Stocks quoted in this article:
Happy Thanksgiving to all. Yes, it's time for that extended weekend where we can all sit back and watch our waistlines expand and our equity options decay. Oh, and we can watch LOTS of terrific football (and maybe augment all those Black Friday savings)!
The 2014 NFL is the "Tale of Two Divisions." It is the "Best of Times" in the AFC North -- the Bengals are 7-3-1 and everyone else is 7-4. And it's the "Worst of Times" in the NFC South, where the Falcons and Saints set the pace at 4-7. So, how's it all going to turn out?
Well, let's go to the AFC North first. The odds via 5Dimes.eu are as follows.
For those not familiar, +180 on the Bengals means that if you wagered $100 on the Bengals to win the division and they won, you would win $180. Conversely, if you wanted the non-Bengals "field," you would have to pay $220 to win $100. Is there any play here?
Well, I'm glad you asked. I've written a not-terribly-complex NFL algorithm to power-weight the teams based on almost entirely objective data. I tweak very modestly for injuries and coach effect. I set it so that a team rated at zero should finish at exactly 8-8 playing an exactly league average schedule. Right here, right now, I have the Broncos at the top at 6.12 and the Jaguars at the bottom at -6.43, which means that if they played each other on a neutral field, I'd expect to see the Broncos as a 13.5 point favorite.
Anyways, on that scale, here is how I rate the NFC North teams.
- Ravens 2.94
- Bengals 2.21
- Steelers 1.14
- Browns 0.66
Then, if I translate all power ratings to point spreads and convert the point spreads to win expectancies, I project the teams to end with the following win totals.
- Ravens 10.27
- Bengals 10.26
- Steelers 9.65
- Browns 9.25
Maybe there is some value on the Ravens here? I believe so, but with some caveats. In the real world, they won't have fractional records. I show the Ravens as the better team over the Steelers, and they have a more favorable schedule going forward, but it's unclear who wins a real-world tiebreaker. You would need a model that simulates the season thousands of times and then solves for the NFL tiebreaking procedures. The Bengals' tie versus the Panthers gives them a de facto edge from the perspective of today.
The human observer in me says one of these teams gets to 11 wins, and the dispassionate robot in me says the Ravens have essentially the same chance as the Bengals to get there -- but you get better odds on the Ravens.
I should also note that as recently as two weeks ago, I showed the Browns as the favorite. But, hey, it's a dynamic market!
Now to the red-headed step child of the NFL: the NFC South. One of the Saints/Falcons/Panthers/Bucs will make the playoffs, unless Roger Goodell changes the system on the fly (note: there is a non-zero probability that happens). Here's how the market caps the division.
I have them power-rated as follows.
- Saints -1.08
- Panthers -2.96
- Falcons -2.99
- Bucs -4.79
After throwing it into my "OdellBeckhamCatch-o-tron 5000" (yes, I'm now naming it), I get the following end-of-season win totals.
- Saints 6.76
- Falcons 5.94
- Panthers 5.77
- Bucs 3.65
We still have five all-NFC South matchups left, and someone has to win them. Seven wins looks golden in the SEC-Least here, and there is a reasonable chance no one hits it. It's theoretically possible for the Panthers to win the division at 5-10-1.
The market looks like it has it right, though. The Saints still get the Panthers and Falcons in New Orleans. I'd rather take either the Falcons or Panthers with points, or the moneyline versus the Saints, than the division prop. Even though the Saints look pretty horrible on the field, they have a relatively easy path to seven wins. And if they just win those two home games, they might even advance at 6-10.
Well, if you've made it this far, here are some tidbits on tomorrow's games, in no particular order.
I rate the Cowboys over the Eagles, but I show the Eagles as more likely to win the NFC East, especially if I consider their current tiebreaker edge. If you're inclined to play the Birds on Turkey Day and you think a blowout from the Buddy Ryan era impacts a game taking place tomorrow, there's this bit of random noise.
Similar story in the NFC West -- I show the Seahawks better than the Niners, but the Niners more likely to finish with a superior record. This could matter in a big way -- right now they are fighting for the last playoff spot. And that spot projects into a relatively winnable first round game at the Eagles.
My system loved the Lions until very recently. They peaked at second after beating the Dolphins two weeks ago, but have since dropped to 11th. They also fell from projecting as the second seed and a bye to almost missing the playoffs entirely. Real-world-me didn't actually see them as the second best team in league, but on the flip side, I see them making the playoffs, albeit as a wild card.
Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.