Goldman Sachs predicts World Cup winner

June 10, 2014
As World Cup fever mounts this week ahead of the tournament kicking off on Friday, the talk has finally turned to the inevitable: who is going to be crowned winners of the Jules Rimet trophy come July 13. In homes and bars across the region the usual names are starting to be thrown around: Germany, Argentina, Spain, Italy and - in their homeland - Brazil, of course. But investment bank Goldman Sachs has ignored all the chatter and tried to systematically predict the winner. The banking giant has done what it does best and crunched a huge amount of numbers to produce what is as close to a scientific outcome as humanly possible. And their prediction? Drumroll please...... Brazil. So, maybe not such a surprise.


But Goldman's methodology behind their research raises several interesting points: “The predictions for each match are based on a regression analysis that uses the entire history of mandatory international football matches—i.e., no friendlies—since 1960," the bank explained. "This gives us about 14,000 observations to estimate the coefficients of our model. The dependent variable in the regression analysis is the number of goals scored by each side in each match. Following the literature on modelling football matches, we assume that the number of goals scored by a particular side in a particular match follows a Poisson distribution.” So, that is how Brazil has appeared as clear favourites ahead of reigning champions Spain. It's also worth nothing that no European team has ever won a major trophy in South America - something we pointed out in our recent Bluffer's Guide to the World Cup. So those of you who have drawn Germany or Italy in your office sweepstake, maybe don't get your hopes up just yet. Goldman's stats also reveal the least favourite teams. So if you support Cameroon, Japan or Honduras, we sincerely suggest you lower your expectations. England also will not fare well, according to the data, which predicts the host side will face their arch rivals Argentina in the final.


However, Goldman also notes that its model does not take into account current form or potential of unknown talent. Belgium for example has an exciting squad of young talent but have never finished better than fourth at a World Cup, and that was in 1986. Here's what the bank had to say on the matter: “To be clear, our model does not use any information on the quality of teams or individual players that is not reflected in a team’s track record. "For example, if a key player who was responsible for a team’s recent successes is injured, this will have no bearing on our predictions. There is also no role for human judgment as the approach is purely statistical.” All in all, you'd be a fool to think Brazil are anything other than hot favourites. But we'd certainly love to see one of Goldman's less fancied teams shake things up. Let's wait and see...