The Economics of Success – Why Bayern Munich will beat Chelsea

Munich - Allianz Arena after soccer game

I’m neither a supporter of Bayern Munich nor of Chelsea FC. In Germany, I fiercely support the team from the city I was born. Here in England I support the one that plays in the district where I live.

Hence, with regard to this years Champions League final, I’m perfectly neutral.

However, I’m also an economist. And based on my professional background I’m rather confident that Bayern Munich will beat Chelsea this weekend.

This forecast is not based on the fact that Bayern will play on its home turf. It is rationally derived from purely economic arguments: Judged by the current market value of the individual playes, Bayern will have the stronger and more powerful squad on the ground.

On Friday, the German football magazine “kicker” published the most probable formations of Bayern and Chelsea. Judged by the current market value of the player – estimated by the football website Transfermarkt – the German XI will be about 30 percent stronger than the English one.

The Bayern XI will be worth 290.5 million Euro while Chelsea’s players are just worth 202.5 million Euro. Even if the ageing forward Didier Drogba would be replaced by the expensive (and mostly useless) Fernando Torres, Chelsea’s value would only climb to 235 million Euro.

The most striking difference between both teams is in the midfield and in the attacking units. The six Bayern players Sebastian Schweinsteiger, Toni Kroos, Arjen Robben, Thomas Müller, Franck Ribery and Mario Gomez have a combined market value that is higher than that of all eleven Chelsea players. They are worth 212 million Euro.

The goalies are a much closer match: Manuel Neuer is better than Petr Cech, but the difference is rather tiny (30 million Euro vs. 25 million). Chelsea’s defensive unit is slightly stronger than Bayern’s. The four defenders of the British team are worth 62,5 million Euro while Bayern’s would cost 48.5 million.

The idea to use the transfer value of the individual players as a forecasting tool traces back to Gert Wager, a Professor of Economics at the Berlin University of Technology, and Jürgen Gerhards, a professor of Sociology at the Free University of Berlin.

Their track record is rather impressive. Wagner and Gerhards were able to successfully predict the winning teams of the World Cup in 2006 and 2010 as well as the Euro 2008. “Our method confirms the idea that simple models quite often work as precisely as more complex and intricate forecasting tools”, says Gerhards.

However, they also concede that pure happenstance often plays the decisive role in football. In a single match, this factor might be much more important than in a tournament where teams play several games.

According to the German sport scientist Roland Loy, about 50 percent of all goals are happening by chance, for example because of outright errors by the goalie or the referee or because the ball was deflected in a completely unpredictable way. Loy’s assessment rests on the detailed analysis of more than 3000 professional football games.

Hence, in fact anything can happen in Munich. This is why I really look forward to watching the game.

18 Comments

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18 Responses to The Economics of Success – Why Bayern Munich will beat Chelsea

  1. Impartial Spectator

    According to this logic, BVB 09 Dortmund should never have won the Double this year and the championship last year, nor should Moenchengladbach have made the Champion league cut, and so on. Of course, simple heuristics can be quite effective in some circumstances but they can also fail miserably. It will be a good game, I trust.

    • asdf

      The market value also contains expected resale value, which depends on how a player will develop in the future. Bayerns team is a lot younger, many key players are still in their mid-twenties and will be able to play at their current or a higher level for 5-10 years. Chelseas most important players will likely retire or transfer to lower-level leagues within the next few years, so their market value is lower. This does not reflect differences in their current level of play, or their value in the final. So I doubt that this forecast captures any important difference between the teams other than age.

  2. Could be a good tool in predicting winners from big pools of teams, but seems less accurate the further the tournament progresses i.e Chelsea beating Barcelona. It weirdly reminds me of the Foundation books by Isaac Asimov, where a great galactic empire was predicted to rise, but a unique individual managed to scupper the plan… Drogba? haha

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  4. Impartial Spectator

    There goes: http://www.spiegel.de/sport/fussball/0,1518,558100,00.html#CHAMPLEAGUE-1429333-10-2011/12

    Grau ist alle Theorie … der Ball is rund …

  5. Bazmaz

    That went well…

  6. 0_o

    You seem to forget that normal laws of economics do not apply to football.

  7. So, as a matter of terrible injustice with the beauty of this sport… Chelsea won the final, with the same style that recalls the same from the Greek team that won the Eurocup. Now, following your post, I think we can also feel ashamed as economist because reasoning like the one of this post are actually used in less trivial issues than a soccer match (maybe I’m “trivializing” too much a soccer match, I mean, there’s a whole industry behind)

  8. sg

    “Even if the ageing forward Didier Drogba would be replaced by the expensive (and mostly useless) Fernando Torres, Chelsea’s value would only climb to 235 million Euro.”

    What has last price paid got to do with value?

  9. Clive Matthews

    Economic forecasting only exists to give astrology a good name (JKGalbraith). What does it say of your economic forecasting when you get it so wrong in a two-horse race?

  10. The sneering realist

    Another failure for the economists to ponder on.Now they have ruined they world economy are they trying to do the same with football.

    • Bruce

      This was poor science in the first place. The value of a player reflects his expected future impact, not only on the pitch but also in image rights and other things, not his abilities on any particular day. So a 30 year old player may be better than a 21 year old, but the value of the 21 year old may well be higher. One reason why the value of the Chelsea team is lower is that it contains older players nearing the end of their careers. So your analysis should have controlled for the age of the players. Revise and resubmit!

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