The FIFA World Cup is one of the most important sporting competitions in the world. The event, organized by the Fédération Internationale de Football Association, is an international football competition contested by the senior men’s national teams of countries that are FIFA members. The tournament has taken place every four years since its beginning in 1930, except in 1942 and 1946 when it was not held due to the Second World War. This year, the World Cup Finals are hosted by Brazil whose national team has won the competition five times. Other teams that have won this prominent competition include Italy (four times), Germany (three times) Uruguay and Argentina (twice each), and England, France and Spain (once each).
Although the FIFA World Cup is one of the biggest sporting competitions around the world, to our knowledge, few studies have performed simulation exercises to predict its outcome. A possible explanation for this negligence maybe the availability of information, as few football competitions join forces across different continents. In addition, the time elapsed between tournaments is substantial. To overcome these facts, we propose a Bayesian methodology to ex ante predict the probability of the national teams participating in the 2014 FIFA World Cup achieving different stages in the competition.
The novelties of our approach are twofold: first, we use simple Bayesian rules based on the Bayes’ theorem that explicitly incorporate the dependence between opponents in each match in our framework. Second, we use betting odds from bookmakers to build our statistical framework. We use betting odds because they are measures that summarise different sources of knowledge related to the matches and tournament, and implicitly incorporate probabilistic forecasts with good performance. Thus, the strength of our Bayesian approach is that our two sets of knowledge to build our forecasts, betting odds and historical World Cup information, can easily be updated, overcoming the lack of information that characterizes the FIFA World Cup.
First, we present basic descriptive statistics in the Table 1. We can see that Brazil, Argentina, Germany, Spain, and Belgium are the top five national teams in terms of the betting odds whereas Honduras, Costa Rica, Algeria, Iran, and Australia almost have no chance of winning the 2014 FIFA World Cup under this criterion. Specifically, if a person bets €1 on Brazil being the champion and Brazil indeed wins the tournament, this person gains €4.04, while if a person bets €1 on Honduras and Honduras wins, this person gains €2,500.6.
Regarding the winning percentage in the qualifying matches for the 2014 FIFA World Cup, Germany and Netherlands obtain the highest score (90%) while Ecuador has the lowest (38%). Also, Ecuador presents the lowest average scored goals with 1.9, while Germany presents the highest with 3.6. Additionally, we have Spain with an average of just 0.38 goals conceded per match, while the maximum average is 1.56 (for Uruguay). Brazil is the national team whose market value is the highest (€509 million). On the other end of the spectrum, Costa Rica is the team with the lowest value (€21 million). Finally, Spain is in first place in the FIFA rankings, while South Korea is the team with the least favourable position here, at 54th.
Table 1. Descriptive statistics: 2014 FIFA World Cup
We perform 10,000 simulation exercises for the 2014 FIFA World Cup based on our Bayesian statistical framework, and after that, we can see in Table 2 the probabilities of qualifying for each stage of every national team. For instance, Brazil, Spain, Colombia, Uruguay, France, Argentina, Germany, and Belgium have the highest probabilities of qualifying for the Round of 16 in their groups. We observe that Brazil (65.87%), Argentina (58.16%), and Germany (61.33%) have the highest probabilities to qualify for the quarterfinals. Also, we can deduce from this table that the most probable semifinal matches are Brazil versus Germany and Uruguay versus Argentina. Moreover, the final with the highest probability is Brazil against Argentina, and although Germany has the second highest probability of achieving this stage, the Germans play against Brazil in the semifinal match, and most of the times the Brazilians win. Overall, Brazil has the highest probability of winning the 2014 FIFA World Cup with 19.95%, followed by Germany, Argentina and Spain with probabilities of 14.68%, 12.05%, and 6.20%, respectively.
Table 2. Forecasting of the probabilities of qualifying each stage: 2014 FIFA World Cup
You can visit the following link to download our paper to see technical details and obtain additional results regarding betting opportunities and more probabilities associated with the 2014 FIFA World Cup at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2396259