Valuations of Soccer Players from Statistical Performance Data

Based upon contingent claims methodology and standard techniques in statistical modeling and stochastic calculus, we develop a framework for determining the financial value of professional soccer players to their existing and potential new clubs. The model recognizes that a player's value is a product of a variety of factors, some of them more obvious (i.e. on-field performance, injuries, disciplinary record), and some of them less obvious (i.e. image rights or personal background). We provide numerical examples based upon historical statistical performance indicators that suggest the value of a soccer player is not the same for all potential clubs present in a market. In other words this is a special case where the law of one price for one asset does not function. Our modeling employs the vast database of soccer players' performance maintained by OPTA Sportsdata; the same database has been used by major clubs in the English Premiership such as Arsenal and Chelsea. From a statistical point of view, our model can be applied to identify the relative value of players with similar characteristics but different market valuations, to explore patterns of performance for individual star players and teams over a run of games, and to explore correlations or interactions between pairs of players or small groups of players on the team. Moreover, it offers a tool to value players from a financial point of view using their past performance; hence this model can be also used to inform contractual negotiations.