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August 12, 2011 - by David Hess
The NFL preseason kicked off last night, as the Patriots demolished the Jaguars, and the Seahawks upset the Chargers in San Diego, among other results. To celebrate the start of clashing pads and cheering crowds, we thought we’d review some NFL futures bets. We will of course point out a few bets that we feel are good value, but we’ll also look at some interesting patterns in the futures odds themselves, and what those might tell us about the upcoming season.
The odds in this column came from leading sportsbooks, and were current as of 5:15 Eastern on August 11, 2011.
We’ve compared these odds to those listed on our projected NFL standings page. These are based on a simulation of the upcoming season that uses our preseason projected ratings, along with the actual team schedules and NFL playoff format.
Often, there’s a premium for betting the popular favorites — you’ll rarely see fair odds on the defending Super Bowl winner to repeat as champs, for example. To find value on a team that actually has a reasonable chance to win their division, you need to look to teams that are less popular, or have some flaws that people are overemphasizing. Here’s a few that we see.
Baltimore Ravens to win the Super Bowl at 17.6-to-1
5.38% break even percentage / 8.6% TR Odds
This is a team that finished with the third-best record in the NFL last year, and 5th in our predictive power ratings. Yet betting odds have them as the only tenth most likely team to win the 2011 Super Bowl. Compare them to the Steelers, their divisional nemesis. Pittsburgh’s odds to win the AFC North are 1.01-to-1, while Baltimore’s are 1.09-to-1 — not much of a difference, which means Vegas (or the market) is telling us that the Ravens are very, very close in quality to the Steelers. Yet a bet on the Steelers to win the Super Bowl only gives you 13-to-1, much worse than a bet on the Ravens.
Atlanta Falcons to win the Super Bowl at 16.8-to-1
5.61% break even percentage / 8.3% TR Odds
Last year, we thought Atlanta was overrated. They finished with the 2nd-best win-loss record, but were only 7th in our Predictive Power Ratings, and had a perhaps unsustainable turnover margin (+14, third best in the NFL). But they were led by young guys like Matt Ryan and Curtis Lofton, and our preseason projection models show that their youth should help them improve this year.
Honorable Mention
New York Giants to win the Super Bowl at 21.8-to-1
New York Giants to win the NFC East at 2.8-to-1
Sometimes it’s easier to find value among the teams that nobody thinks have a realistic shot to win. Placing money on the worst team in a division can be a good bet, in the long run, if the odds are right. But the fact that the bet will still lose 85% of the time or more turns people off, which can skew the market.
Denver Broncos to win the AFC West at 14.2-to-1
6.6% break even percentage / 19.1% TR Odds
This is a king-of-the-paupers kind of bet. San Diego is the obvious favorite in the AFC West, for good reason. But as we saw last year, sometimes the “best” team doesn’t win. Our projections actually show Denver as being roughly even with Kansas City as the second-best in the West, partly because KC is unlikely to repeat their +18 turnover advantage relative to Denver, and partly because teams often bounce back some after a huge drop (Denver), and fall a bit after a huge improvement (Kansas City). Thus, if the Chargers falter again this year, we’d like our insurance policy to be Denver at 14-to-1 rather than KC at 4.4-to-1 (or Oakland at 5.6-to-1).
Cincinnati Bengals to win the AFC North at 22.2-to-1
4.3% break even percentage / 17.6% TR Odds
We actually think our projection for Cincinnati is a bit optimistic. But even if we’re giving them three times as good of a chance as they actually have, that’s still above their break even point. Plus, we think they may be as good or better than the Cleveland Browns, despite having worse odds. The teams were basically even last season, but the Bengals have better recent history, more three and four year old draft picks that should be developing, and had worse turnover luck last year. That puts them in a better position to nab a fluke non-Baltimore-or-Pittsburgh division title.
Honorable Mention
Carolina Panthers to win the NFC South at 26.6-to-1
Buffalo Bills to win the Super Bowl at 166-to-1
Tennessee Titans to win the AFC South at 6-to-1
In poring over the odds, we noticed a few quirks that we thought we should highlight. For the most part, these were relationships between the various odds offered that were somehow illogical, or combinations of odds that reveal something insightful about the upcoming season.
Do we like the AFC more than Vegas does? Or do the NFC teams just have more juice?
Looking at all the “win Super Bowl” odds for each conference, Vegas’ odds for the AFC sum to 62.2%, and the NFC odds add up to 62.3%. So, basically even (with a ton of vig added in, of course). Our odds, on the other hand, sum to 53.9% for the AFC, and only 47.7% for the NFC (yes, slightly over 100% — that’s due to rounding, not vig).
The imbalance is not because of the favorites – 4 of Vegas’ top 6 are AFC teams. The difference is at the bottom. We think 6 of the worst 8 teams are in the NFC, but Vegas’ odds treat the worst in each conference as roughly the same. That’s probably why most of our longshot picks above were in the AFC, not the NFC.
There’s a premium to bet the Jets in the Super Bowl. (And probably some others, as well)
Sportsbooks list the odds for the Jets to win the Super Bowl as 10.1-to-1. Their odds to win the AFC Conference are 5.8-to-1. In order for those two bets to have equal expected value, the Jets would need to win the Super Bowl 61% of the times that they reach. Do the same calculation for all the other teams, and you’ll find that New York has the highest value, by nearly 3% — Green Bay is next at 58.1%.
It’s highly doubtful that the markets truly believe that the Jets will be the best team in the Super Bowl, but only the third-best AFC team up until that point. What’s more likely is that “Jets to win the Super Bowl” is a far more popular bet than “Jets to win the AFC Conference,” so the price is higher. The moral of the story? A bet on the Jets to make the Super Bowl seems to offer better value than one on the Jets to win the Super Bowl.
Conversely, there’s a discount to bet the Ravens in the Super Bowl.
Using the same logic as above, the opposite is true for the Ravens: a “win Super Bowl” bet seems to be a better value than a “win AFC” bet. Despite being the fifth-most likely AFC team to reach the Super Bowl according to the betting odds, the ratio of their Super Bowl to AFC title odds would imply they have the worst chance to win once there. Again, what’s more likely is that people just don’t view the Ravens as a “champ” — they’re willing to bet them to advance far and do well, but unwilling to take the final plunge. That lowers the price for those who are able to overcome their anti-Ray-Lewis bias.
Come back next week, same time, same channel, and we’ll cast a similar analytical eye on NFL Win Totals.
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