January 31, 2013 12:00 AM

NFL Alphas: Ravens is value pick to beat Super Bowl spread

Joseph Azelby is a managing director at J.P. Morgan Asset Management, where he is head of the firm's Global Real Assets Group. He joined J.P. Morgan in 1986 after playing as a linebacker for the Buffalo Bills.

Greg Baty is a vice president at private equity consulting firm Hamilton Lane Advisors. He had an eight year career as a tight end playing for the Patriots, Rams and Dolphins between 1986 and 1994.

Dave Brown is a managing director in Greenhill & Co.'s private equity fund placement group. He spent nine years in the NFL playing quarterback for the Giants and Cardinals from 1992 to 2001.

After ending a six year career in the NFL as a safety with the Bears, Patrick Eilers stayed in Chicago where he joined private equity firm Madison Dearborn Partners. He also played for the Redskins and Vikings.

John Hannah built a Hall of Fame career as a left guard for the New England Patriots. In 1981, Sports Illustrated magazine labeled him the best offensive lineman of all time. After he retired in 1986 after the Super Bowl, Mr. Hannah decided to open his own investment consulting business, The Hannah Group. The firm managed $3 billion in institutional money before selling to Advest Inc. in 1996. In 2001, Mr. Hannah told P&I he regretted selling the business.

Eugene Profit spent four years playing cornerback for the Patriots and Redskins before retiring in 1990 to do what he calls his "real life's work." Mr. Profit founded his own asset management firm, Profit Investment Management LLC, Silver Springs, Md. The firm specializes in large-cap value equities and has mostly institutional clients.

If you're picking Sunday's Super Bowl winner based on which team is more undervalued, go with the Baltimore Ravens.

So says Matthew Robinson, analyst at quant manager Analytic Investors and author of an annual NFL Alphas study, which reflects the performance of National Football League teams relative to their expected value over the 2012-2013 season.

For this year's Super Bowl, Mr. Robinson's analysis favors the Ravens, currently four-point underdogs vs. the San Francisco 49ers, to beat the spread. The 49ers' alpha of 23.1% is likely leading bettors to overestimate their probability of victory vs. the 2.3% alpha of the Ravens.

The analysis doesn't mean the Ravens will be the outright winner of the Super Bowl, but that bettors are overestimating the 49ers' probability of victory.

“Despite an admittedly uninspiring regular season, the Baltimore Ravens have had an inspirational postseason run and are the epitome of our season-reversal strategy,” Mr. Robinson said in a report on the study. “Do the 49ers have a weapon strong enough to stand up against the swan song of Ray Lewis and the Ravens? We think not.”

This analysis has correctly picked the undervalued team to beat the spread eight out of the last nine seasons, including a stretch of seven in a row before the New York Giants beat Mr. Robinson's pick, the New England Patriots, 21-17 in last year's Super Bowl.

So far this postseason, Mr. Robinson's analysis has correctly predicted which team was undervalued in seven of 10 playoff games.

The annual NFL Alphas study looks to determine which NFL teams provided the best return on investment. This year, the highest alpha belonged to the Indianapolis Colts, leading all 32 teams at 59.2%. Last season, the Colts had the lowest alpha, at -57.4%.

Along with Indianapolis, eight other NFL teams had alphas better than the S&P 500 total return of 16% in 2012: Atlanta, Cincinnati, Denver, Minnesota, St. Louis, San Francisco, Seattle and Washington.