Popular Team Effect

In a previous article on How Bookies Work we saw how PaddyPower refused to be swayed by popular opinion and despite bucket loads of misplaced cash backing Liverpool to win the Premiership outright the bookie actually lengthened their odds instead of shortening their odds.  This would leave them exposed to paying out more!

Now this tweet from @SimonGleave (who is the brains behind fantastic articles on soccer analytics and predictive models such as this article here) got me rethinking about whether or not Bookies are swayed by popular opinion.

@MC_of_A Thing is Michael there are different goals. Bookies will overrate Man Utd because that maximises their profit.
— Simon Gleave (@SimonGleave) September 11, 2014

Now it is probably true that a sizable proportion of the bookie's customers will bet on their favourite team regardless.  Soccer is an emotive sport and fans can often be driven by their loyalty and their heart rather than facts.  This we have seen with 31% of the money for the outright on Man Utd and only 9% on Man City.  So again the logical step for the bookie to maximise their profit would be to offer shortened odds on the popular teams to reduce their payouts.  In other words overrate teams like Man Utd.

Does this happen?

Thanks agains to football-data.co.uk we can check this out.  The following analysis uses the Bet365 odds data and results data collected by football-data.co.uk over 12 seasons.  I extracted the fields and records that I needed to here.

If this theory is true and the bookie is overrating Man Utd, if they are offering shortened odds then they must be underrating their opponents.  The smart punter could realise this and back Man Utd's opponents each week.  With artificially high odds in his favour, will he make a long term profit?

The table below shows that over the last 12 years, this strategy would have only made a profit in three seasons - and overall a total loss of €60.  The biggest profit was last season 2013/14 where you could probably make a stronger case that Man Utd under performed - rather than the bookies over rated them.

Now interestingly if you had bet for Man Utd every match this is what would have happened.

You can see a small profit every season except for 2003/04, 2010/11 and 2013/14.  Of course a 100% loss so far this season but there are only 3 matches gone yet.  Despite the bad start to this season and the misery inflicted on Utd fans under Moyes you still see an overall profit based on the last 12 (and a tiny bit) seasons.  An  €8 profit over 12 seasons is nothing to get excited about.  It does however put some cold water on the theory that the Bookie is over rating Man Utd by offering artificially short odds on arguably the most popular team on the planet.

This shouldn't surprise us if you remember what we discovered in previous articles like The Happy Medium.  The bookie seems to be offering much better value on the favourites.  The below chart shows your Return on Investment by betting on different odds bands (ie long shots, underdogs, 50-50 shots, favourites and goliath favourites).  By far the best strategy seems to be to bet on the favourites.  So I'm not discounting the Popular Team Effect but at least in the case of Man Utd if it exists, it is being cancelled out by the pressure the bookie is under to offer very good value on the favourites.  Nobody wants to risk €10 to win just €1 - these bets are just hard to sell so the bookie is forced to offer extra good value here.