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Simon Kuper exclusive: Why teams trading on past glories are overvalued at World Cup 2014

Read the Financial Times and Soccernomics author on why past performance has little bearing on future tournaments.

by Simon Kuper | June 4, 2014

In 1997, a friend of mine who’d painstakingly saved a bit of money made the first investment of his life. He spent weeks researching the world’s stock markets. Finally he identified the one that had made the highest historical returns: Hong Kong. He put all his savings into Hong Kong’s stock market. Weeks later the Asian financial crisis struck. His money disappeared.

He’d made a classic investor’s mistake: basing decisions on past performance.

Many bettors make the same mistake. Going into this World Cup, the market is overvaluing teams and players that have done well in the past. However, only one thing should matter to punters: future performance.

Past performance at World Cup is a mediocre guide. Famously, no world champion has retained the title since Brazil in 1962. But the champions have performed even worse than that stat suggests. Since 1966, nine of the 12 reigning champions haven’t made the semi finals at the next World Cup (see graph below).

Every world champion – including Spain this time – starts with two disadvantages.

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Spain World Cup 2010

The end of the reign of Spain?

Firstly, it typically places too much trust in the guys who won last time, even if they’re now ageing. Secondly, reigning champions stop learning. In the famous slogan of the rental car firm Avis: “We’re No. 2. We try harder.”

Spain, like Barcelona, has largely stuck with tiki taka even as opponents find remedies.

At least Spain is willing to drop its playmaker Xavi, now 34. Significantly, he started Barcelona’s last crucial game against Atletico Madrid on the bench. However, even Spain doesn’t have another Xavi.

The market, fascinated with past performance, doesn’t merely overestimate reigning champions.

Simon Kuper-fate-of-past-winners

It overestimates all past champions. The long-ago titles of Uruguay or Argentina are probably irrelevant now.

Veteran players also get overestimated – at this World Cup, stars bursting with past performance like Robin van Persie or Wayne Rooney.

Jan Zwartkruis, a former manager of Holland, once remarked that players tend to think they get eight years at the top; usually, he said, it’s more like four. Quite likely, the heroes of the coming tournament will be younger players whom nobody is talking about yet.

French fancy  

The only past performance that definitely matters is very recent performance. In league football, a team’s last two or three results are a good predictor of its next result. That being so, the team that may have hit form at the right time is France.

Les Bleus have won six of their last seven matches, scoring 22 goals and conceding just four. None of their opponents were world-beaters, but nor is any team the French are likely to meet before the quarter-finals – after which anything is possible. They look better value at 22-1 than Spain at 13-2.


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