Have you been following the FIFA world cup in Russia?
The World Cup is one of the largest sporting events in the world.
Over 200 countries participate in the qualifier rounds, yet only 32 teams make it to the main tournament.
The event is televised all over the world. It’s an opportunity to make big money for the big players in travel, hospitality, sporting equipment, vests…yep, even vests.
You may have noticed England’s coach has been wearing fitted vests at the matches. Since the World Cup started, Marks & Spencer has seen a 35% rise in waistcoat sales, and Ebay a 25% increase, as The Independent reported.
The World Cup is also one of the biggest betting events. And here bookmakers are the big winners.
Why are bookmakers the winner?
Because in football people can bet on many variables and outcomes. Who wins, losses, draws, who scores first, how many goals, you get the gist.
Heading onto the final this week, there are four teams left.
Of the remaining teams — France, Belgium, Croatia and England — France and England are the favourites to go through to the final.
English fans, swept with national pride, are betting ‘it’s coming home’. As NBC reported:
‘In a soccer-crazy country like the United Kingdom, for example, the largest off-track bookmaker, Ladbrokes, expects that 200 million British pounds, or almost $300 million, will be spent by British punters on the World Cup, more than double the amount wagered on the last Cup, held in France in 1998.’
And so are the French. As European Gaming reported:
‘There are 48 group stage matches that occurred between June 14 and June 28. On those games, French bettors spent 363 million euros. In comparison, the 2014 World Cup saw about 166 million euros wagered, and about half of it was for the group stage. Total, for the entire event 290 million euros was spent by French bettors in 2014.
‘World Cup bettors in France are also setting new records, with punters wagering more than £321m ($427m) in the group stages alone. This figure not only doubles what was wagered on the group stages in 2014, but it also exceeds the amount bet by French punters on the entire 2014 World Cup.’
Who will win it?
Belgium? France? England? Croatia?
Well, anything can happen, particularly in this World Cup which has defied odds from the beginning.
For one, it is the first time since 1958 that four-time champion Italy did not qualify. Also missing from the championship are Chile, Netherlands and the USA.
Germany, the defending champion, didn’t even make it to the round of 16.
And, who would have expected Croatia to get this far?
Caught up in World Cup fever are also the investment banks. Yep, you heard right. We are not only getting winner predictions from sports experts, but from the investment banks too.
What did the experts predict?
As SBS reported, UBS, Goldman, ING and Nomura gave us their predictions before the start of the tournament. They used the skills they use daily, that is statistics, artificial intelligence, economic analysis and history to predict the World Cup winner.
Their winner predictions?
Goldman Sachs: Brazil
Nomura: France versus Spain final.
As you can see, no one got it right.
UBS used 18 analysts and editors and 10,000 simulations to produce the below chart.
They gave France, the current favourite, a 7.3% chance to win it all. England got a 31.4% chance to making it to the semi-finals and an 8.5% chance to win it all.
Croatia were given an even smaller 4.4% chance to make it to the semi-finals…and a 0.2% chance to win it all. Yet here we are.
It is not the first time UBS misses the mark in predicting the World Cup winner. Back in 2014, UBS picked Brazil as the winner. The hosts were eliminated after a 7×1 loss against Germany.
If you had followed their winner advice and placed a bet, you would have lost quite a bit of money.
Much like in sports, it is hard to predict what will happen in the economy.
Investment banks may do the research, study the players, the history, the finances. They may try and predict the future to the exact comma and decimal.
Yet there are a whole range of unforeseen factors that can influence the future.
My point is, no one can predict the future, no matter how complicated their tools or analysis are.
These predictions could come true or be very, very wrong.
At the end of the day that’s all they are, predictions.
Editor, Markets & Money
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