Leicester City and the law of diminishing returns

In an interview with the BBC shortly after Leicester City had won their first English top division title in 132 years, Gary Lineker said: “If you had given me odds of 10 million to 1 at the start of the season, I wouldn’t have taken them. I’d have said it was a waste of a pound.” It’s solid logic. Ex-ante – that is, before the event – Leicester City was simply never going to win the league.

The 2007 bestseller, the Black Swan, seems to perfectly encapsulate the Leicester City phenomenon. Author Nassim Taleb wrote about how before people had ever seen black swans, there was an ancient which said that they didn’t exist. After black swans were discovered, the saying was rewritten. Black swans? Well of course they exist - why wouldn’t they!

Hindsight is everything, so naturally, a narrative is built around how and why this small provincial team conquered one of the most unbalanced leagues in the world. A rationale is created from the result. The reasons for Leicester’s season are now manifold if you’re to believe the football press. Some of the more well-worn of these include:

1. A world-class scouting system (or one that got lucky)
2. Building on the form developed at the tail-end of the previous season
3. Lack of injuries (aided by early exits from other competitions)
4. An incredible team spirit fostered by Claudio Ranieri
5. Jamie Vardy is having a soirée, bring your prosecco and foie gras

Maybe it’s something else: the diminishing return on investment. In the coming season, the English Premier League will be awash with £5 billion in television money – a 70% hike on the previous deal. Is the league 70% better than it was at the time of the previous deal? If anything, it may even be a little worse.

Another way of thinking about this is to imagine a club like PSG having $20 billion to spend in one transfer window. Naturally, their first signing would be Leo Messi. Their second? Well, even with $19.5 billion left over and burning a hole in their pocket, they couldn’t buy a second Leo Messi. There’s still only one. And so, their megabucks suddenly buy a lot less than they previously did.

It appears something similar may be happening in the Premier League. Clubs like Swansea, Southampton, Leicester, Spurs and even Bournemouth are boxing clever. They’ve got enough money to consistently buy quality players. And the relative difference between those players and what happens at the level just above them is diminishing.

An example of how this might be the case can be seen with how Shane Long moves to Southampton for £12 million in August 2014. Four months later, Wilfried Bony moved to Manchester City from Swansea for £25 million (and more, dependent on conditions). Is Bony twice as good as Shane Long? No –so the £13 million extra paid therefore isn’t an advantage at all. If it was the other way around and City had bought Long instead of Bony, he still wouldn’t be worth twice the price.

It’s not the first time that it’s happened at Manchester City with strikers, either. The club has already bought a long list of quality strikers: Dzeko, Jovetic, Negredo, Tevez, Jo and even Craig Bellamy. All decent strikers. But aside from court cases, what’s the difference between Jovetic and Bellamy? Millions of pounds and very little else.

This is the diminishing return of money in football. It’s just a theory and it’s no better at explaining the Leicester City phenomenon than any of the others. But if it’s true, it means that everyone competes better than they’ve ever done before. And the idea that money is making the league more unequal may be shaky in its foundations. Viva diminishing returns. Viva Leicester City.