An economic explanation of Bayern’s failure

Football and (the limits of) Economics (Photo by Anton via Wikipedia)

Yesterday’s Champions League final has not only been very embarrassing for Bayern Munich. When Bastian Schweinsteiger missed his penalty, I also met my Waterloo.

I had predicted earlier that Bayern would beat Chelsea because they were structurally the stronger team. I based my forecast on the fact that compared to Chelsea, the value of the Bayern squad is 30 percent higher.

My reckless claim was inspired by the German economic think tank DIW. Using the same method, they successfully predicted the winner of the Euro 2008 as well as the World Cups in 2006 and 2010.

Well, Saturday’s game showed that the economic approach to football has its limits.

However, the beauty of economics is its versatility. The dismal science not only explains why Bayern should have won yesterday. At the same time, the discipline is also able to point out why the team actually lost.

The Economics of Success – Why Bayern Munich will beat Chelsea

I’m neither a supporter of Bayern Munich nor of Chelsea FC. In Germany, I fiercely support the team from the city I was born. Here in England I support the one that plays in the district where I live.

Hence, with regard to this years Champions League final, I’m perfectly neutral.

However, I’m also an economist. And based on my professional background I’m rather confident that Bayern Munich will beat Chelsea this weekend.

This forecast is not based on the fact that Bayern will play on its home turf. It is rationally derived from purely economic arguments: Judged by the current market value of the individual playes, Bayern will have the stronger and more powerful squad on the ground.