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What Economists Can Teach World Cup Coaches
Does economic theory have anything to offer a coach in the World
Cup? And if it did, would Diego Maradona have cared?
The answer to the second question is probably no. But, in a
paper issued by the Ifo Institute for Economic Research in
Munich, Alexander Ebertz and Marc Gronwald argue that the
notion of evolutionary finance may help explain why certain
styles of soccer seem indomitable for a time, only to eventually be
usurped by a new strategy.
As described by the authors, evolutionary finance regards
financial markets as a competition not so much among individuals
as among strategies. In Darwinian fashion, strategies constantly
adapt and mutate, and no strategy can be assured of long-term
success. Rather, an investment strategy is only superior until
another evolves that is better. Successful strategies must always be
seen in light of competing strategies.
So it is with soccer, Mr. Ebertz and Mr. Gronwald argue. They
note that various soccer strategies have been hailed as modern and
superior, only to be supplanted by new methods of play.
Currently, Mr. Ebertz and Mr. Gronwald write, commentators
seem to believe that the most effective style is that practiced by
top clubs like Munich Bayern, FC Barcelona and the Spanish
national team, which on Wednesday will meet Germany in South
Africa.
This style calls for maximum ball possession; short, accurate
passing; and constant probing and exploitation of any crack in the
opponents defense.
But the authors note that the history of soccer has seen numerous
strategies come and go, from extreme offensive play with 9
strikers (out of 11 players on a team) to extreme defensive play
practiced at Inter Milan in the 1960s under coach Helenio Herrera
who, it happens, was the same nationality as Mr. Maradona,
whose strategy as the Argentine coach at the World Cup
competition in South Africa this year was all about offense.
Sports commentators, as well as financial-market commentators,
may leave the impression that one strategy is superior to others.
But time and again seemingly invincible teams have been undone
by new strategies just as Mr. Maradonas Argentines were
defeated Saturday by the German strategy of tight defense
combined with explosive attacks.
In addition, there is another variable: a teams ability to execute a

given strategy. This is where economics comes back into play.

Bayern Munich and FC Barcelona consistently rank among
Europes best teams because they are among the richest clubs and
can afford to hire players skillful enough to execute the strategy
the coach has chosen.
The conclusion of Mr. Ebertz and Mr. Gronwald is that it would
be a mistake to expect a team (or an investment fund) to be
successful simply because it pursues a strategy that has been
effective in the recent past.
It has ever been so, that there have been extremely successful
ways of playing, but that there have also always been new tactical
developments, they write. Therefore and this will be bad news
for bettors there is no way to say which strategy will
succeed.
Mr. Ebertz and Mr. Gronwald quote Otto Rehhagel, the German
coach of the Greek team that won the European championship in
2004, despite critics who said the style of play was old-fashioned.
The modern team is the one that wins, Mr. Rehhagel said.