Friday, May 28, 2010

LMG Alternative World Cup Football 2010: Day 3 The first 2 matches in Group C


Today the first two matches in group C of our Alternative football World Cup 2010. Will the mixture of economics, politics and football explain success in the latter? This at first ludicrous and funny linkage is something that is taken quite serious by both academic scholars and professionals, albeit that the investigated linkage does normally go the other way round. Example: researchers from Dutch bank ING published some research this yesterday indicating that a World Championship Title of the Netherlands would translate into 0.25 percent more economic growth.

But is the economic growth the result of the World Title and the performance of the football team, or is it possible that things will run the other way round? I.e., are teams from countries that do a better job economically also teams that perform better. In our test we focus on the second type of linkage. It is not that impossible that the causality will run this way. After all: isn't it true that teams from Emerging countries started to become more important and successful in recent years?

Today the first two matches in group C: England versus the USA and Algeria versus Slovenia. 

Group C; Match 1 - ENG vs USA 2-1
Based on our draw, the following factors will decide on the fate of England and the USA in their first round game in group C: 1) Player Quality; 2) Communications; 3) Transportation and 4) World Politics. Just four factors, with the football-related factor 'Player Quality' counting double.

When we look at the two goal keepers, David James of England and Tim Howard of the USA there isn't much difference. We call it a draw. James is goal keeper at Portsmouth in the English Premier League and Howard at Everton, also English Premier League. England's defense is clearly dominant with three players that are definitely international A-label: John Terry (Chelsea), Rio Ferdinand (ManUnited) and Ashley Cole (Chelsea). And the other candidates for the team are also high level players. The US defenders are either less well known or playing in teams of lesser quality. Therefore after Defense the sub-score is 1-0 for ENG. Let's move on the midfield: ENG is again introducing a strong line-up with starts like David Beckham (Milan), Frank Lampard (Chelsea) and Steven Gerrard (Liverpool) in the squad and excellent replacements along the side. The US line up is one filled with guys that play in Europe, but none of a similar level. Therefore 2-0 for ENG. And with an attacking lineup that includes Wayne Rooney (ManUnited) it should be no surprise that we award ENG the win on player quality. 

England - USA
England - now under PM David Cameron (what's in a name) - won 

ENG-USA 2-0 (because of the double counting of this factor).

Now let's move onward to Communications. The total number of mobile and fixed phone lines in the UK is 108.8 million. With a total population of 61.3 million this translates to a ratio of 1.77. In the USA the total number of phones is 420 million. With a total population of 310.2 million this translates to 1.35. Quite a surprise if you ask me. Upfront we would not expect the UK to win this sub-factor. Next, radio stations. The US has 4,789 AM stations and 8,961 FM stations. Impressive numbers. The UK hosts 206 AM and 696 FM stations. Therefore a clear equalizer for the US. Next, TV stations: the UK hosts 940 tv broadcast stations tons of them local or regional with of course the BBC as its internationally renowned flagship organization.  The US has 2,218 stations. Correcting for the number of people living in the country, we get a ratio of 15.3 (stations / population in millions) for the UK and 7.2 for the US. Therefore a 2-1 factor lead for the UK. Then Internet connections: the US dominates the internet with 383 million hosts and 231 million connected people. The UK reaches 9.3 million hosts and 48.8 million subscribers. A good score but nothing like the US. Therefore: Communications a draw.

Result: ENG - USA remains a 2-0 lead for the Brits.

World Politics is of course an easy win for the US, still the most powerful country in the world, thereby reducing the English lead to 2-1.

The Transportation score is therefore decisive. the UK has 307 airports with paved runways with 9 being capable of handling major aircraft. The US has 5,174 with 190 major ones. Even when correcting for size of the country and/or population this provides the US with a clear win on this sub-factor. So it can still get exciting. Will they be able to achieve a surprising draw? Next, Ports. The US has 10 major ports and so does the UK. For a country of its size, the US is rather strongly dependent on other forms of transportation. Correcting for size of the country and population the Ports score implies an equalizer for this factor. The UK has 16,454 km railway versus the US 226,427. Based on a comparison of populations that is a clear win for the US, but what about a ratio versus country size? Total surface of  the US is 9.8 million square km. The size of the UK is 243,610 square km.  So it is not decided, because the ratio relative to size of the country is to the advantage of the UK. This provides the UK with a lead on this factor.

The US will now have to win on the last two factors Waterways and Roads to equalize the match. The UK has total waterways of 3,200 sq km. The US: 41,009 sq km. Again, based on population a clear victory for the US but when comparing the size of the countries it is not so clear.
With 6.5 million km of motorway the US is the world's number one. The UK has 398,000 km. Again the issue is, will we compare based on number of people or size of the country.

All in all we did not feel comfortable enough with the US's dominance to give them the victory on this factor.

Therefore, end result ENG 2 USA 1

Group C; Match 2 ALG vs SVN 1-4

The second match is between two representatives of Emerging Markets: Algeria (ALG) and Slovenia (SVN). This match will also be decided on one (double-counting) football related factor and 3 non-football factors. The football factor is again - just like in Match 1 of this group - Player Quality. The other three factors are: a) Military/Defense b) Finance and c) Communications.

Let's start with Player Quality. Slovenia has the better goalkeeper. The two Algerian candidates are maybe talented but still local stars. Handanovic, the Slovenian goal keeper, is an experienced man, defending the goal of Italian Serie A team Udinese. Algeria doesn't have a bad defense line up with four legionnaires: Yahia (Vfl Bochum, GER), Belhadi (Portsmouth, ENG), Bougherra (Glasgow Rangers, SCO) and Halliche (Nacional Madeira, POR). But their opponents post a legionnaire group of similar quality playing in France (Grenoble), Germany (Cologne), Belgium (Gent), Italy (Chievo Verona) and a possible alternative playing in Russia (FC Moscow). Intermediate score remains 1-0 for Slovenia. Then the midfield players. Again no real big starts in the Algerian squad, but legionnaires from Portsmouth, Lorient (FRA), Strassbourg (FRA) Wolfsburg (GER), Lazio (ITA) and Blackpool (ENG, just promoted to the Premier League). Again, the Slovenians respond with a comparable group of non-stars playing for Wisla Krakow (POL), West Bromwich Albion (ENG), Larissa (GRE), Maccabi Tel-Aviv (ISR), Ioannina (GRE) and Nacional Madeira (Pecnik, who is therefore team mate of Algerian player Halliche). Again undecided. Finally, the attack. Unless Algeria has the better strikers, the football factor goes to Slovenia. The Slovenians have strong players but no real stars. All of them are playing in European sub-top teams. Same thing for Algeria. Therefore a tiny little victory for SVN based on the more experienced goal keeper.

ALG - SVN 0-2.

ALG spends 3.3 percent of GDP annually on defense making it the nr 38 spender in the world. SVN spends only 1.7 percent of GDP. GDP of Slovenia has a size of USD 50.1 billion versus USD 136.4 bn for Algeria. Therefore a clear win for ALG as the stronger defense force.

ALG - SVN 1-2

Now Finance. We look at three factors, namely the Size of the Stock Market; Performance of the Stock Market over the last 10 years and last but not least the Performance of the Currency vis-a-vis the US Dollar over the last 10 years. In terms of stock market size and opportunities there is a win for Slovenia. Its market is already part of the MSCI Frontier selection, unlike Algeria. In terms of performance we do therefore get a not-available for ALG. The stock market of SVN was not in existence during the full 10 year period and didn't do that well during the last five years (2.2% annually). Therefore undecided on this factor. Let's now analyze the two currencies vis-a-vis the US Dollar. Ten years ago the exchange rate of the Algerian Dinar vis a vis the US Dollar was 0.01359 to 1. The Slovenian Tolar was at 0.004423 to 1. On May 26, 2010 the Algerian Dinar quoted 0.01373. A reasonably stable performance versus the US greenback for Algeria. The Tolar was replaced by Euro. At the beginning of the 10 year period the Euro did 0.9123 versus the USD. At the end of the period it was valued at 1.2261 In other words: during the 10 year period the Euro improved substantially whereas the Algerian Dinar stayed flat. Combined this leads to a Finance win for Slovenia.

Slovenia: since 2007 part of the Euro community
Not doing bad and too strong for Algeria in our Alternative World Cup

Last factor to analyze now is Communications. It is not decisive for victory anymore, because of the 1-3 lead for Slovenia. Algeria has 35.2 million phone lines for a total population of 34.6 million, i.e. a ratio just slightly above 1. In Slovenia there are 3.1 million phone lines for 2 million people. Therefore: first sub-factor goes to Slovenia. When we look at the number of radio stations, Slovenia has 10 AM and 230 FM stations. Algeria is at 25 AM and only 1 FM station, with far less freedom as well. This means that the second sub-factor is going to Slovenia as well. When we look at TV stations Algeria has 46 stations and Slovenia 31. Taking into account the difference in country size and number of people we cannot really consider this a win for Algeria. In terms of Internet density Slovenia has 89,000 hosts and 1.1 million users. Algeria is at 510 hosts and 4.1 million users. Taking into account that the country has 15 times more people we decided to give Slovenia another victory on Communications as well.

End Result: Algeria 1 Slovenia 4

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