Odds are there to be broken

The odds of Leicester City winning the English Premier League this year were less likely than Donald Trump winning the Nobel Peace Prize, writes Manager and Actuary at Deloitte, Marc Mer.

We all know actuaries love a good stat. So here’s one for the record books.

Leicester City have just won the English Premier League (soccer) title to complete probably one of the greatest upsets in the HISTORY of sport at a whopping 5000-1 odds. These were the longest odds that some bookies had on their market at the time.

This is more than twice as unlikely as your chances of fatally slipping in the bath or shower (2232-1), and ten times as unlikely as being born with 11 fingers or toes (500-1).

To put this into perspective, at the Rugby World Cup last year the Cherry Blossoms (Japan) beat the mighty Springboks (South Africa), defying odds of 80-1, in what was considered one of the greatest upsets in sporting history at the time.

Here are some other punts you could have taken at the time the EPL started (August 2015) that were MORE LIKELY to happen than Leicester’s triumph:

80-1 – Finding documented evidence of alien life in 2017

100-1 – Donald Trump to win the Noble Peace Prize

100-1 – Kevin Rudd to be the next Labor leader

1000-1 – Robert Mugabe to win the Noble Peace Prize

1000-1 – Hugh Hefner to admit he’s a virgin

2000-1 – Kim Kardashian to become the US president

2000-1 – Elvis Presley showing up alive

2500-1 – Vinnie Jones to win best actor

2500-1 – David Cameron to replace Tim Sherwood as Aston Villa (soccer) manager

The graph below shows how the betting market’s assessment of Leicester City’s title chances changed during the season, and especially as their feat started becoming a real possibility from February.

This is Leicester’s implied probability of winning the league, based on Ladbroke’s match-by-match title odds.

EPL

It is truly remarkable how this (relatively) small team from the East Midlands of England, in a league dominated by huge spending and billionaire backers, were able to pull off this feat. The total cost of their squad was £50m. This sounds like a lot of money spent on a bunch of supposedly “average” mere mortals, but it is nearly ten times less than the likes of Manchester United and Manchester City who have near half-a-billion pound squads!

Using the pre-season odds, if Leicester were to play in the Premier League for the next 4999 years, we would not expect them to repeat this feat!

What’s that I hear you say about being able to withstand a 1 in 200 year loss event and still remain solvent? Surely 1 in 200 is so unlikely it will never happen? I intend this article to be more light-heartened than an analysis of Regulatory Capital requirements, but it does make one think…

Nonetheless, it is remarkable for the game, and certainly keeps us statistically-oriented folk on our toes.

Sources: Ladbrokes, Paddy Power, William Hill

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.

Comments

Image of Richard Lyon
Richard Lyon says

21 May 2016

Isn't this just an obvious (albeit ex-post) example of poor pricing? Remember the 1981 Headingley test, when Ladbrokes offered 500-1 against an England win (before play on Day 4)?

Looking at the other odds listed in the article, it seems that 1000-1 is a betting shop's equivalent of "effectively impossible". So why would you offer longer odds on a "definitely possible, albeit highly unlikely" outcome? Perhaps the Ladbrokes actuarial team is understaffed?

By the way, it will be interesting to see what are the longest odds offered at the start of the next Premier League season...


Comment on the article (Be kind)

You must be logged in to post a comment.

Sign In To Comment