Homem de Ouro

As of June 1st, the 2014 United States collegiate rowing season has concluded and “only” Henley remains for the rest of the best.  For the rest of the planet, the fever of World Cup fútbol has already begun.  Bookmakers around the globe have scheduled additional armored car service so that mountains of newly-wagered cash can be safely hauled away to the nearest accommodating bank.  Pundits and punters are making their predictions  –usually without the benefit of feng shui auguries and omens.  Some of these soothsayers include some very unlikely suspects:

Economists at Goldman Sachs have issued a 60-page report with detailed analyses of each World Cup team and a forecast for outcome of the tournament.  These predictions are derived from a formula that estimates the number of goals a team is likely to score in a game based on its past performance as well as on other factors, such as whether the team is playing at home.

Brazil, the host country, is strongly favored to win the championship, with odds of winning the championship almost as good as even, according to Goldman. Argentina, which the firm says is the next most likely to win, has a 14 percent chance.

[However,] Goldman’s model relies heavily on past performance, meaning that it [might] fail to accurately predict performance for a team that is improving rapidly or that is suddenly confronting a new obstacle, such as an injury [ or scorching Brazilian heat –Lunghu ].  Goldman did not provide confidence intervals or an R-squared value for their model. These statistics would help readers understand how well the analysts’ technique would have worked in past World Cups –and how well past performance predicts future results in soccer generally.

Goldman Sachs’ own “past performance” during the previous decade (in marketing collateralized debt obligation securities and credit default swaps) might be an indication that its investment bankers are heavily shorting Brazil and Argentina … while its analysts tout the two nations’ chances.

Javier Galeano_Nobsa

What do actual gamblers think?  Let’s compare and contrast.  The Goldman Sachs report predicted the top two finishers in each World Cup Group:  the teams that will advance to the Round of Sixteen.  So have bettors at PaddyPower, the Irish bookmaking chain.  The Irish were bilked of billions by their banks, with Goldman’s help.  Can they get closer to balancing the books with a double-or- nothing bet on the outcome of World Cup group play?

Here’s where both sides agree:

  • Group A (Brazil & Croatia)
  • Group B (Spain & Netherlands)
  • Group D (Italy & Uruguay)
  • Group G (German & Portugal)

Partial agreement:

  • Group C (Goldman — Greece & Colombia; Irish — Colombia & Ivory Coast, with Greece finishing last in the group)
  • Group E (Goldman — France & Ecuador; the Irish — France & Switzerland)
  • Group F (Goldman — Argentina & Iran; the Irish — Argentina & Bosnia)
  • Group H (Goldman — Russia 1st, Belgium 2nd; the Irish — Belgium 1st, by a wide margin over Russia)

 

Also interesting:  the way PaddyPower’s betting line has moved over the past few days. The following teams have lowered odds (a reflection that they are seen by bettors to have improving chances in group play):  Croatia(A); Spain(B); Japan(C), Uruguay(D); Portugal(G); Ghana(G); South Korea(H), and Algeria(H).

Other teams have odds that are increasing (sometimes only a little, sometimes a lot). This is a reflection of reduced interest in betting on these teams, often because they are viewed as overpriced:  Mexico(A); Australia(B); Greece(C); France(E); Honduras(E); Germany(G); USA(G), and Belgium(H).

Lunghu is wondering whether moves in the betting lines for Croatia and Germany have anything to do with referee assignments for World Cup matches. Sepp Blatter isn’t the only guy in fútbol with bulging pockets…

And as long as it’s time for predictions, Lunghu has some modest proposals of his own.  First, Group H is by no means a lock for Team Russia.  The fact that they have an Italian coach doesn’t suddenly make them the Nuovo Azzuri, and even though they’re playing group games in the “cooler” southern region of Brazil there are other environmental hazards that could affect their conditioning and play:  Brazilian cuties, cachaca and cocaine.  Nor should we underestimate the abilites of the (hot weather) Korean and Algerian teams –Lunghu thinks there’s a big surprise coming out of Group H.

Second, neither Goldman analysts nor PaddyPower bettors give enough credit or respect to the Dark Continent teams.  Aside from Ivory Coast in a somewhat weak Group C, both Ghana in Group G and Nigeria in Group F may have enough to take second in their groups.  Cameroon in Group A?  Maybe not so much.  Argentina and Germany both appear unbeatable in the early round-robin matchups, but don’t discount the impact of something close to home-field advantage in the slave trade ports of Natal, Recife, Salvador, Porto Alegre or Fortaleza.  Expect a warm welcome for distant African relatives.

Finally, Lunghu thinks that it’s important consider the impact of outright bribery on the outcome of World Cup games.  Anyone tempted to bet on World Cup fútbol should definitely compare the ranking of each national soccer team with that nation’s ranking on the Transparency International corruption index (and then multiply by per capita GDP?).  Using that standard, Russia, Iran and Nigeria might be clear favorites.  Maybe there’s another reason that Denmark isn’t represented in this year’s World Cup.  Caveat emptor.

2013_CPI

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