Goldmans Sachs on World Cup success indicators

The Goldman Sachs World Cup and Economics 2006 survey suggests there is a limited link between football and finance. Six of the countries in the G7 wealthy economies, for instance, are in the top 20 football nations according to FIFA world rankings. Surprisingly, the richest of the G7 nations, the United States, is also the highest ranked by FIFA, in fourth place. France is in seventh place, England 10th, Italy 14th, Japan 17th and Germany, this year’s World Cup finals host, languishes in 19th place. Of the G7 countries, only Canada is not in the finals.

Goldman Sachs says that when it comes to footballing success, population size matters. Luxembourg, Switzerland and Norway have three of the highest living standards in the world but feature nowhere in the World Cup. By contrast, the four most populous countries in the European Union -- Britain, Germany, France and Italy -- are the only European nations to have lifted the trophy. “This suggests that there may be a common denominator between size and football success,’’ said Jim O’Neill, the company’s chief economist. “Perhaps it is simply the size of population that matters for football success in Europe. Other economic measures matter less.’’

Using stock market performance as an indicator of football success Goldman Sachs state that looking at market statistics since the last World Cup in Japan and South Korea four years ago, the favourites this time would be Ukraine, (Ukraine whose market is up 699%), but Goldmans' rates their chances at just 1.1%. Argentina whose stock market has gained 548% since the 2002 Cup is given a 7.4% chance of lifting the trophy come July 9. "Brazil is the undisputed favourite, with a 12 per cent probability of winning the Cup," concludes Goldmans' Themistoklis Fiotakis.

To calculate its betting tips, Goldmans took FIFA's world rankings and combined them with average odds by bookies to create an "initial probability". Then it penalised countries according to the toughness of their schedules. Australia comes level with Costa Rica at 0.6%. Australia's footballing fortunes parallel its terms of trade, according to Goldmans' Tim Toohey. "One can only assume that should commodity prices continue on their current trajectory, Australia will feature prominently at future World Cups," Mr Toohey wrote in the report. At 44th, Australia has one of the worst football rankings among competing countries yet one of the higher levels of gross national product.

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