’ in teams’ performances
over that period. Figure 6 reports some information to support this point. It shows the
number of times that each AFL club made the finals in the six-year periods during 1994-2011.
There is shown to have been a relatively high degree of turnover in the identify of clubs
making finals – for example, in each six-year period at least have the clubs made the finals on
between two and four occasions. In each period there were also four different clubs that won
the Premiership. Comparing between the periods it does not seem that there was any trend to
less churning in the more recent periods. Putting together these pieces of information – that
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there has been consistency in the ordering of football spending by AFL clubs, but churning in
the ordering of finishing position - it follows that relative football spending by AFL clubs
cannot be the only factor explaining teams’ performances.
Which clubs get the most out of their money and which clubs get least?
Since differences in clubs’ spending can explain only a small proportion of the variation in
their teams’ performances, there must be other factors, such as management (for example,
quality of coaching, recruiting and medical staff) and luck (for example, injuries), that also
have a large effect. We refer to the influence of these other factors as the ‘effectiveness’ of
clubs’ spending, and we next derive a measure of this effectiveness.
Calculating the measure of the effectiveness of clubs’ spending is done in several steps. First,
a team’s predicted performance based on its spending by its club can be calculated. This
calculation is done using data on clubs’ spending and the estimated relation between that
spending and teams’ performances. To do this step we use seasonal winning percentage as
the performance measure and total football spending as the spending measure (Table 1,
columns (2) to (4)). Second, a team’s actual performance can be compared to its predicted
performance. Where a team’s actual winning percentage is above its predicted winning
percentage, this means that the club is doing better than would be predicted by its spending.
In other words, it is being relatively effective in using its money. By contrast, where a team’s
actual winning percentage is below its predicted winning percentage, the club is doing worse
than is predicted by its spending. It could be said to be relatively ineffective in using its
money.
Tables 6 and 7 report the findings from this analysis of relative effectiveness of clubs’
spending. Table 6 shows the three clubs whose actual seasonal winning percentage was
above and below their predicted levels by the largest margins. Table 7 provides a complete
picture by showing the rank-ordering of each club. A rank of ‘1’ means that the club was the
most effective in its spending, having the biggest positive difference between actual and
predicted performance; whereas a rank of ‘16’ means that the club was the least effective in
its spending, having the biggest negative difference between actual and predicted
performance. Both tables distinguish between the three six-year sub-periods from 1994 to
2011.
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What is striking about the findings is the extent of churning in the relative effectiveness of
spending by clubs. Looking at Table 6, for example, no club appears in the list of top three
clubs for more than one of the six year sub-periods; and two clubs (Western Bulldogs and
Essendon) shift between being in the lists of top three and bottom three clubs in successive
time periods (moving in opposite directions). This finding is reinforced by Table 7. There
are only two clubs that have been in the top half of clubs for the relative effectiveness of their
spending in all three sub-periods: Geelong and the Kangaroos. Equally, only one club has
been in the bottom half of clubs for relative effectiveness of spending in all three time periods
(Fremantle; although Melbourne and Collingwood feature in very low positions in two of the
time periods).
Why would there be so much churning in clubs’ effectiveness in spending? There are several
possible explanations. One explanation is that the effectiveness of clubs’ spending may be
constrained by institutions such as the reverse-order player draft. Clubs are all required to
spend relatively similar amounts on player salaries, yet their access to talent will vary
according to the reverse-order draft. Clubs that have done well in previous seasons will have
had lower draft choices, with higher draft choices going to clubs that have not done well.
Hence the reverse-order feature of the player draft causes variation over time in clubs’ access
to talent that may to some degree be reflected in variation in the effectiveness of clubs’
spending. This would be consistent with cycling in the relative effectiveness of spending on
player payments. But it cannot account for why the effectiveness of spending on football
operations would vary across time. Therefore there must also be other explanations. A
second explanation might be the influence of luck - such as incidence of injuries. To the
extent that injuries play an important part in determining teams’ performances, and that the
relative incidence of injuries at clubs varies across time, this could explain why the relative
effectiveness of football spending shows churning. A third explanation may be club
management. Clubs that are well-managed and coached are likely to do better than predicted
on the basis of how much they spend; and vice-versa for clubs that are not well-managed and
coached. However, if the quality of management and coaching are to explain the differences
in the relative effectiveness of spending, then given the observed churning in the relative
effectiveness of spending, it must be that there has been churning in the relative quality of
management and coaching.
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5. Conclusions and implications for policy
This study has examined the relation between spending by AFL clubs and their teams’
performances between 1994 and 2011. Total football expenditure by high spending AFL
clubs is about 25 percent higher than low spending clubs. With the salary cap governing
player payments in the AFL, this difference is mainly driven by spending on football
operations, which is about 60 percent greater at high than low spending clubs. This gap in
expenditure between high and low spending clubs is found to have translated into the number
of games that clubs win and whether they make finals or win the premiership – but only in
recent years.
One major implication from our study is to show that the case of the AFL fits neatly into the
international literature on the effects of spending on performance of sporting teams. The
AFL has a high degree of regulation of labour markets, and as with other sporting leagues
with that institutional set-up, we find that the role of clubs’ spending in explaining their
performances is relatively small. The second major implication is that it follows that the
regulations used by the AFL to equalise spending by clubs have indeed prevented differences
in spending becoming a major impediment to achieving competitive balance. Any ‘undoing’
of the salary cap on player payments via growing differences in spending on football
operations has been limited, and has only occurred in recent seasons.
Our study suggests that sporting leagues seeking to improve competitive balance are right to
worry about equalising spending by clubs. It also suggests, however, that it is important to
recognise that clubs’ performances depend on other influences – such as luck or how well
they spend their money. Hence, improving competitive balance may also be about equalising
those other influences.
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References
AFL (2012), AFL Record Season Guide 2012 (Melbourne). Baker, Grant (2014), ‘Pay to Win’, The Herald-Sun, January 28, pages 69,72. Booth, Ross (2006). The economic development of the Australian Football League. In W. Andreff and S. Szymanski (eds.) Handbook on the Economics of Sport (pp.552-64), Cheltenham, UK: Edward Elgar. Borland, Jeff, Chicu, Mark and Robert Macdonald (2009), ‘Do teams always lose to win?: Performance incentives and the player draft in the Australian Football League’, Journal of Sports Economics, 10, 451-84. Fort, Rodney and James Quirk (1995), ‘Cross-subsidization, incentives and outcomes in professional team sports leagues’, Journal of Economic Literature, 33, 1265-99. Hall, Stephen, Stefan Szymanski and Andrew Zimbalist (2002), ‘Testing causality between team performance and payroll: The cases of Major League Baseball and English soccer’, Journal of Sports Economics, 3, 149-68. Jones, Willis (2013), ‘Exploring the relationship between intercollegiate athletic expenditures and team on-field success among NCAA Division I institutions’, Journal of Sports Economics, 14, 584-605. Macdonald, Robert and Ross Booth (2007). ‘Around the grounds’: A comparative analysis of football in Australia. In B. Stewart (ed.) The Games Are Not the Same: The Political Economy of Football in Australia (pp.236-331), Carlton, Australia: Melbourne University Publishing. Niall, Jake (2012), ‘$7.8M jackpot’, The Age, December 5, pp.23-24. Quayle, Emma (2013), ‘AFL to consider luxury tax’, The Age, January 31, pp.15-16. Szymanski, Stefan (2003), ‘The economic design of sporting contests’, Journal of Economic Literature, 41, 1137-87.
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Figure 1: Average real spending by AFL clubs, 1994 to 2011 (expressed in 2011 dollars)
Figure 2: AFL, Ratio of spending by top 4 clubs to bottom 4 clubs, 1994 to 2011
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Figure 3: Rank-order of total football spending, Selected AFL clubs, 1994 to 2011
Figure 4: Correlation in rank-order of spending by AFL clubs, 1994 to 2011
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Table 1: Relation between seasonal winning percentage and relative total football
spending
Dependent variable: Seasonal winning percentage in home-and-away matches
(1) (2) (3) (4) (5) (6)
Whole period
Sub-periods
1994-2011 2006-11 2000-05 1994-99 2009-11 2006-08
Relative Total Football Spending
0.375** (0.109)
0.686** (0.225)
0.379 (0.209)
0.178 (0.144)
0.958** (0.331)
0.453 (0.309)
R-squared 0.040 0.089 0.033 0.016 0.153 0.044
Observations 284 96 96 92 48 48
Note: ** and * respectively denote significance at the 1% and 5% levels.
Table 2: Relation between seasonal winning percentage and relative football operations
spending
Dependent variable: Seasonal winning percentage in home and away matches
(1) (2) (3) (4) (5) (6)
Whole period
Sub-periods
1994-2011 2006-11 2000-05 1994-99 2009-11 2006-08
Relative Football Operations Spending
0.147** (0.054)
0.235* (0.106)
0.017 (0.108)
0.065 (0.073)
0.266 (0.165)
0.211 (0.140)
R-squared 0.025 0.049 0.025 0.008 0.053 0.047
Observations 284 96 96 92 48 48
Note: * and ** respectively denote significance at the 1% and 5% levels.
Table 3: Relation between making the finals and winning the premiership and relative
total football spending
(1) (2) (3) (4) (5) (6)
Dependent
variable
Make
finals
Win
premiership
2006-11 2000-05 1994-99 2006-11 2000-05 1994-99
Relative Total Football Spending
2.307** (0.550)
1.288* (0.562)
0.682 (0.466)
0.764** (0.279)
0.811** (0.266)
0.303 (0.231)
R-squared 0.157 0.052 0.023 0.073 0.089 0.018
Observations 96 96 92 96 96 92
Note: ** and * respectively denote significance at the 1% and 5% levels.
P a g e | 17
Figure 5a: Average total football spending and average games won per season by AFL
clubs, 1994 to 1999
Figure 5b: Average total football spending and average games won per season by AFL
clubs, 2000 to 2005
AdelaideBrisbane
Carlton
CollingwoodEssendon
Fremantle
Geelong
Hawthorn
Kangaroos
Melbourne
RichmondSt.Kilda Sydney
Western Bulldogs
West Coast
0
2
4
6
8
10
12
14
16
18
20
0 1 2 3 4 5 6 7 8 9 10
Av
era
ge
Ga
me
s W
on
Pe
r S
ea
son
, 1
99
4-9
9
Average Total Football Spending, 1994-99 ($million; 2011 dollars)
Adelaide
Brisbane
Carlton
Collingwood
Essendon
Fremantle
Geelong
Hawthorn
KangaroosMelbourne
Port Adelaide
9St.Kilda
Sydney
Western Bulldogs
West Coast
0
2
4
6
8
10
12
14
16
18
20
8 9 10 11 12 13 14 15 16 17 18
Av
era
ge
Ga
me
s W
on
Pe
r S
ea
son
, 2
00
0-0
5
Average Total Football Spending, 2000-05 ($million, 2011 dollars)
P a g e | 18
Figure 6: Average total football spending and average games won per season by AFL
clubs, 2006 to 2011
Table 4: Proportion of inter-club variation in games won per season explained by club
spending, 1994 to 2011
Proportion of
variation in total
games won
explained by:
1994-2011 2006-11 2000-05 1994-99
Total Football Spending
0.040 0.089 0.033 0.016
Football Operations Spending
0.025 0.049 0.025 0.008
Adelaide
BrisbaneCarlton
Collingwood
Essendon
Fremantle
Geelong
Hawthorn
Kangaroos
Melbourne
Port AdelaideRichmond
St.Kilda
SydneyWestern Bulldogs
West Coast
0
2
4
6
8
10
12
14
16
18
20
10 11 12 13 14 15 16 17 18 19 20
Av
era
ge
Ga
me
s W
on
Pe
r S
ea
son
, 2
00
6-1
1
Average Total Football Spending 2006-11 ($million, 2011 dollars)
P a g e | 19
Table 5: Relation between expenditure and performance, International comparison
League α β WPCσ WPC*σ RWσ R-
squared Period Obs
AFL 0.12 0.38 0.180 0.106 0.096 0.04 1994-2011
285
NFL (US) 0.19 0.31 0.19 0.13 0.13 0.05 1989-2000
350
Premier League (UK)
0.33 0.19 0.11 0.08 0.34 0.34 1974-99
339
Note: α and β are as defined in equation (1). WPCσand WPC*σ
are respectively the SD of
winning percentage and the ideal SD for each competition. RWσis the SD of total spending in
each competition.
Sources: AFL – Calculations by authors; NFL and Premier League are from Table 1 in
Szymanski (2003).
Figure 6: Number of times AFL clubs made finals, 1994-2011
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Nu
mb
er
of
AFL
clu
bs
Number of times made finals
1994-99
2000-05
2006-11
P a g e | 20
Table 6: Clubs’ actual relative to predicted winning percentage, 1994 to 2011
2006-11 2000-05 1994-99
Top 3 clubs Geelong Port Adelaide Kangaroos
St.Kilda Brisbane Carlton
Western Bulldogs Essendon West Coast
Bottom 3 clubs Brisbane Carlton Collingwood
Melbourne Collingwood Fremantle
Essendon Western Bulldogs Melbourne
Table 7: Clubs’ actual relative to predicted winning percentage, Rank-order of
performance, 1994 to 2011
2006-11 2000-05 1994-99
Adelaide 7 5 13
Brisbane 16 2 9
Carlton 10 16 2
Collingwood 5 15 16
Essendon 14 3 4
Fremantle 12 11 15
Geelong 1 7 6
Hawthorn 4 10 12
Kangaroos 6 4 1
Melbourne 15 6 14
Port Adelaide 9 1 10
Richmond 13 13 7
St.Kilda 2 12 8
Sydney 8 8 11
Western Bulldogs 3 14 15
West Coast 11 9 3
Note: 1 = Best performance relative to spending; 16 = Lowest performance relative to spending.