Spain will beat Germany in the finals and win the European soccer championship EURO 2012. This result has been forecast by the statisticians from WU and the University of Innsbruck who predicted the winner of the EURO 2008 finals as well as the 2010 world cup winner Spain. A statistical model based on bookmaker odds was used to make the prediction.

From the official FIFA rating to astrological predictions - just before the EURO 2012 kicks off, speculations about its outcome abound. In recent years, predictions based on the so-called bookmaker consensus have proven remarkably accurate. This statistical model was developed by Professor Kurt Hornik and Dr Christoph Leitner from WU's Institute for Statistics and Mathematics together with Achim Zeileis, Professor for Statistics at the University of Innsbruck. The model has now been applied again to predict the results of the EURO 2012.

Minimal chances for other teams

The researchers simulate all possible pairings and results of the entire championship and combine them with the bookmaker odds of 23 on-line betting providers, using complex statistical calculation models. Once again, Spain has the highest chances of winning the EURO cup (25.8%), closely followed by Germany (22.2%). It is statistically probable that these two teams will - just like in 2008 - compete against each other in the finals again this year. However, the researchers' model also shows significant differences as compared to past championships: Teams other than the two odds-on favorites really have the odds stacked against them. The Netherlands have only an 11.3% chance of taking home the cup and are most likely to come in third, followed by England with an 8% probability of becoming champion.

Probabilities based on bookmaker odds

Bookmakers set their odds based on the most likely results. Their expertise takes not only previous results but also currently relevant factors such as injuries into account. Bookmakers' odds are a valuable source for statistical forecasts, explain Achim Zeileis, Christoph Leitner und Kurt Hornik, "Bookmakers set their odds to be as close as possible to the actual results while at the same time ensuring their profits. As soon as they have been adjusted for the bookmakers' surcharges, the odds provide an excellent basis for predicting results."

A model for predicting winners

In the next step, the researchers calculate the teams' probabilities to win against their respective opponents. "The playing schedule was already set when the bookmakers fixed their odds, so we also have to take the individual teams' chances within their respective groups into account", Zeileis explains. The teams are first compared with one another in pairs using traditional statistical methods. The resulting chances are then combined with the bookmakers' odds and included into a mathematical model which makes it possible to simulate any possible combination of teams. "What makes our model unique is that it delivers not only the individual teams' chances for winning, but also for 'surviving' in the championship", Hornik says, but he also admits that, "despite an unparalleled degree of probability, we are still far away from 100% certainty." So, even if the odds are against a surprise winner in the finals in Kiev on July 1, the thrill remains.

The complete study can be found here: http://EconPapers.RePEc.org/RePEc:inn:wpaper:2012-09

Contact and information:
Kurt Hornik
Institute for Statistics and Mathematics
+43-1-313 36-4756
kurt.hornik@wu.ac.at
http://www.wu.ac.at/statmath

Christoph Leitner
Institute for Statistics and Mathematics
+43-1-313 36-4757
christoph.leitner@wu.ac.at
http://www.wu.ac.at/statmath