Economists can’t forecast (football)

I had no idea European football (that’s soccer for you Yanks) championship kickoff was today (Friday) until I read the morning papers before starting with this column. 

Honestly, I couldn’t care less: My beloved Beşiktaş would have won its first basketball championship since 1975, a few months before I was born, if it had beat Anadolu Efes in the fifth game of the playoff series, which was an hour after the inauguration game between Greece and co-host Poland. 

In the new edition of their widely-popular book Soccernomics, journalist Simon Kuper and sports economist Stefan Szymanski argue that match-fixing decreases the public’s interest in football as well as match attendance. So maybe I am simply responding to the rigging scandal that has shocked Turkish football- except that I have yet to see solid evidence on “şike”. 

Besides, given Beşiktaş’s woes, I am more interested in the European crisis than football these days, but a recent report by ABN Amro has linked the two. According to the bank, victory by one of the core Eurozone countries would increase confidence in the monetary union, whereas the triumph of “one of the euro opt-outs” (Denmark, Sweden and England) “would only encourage the euroskeptics”. Since France is arguably the riskiest core country, its victory would be ideal.

Given the reluctance of European officials to step in, the beautiful game may indeed be our last hope. However, it is also worth mentioning that the last two European champions were Spain (2008), where banks are bankrupt, and Greece (2004), where the whole country is bankrupt. Then, maybe no Eurozone country should be too eager to take home the trophy. Or if the direction of causality is the opposite, Spain, Portugal, Italy and Greece are all good championship candidates. 

Among these, Spain looks best-poised: A research note by UniCredit argues that the most valuable team has the best chance of winning the championship. Spain simply blows away the competition on this measure: The 23 players on its squad have a combined worth of €650 million, more than 40 percent more than Germany’s, the next more valuable squad.

Spain’s budget minister Cristóbal Montoro recently remarked that the country is shut off from credit markets, but betting markets are on the country’s side: Spain’s odds of winning at online bookie bet365 are at 3.75, trailed closely by Germany’s at 4, with Holland and France far behind. Interestingly enough, the same odds were 3.5 and 4.5 two weeks ago, implying that markets are now expecting a closer competition. 

On the other hand, ABN Amro argues that the German team is younger and hungrier for glory, compared to an aging Spanish squad that may have reached its “saturation point”. By looking at the recent form of all the teams as well, they pick Germany. In fact, all the research reports I have seen are predicting a German or Spanish victory. 

But this game is beautiful precisely because it is unpredictable. Who would have foreseen the Greek win, not to mention the 1992 Danish shocker? Or the credit crunch for that matter? Therefore, I wouldn’t be surprised if the tournament demonstrates, once again, that economists can’t forecast.