Wednesday, September 7, 2016

NFL Market Rankings are Live

NFL Vegas rankings are live and will update daily for the remainder of the season. These rankings are an attempt to reverse engineer what the market "thinks". Markets tend to be efficient, and betting markets are no exception. It is difficult to beat the accuracy of the Vegas point spread over any extended period of time. Based on my own research, these Vegas rankings outperform a broad cross-section of NFL power rankings when it comes to predicting future wins.

The current version of the rankings reflect both the latest Week 1 lines and the opening lines for Week 2. Because there are not enough connections between teams with just two weeks of point spreads, I use the week 1-16 point spreads published by CG Technology (formerly Cantor Gaming) earlier this year to fill in the gaps. But once we have week 3 opening lines, the teams should all be connected and we can dispense with the outdated CG lines.

Because we have limited market data at this point, this is when the rankings tend to be the most volatile. With that in mind, your top 5 NFL teams as of today are (in order): The Steelers, Seahawks, Panthers, Bengals and Cardinals. The Packers just missed the top 5, which I find puzzling. At least one sportsbook has them as the current Super Bowl favorite (+750). For that reason, I am somewhat skeptical of the rankings at this point, and will feel much better about them once we can get the week 3 opening lines (they should come out around the middle of next week).

The Tom Brady Kludge

I try to avoid making any manual adjustments to any of my models. I've found that once you start tweaking, it's hard to know when to stop, and you get questionable return for you time investment. But I am making an exception for Tom Brady's four game suspension for two reasons:
  1. Tom Brady's presence has a significant impact on the point spread. Based on my own research, I estimate that having Tom Brady in the game will improve the point spread 5 points in New England's favor.
  2. The timing of Brady's return to the lineup is known with near certainty.
The rankings you see in the current version of the rankings reflect the Patriots' strength without Tom Brady. However, once week 4 is finished, I will "flip the switch" and the rankings should shift up by about 5 points for New England. In other words, the Patriots' lines from weeks 1 through 4 will be adjusted by 5 points before being fed into my model. The Brady-less Patriots are currently ranked 11th, with a GPF (Generic Points Favored) of 0.9. But with Brady back in the lineup, the Pats should surge to a GPF of 5.9, which would put them right in the mix with the Seahawks and Steelers as one of the top teams in the league.

The projections featured in the ranking table - Projected Seed, Projected Wins (more on that below), and Future Strength of Schedule - incorporate this adjustment as well, treating New England as a better team (by five points) for weeks 5 through 17.

New feature - Projected Wins

For a couple years now, the rankings have been accompanied by a detailed playoff seed projection, summarized in a nice, compact bar chart that looks like this:


The bars represent the team's playoff seed probability (Green Bay, in this case), with seed 16 starting at the left and counting down to the top seed on the right. The top 6 seeds make the playoffs, and are represented by the blue bars. The projection itself is based on simulating the remainder of the season 10,000 times, followed by an exhaustive (and exhausting) application of the the NFL's byzantine tie-breaking procedures. I even code the coin flip, just in case.

There is now a toggle at the top of the rankings page with two choices: "Seed" or "Wins". If you select the "Wins" option, you get a new bar chart that looks like this:


Each bar represents the probability of a particular season win total, with zero wins on the far left and 16 wins on the far right (mouse over the chart for the actual numbers). The number to the left of the bar chart is the interpolated median wins for that team. These could be compared to the season over/under wins that most sportsbooks publish in advance of the season.

In addition to the daily NFL rankings, both the Turnover Index and Playoff Implications will be returning this season. Check back around week 4 for Turnover Index picks. Playoff Implications for Week 1 should show up sometime this weekend.

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