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Wales at Euro 2020: are the betting markets underestimating their chances?

The transfer market value of the Welsh football team suggests a higher probability of winning than the bookmakers’ odds; and their veteran star player may be undervalued. Both factors suggest that the chances of success for Wales at Euro 2020 are understated.

The bookmakers do not give Wales much chance at Euro 2020, offering odds of 150/1 for the team to win the tournament, despite having drawn their first match. After adjusting for the bookmakers’ margins (the adjustments they make to the ‘true odds’ so that they can expect to make a profit), this implies a win probability of only 0.5% for the whole tournament. Only Hungary, North Macedonia and Scotland (with odds of 500/1), Slovakia (at 275/1), Finland (at 250/1) and Poland (200/1) are rated bigger outsiders than Wales.

But is this a fair reflection of the quality of the Welsh team?

Table 1: Winner odds by team

Czech Republic75/1
North Madedonia500/1
Source: Paddy Power. Note: Odds accurate on 15 June 2021

Betting markets, like stock markets, are relatively efficient in their use of information in evaluating expected future performance. Many people placing bets are well informed and the ‘wisdom of crowds’ means that, on average, the odds are a reliable indicator of outcomes.

There is a very strong correlation between the odds offered by the bookmakers and the current squad values of the 24 national teams in Euro 2020. Just as a firm’s share price reflects the current value of expected future profits, players’ transfer costs reflect the current value of their expected future performance both on and off the pitch. The latter relates to the expected commercial value of a player’s image.

Using the well-respected website, the Welsh squad has a current value of £159 million, which ranks Wales as only the 20th most expensive squad in the competition. The top-ranked teams by squad value are England (£1,150 million), France (£925 million) and Germany (£843 million). France are the current tournament favourites (with odds of 9/2), followed by England (5/1) and Belgium (6/1).

Figure 1: Squad values (£ million)


Based only on squad values, the chances of Wales winning the tournament are 45/1. This is much better than the bookmakers’ odds of 150/1: perhaps the bookmakers are offering a good deal to lure Welsh fans to back their team early on in the tournament. The Tartan Army seemed to be getting an even better deal with squad values, suggesting chances of 29/1 for Scotland: following defeat in their first match, this contrasts sharply with the current bookmakers’ odds of 500/1.

Both Scotland and Wales will attract relatively low volumes of bets. But in the case of England, much larger volumes of money are likely to be placed at the bookmakers, and there is very little gap between the market odds (5/1) and those implied by squad values (6/1).

Table 2: Groups by range in squad value

GroupRange (£ million)
A: Italy, Wales, Switzerland, Turkey516.82
B: Belgium, Finland, Denmark, Russia562.32
C: Austria, Netherlands, Ukraine, North Macedonia490.73
D: Czech Republic, England, Croatia, Scotland847.6
E: Slovakia, Spain, Sweden, Poland705.51
F: France, Germany, Hungary, Portugal858.15

There is a ray of hope for Welsh supporters. Based on squad values, Group A looks very competitive for qualifying for the knock-out stages as group runners-up (see Table 2). Italy (£676 million) have by far the most valuable squad and should win the group. But Turkey (£293 million) and Switzerland (£255 million) are much closer to Wales.

The squad values of the three teams other than Italy in Group A could be even closer given that the current market value of Wales’s top player, Gareth Bale, is likely to be a significant underestimate of his true value. Bale is now a veteran and about to enter the last year of his contract with Real Madrid. This means that his current transfer value is estimated as ‘only’ £16.2 million, compared with his peak value of £81 million in July 2016.

Gareth Bale on top form could make all the difference and open up a route for Wales to reach the quarter-finals. Based on squad value, his potential impact is not captured.

But this measure is not necessarily the full story. The transfer market is quite ‘thin’ and actual transactions per year are not that large in volume. Many players stay with their clubs for prolonged periods and the hypothetical ‘transfer prices’ are simply based on statistical models deriving from past performance. Younger players have little history and so their values are much less certain.

What’s more, as the example of Gareth Bale shows, players towards the end of their careers may also be ‘undervalued’ in terms of performance in a single tournament. Lastly, for all players, their contribution to squad value is based on how they perform for their club: their performance and even their role in the national team may be quite different.

Author: Bill Gerrard
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