Sports - The greatest show on earth - but best return?

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A couple of months ago, it finally started to look like the English premiership could be won by a 5000:1 team, who had only just managed to remain in the league the previous year. How amazing for Leicester City to have succeeded.
Even Fortune wrote how this team  Captivated the World. Of course, "fortune has favoured Leicester City but that is only a small factor of their remarkable season"  (The National) "Instead, they have displayed the consistency, the organisation, the spirit, the fitness and the mental strength to take them to the brink. Fortune, both in terms of decisions and injuries, is certainly a factor. But then it required a remarkable amount of things to go right for a club such as Leicester to even threaten to upset the established order."

Their relative performance over two years is astounding, with relatively little incremental investment compared to the big clubs who dominate the league.

But, of course, leave it to the Economist to bring us back down to earth. "Underdogs are overrated...There is a fairy-tale appeal to stories in which people vanquish great odds. But the tellers of tales are able to stack the deck and deal the winning hand to someone deserving. Real life is not so accommodating; having a good story in no way equates to being a good person." I agree with the real life point, but I think they rationally underplay the importance of a good story.

So, can we expect repeat success from this team? Unlikely. Mauboussin's book on skill and luck is a good frame of reference for this. He provides some rough quantification to the outcomes we can expect when luck and skill combine in sport. 

"Once something has occurred, our minds start to believe it was inevitable.  This leads to what psychologists call “creeping determinism” – the sense that we knew all along what was going to happen. So while the single most important concept is knowing where you are on the luck-skill continuum, a related point is that your mind will not do a good job of recognizing luck for what it is." (Luck and Skill Untangled: The Science of Success | WIRED)

In the case of Leicester, their management should continue to make the smart investments in infrastructure and youth development that can sustain them for the longer run. Best not go out with the extra cash and buy Ronaldo!

But it would not be surprising if they did. Just look at Baseball for examples of the capacity to spend money, despite the overwhelming likelihood of disappointment. Sports Illustrated (Surge Pricing) reviewed contracts for pitchers coming into this season. Ageing pitchers have a history of under-performing their huge contracts. "Thirteen pitchers previously signed contracts worth more than $120 million. So far five of them have pitched under those contracts at age 32 or older, and all five have been busts. Justin Verlander, Johan Santana, Barry Zito, CC Sabathia and Mike Hampton, in 14 combined seasons at age 32 or higher, are 74--88 with a 4.56 ERA...Most pitchers these days, regardless of salary, fall off a cliff around age 32."

This, in a game that clearly has a lot of luck at play. So, why do they spend so much? Sport continues to attract money through advertisements and sponsorships, as live sport remains on activity that the masses may actually look up from their smart-phones to view, interacting with their friends. "So what may have seemed an absurd, irrational week of spending actually said more about the robust financial health of baseball than it did the quirky market for pitching. After all, when it comes to the rich and their Veblen goods, the prestige is found not in the wisdom of value, but in the joy of ownership."

Of course, it's not just age and injuries that can get the team owner and GM. Talent itself is unpredictable, and the increasingly smart phone enabled celebrity culture perhaps makes it more so than in the past. Just look at The Fall of Johnny Football: How did it go so wrong for Manziel? | The MMQB with Peter King: "Another suggested it’s impossible to predict the quarterback’s next career move “until he hits rock bottom.” And that might be the scariest thing: No one is sure when things will get better for Johnny Manziel, but most everyone seems resigned to the fact that things are going to get worse."

So, well done Leicester for representing more of the best of team sport. Good luck to the rest of you!