The Denver Broncos are the value favorites to win Super Bowl XLVIII on Feb. 2.
The current betting spread has the Broncos over the Seattle Seahawks by 2 points. But based on an “NFL Alphas” analysis by Matthew Robinson, portfolio analyst at Analytic Investors, the Broncos will beat the spread — and beat the Seahawks by at least a field goal.
Each year since 2004, Mr. Robinson measures each NFL team based on excess performance, defined by him as “the return on investment that could have been earned by placing a systematic wager on an NFL team to win each of its games outright in the regular season.” This year, the Broncos' alpha was 4.6% vs. the Seahawks' 13.7%.
“We have found evidence that lower-alpha teams in the regular season tend to be undervalued throughout the postseason,” he said.
Among the 32 NFL teams, the Indianapolis Colts had the highest alpha with 51.8%. It also led the league with 59.4% last year. Only Indianapolis and the New York Jets, at 39.4%, had alphas better than the S&P 500's 32.4% total return in 2013. Investing in any other team would have yielded a return lower than the S&P 500, although the Carolina Panthers was close at 32%.
Last year, Mr. Robinson selected the Baltimore Ravens to beat the spread in Super Bowl XLVII. The San Francisco 49ers had been favored by 4½ points, but the Ravens won 34-31. His only outright loss was in the previous Super Bowl in 2012, when the New York Giants beat Mr. Robinson's pick, the New England Patriots, 21-17. In three of the years, the undervalued team lost the game but still beat the spread.
Mr. Robinson said his personal choice to win the Super Bowl doesn't always align with the value choice. “I didn't like the Ravens pick last year,” he said. “But generally, they line up.”