A Basic Model to Account for Strength of Schedule

In this post I’ll introduce the basic framework of the model I’ve used with some success to bet NFL and college basketball games. There’s plenty of room to make it stronger, and my hope is that the readers of this site will contribute with ideas and man-hours to help strengthen it.

Since the model came about as a way of computing strength-of-schedule, it’s particularly good at comparing two teams who have few or no common opponents, where humans have difficulty.  For this reason, it has a lot of potential for betting on college football, tennis, and international soccer, where these types of matches arise frequently and make it hard for handicappers to accurately compare the teams playing.

A note on the math: I’m including a few equations here, but nothing fancy. I’ll try to explain in words any equations I write, so if it feels too much like school, you can probably ignore the math and still get the gist.  I plan on setting up static pages with more detailed mathematics so that you can refer to them if you decide you want to go deeper with the nerdy stuff.

The Basic Difficulty in Computing Strength-of-Schedule

For the sake of familiarity, let’s assume we’re talking about the NFL.  You’re considering a bet on the Houston Texans this weekend, Week 4.

We’d like to quantify just how good the Texans are and to do the same for their opponent, the Raiders, to decide on the likely outcome of the game.

So we look at who the Texans have played and how they did. We’ve seen the Texans beat the Colts and Redskins this year, by 10 points and 3 points, but they lost to the Cowboys, by 14.  Does this all make them good or bad?  We need to know more.

So what do we do next?  Of course, we have to look at how good their previous opponents, the Colts, Redskins, and Cowboys are.

But almost immediately, we run into the problem.

The Problem: If we try to evaluate these three teams the same way, by looking at who they’ve played and their margins of victory or defeat, we’re stuck.  They’ve each played Texans, the team we’re trying to evaluate in the first place!  So we have no obvious way of determining how good they are, leaving us with nothing to say about how good the Texans are.

We could look at the other games these teams have played, but the same problem arises in trying to evaluate their opponents.  As we get further into the season the web of games played becomes more complicated, and the problem becomes overwhelming.

A Best-Fit Solution

It turns out that with a little creativity and a computer, this problem can be solved.  We’ve seen that looking at each team one at a time, won’t work, so we have to set the problem up as a system of equations and write a program to solve it.  Let’s look at the most basic way to do this.

Recall that for each game a team has played, we’re using only two pieces of information: the strength of the opponent and the margin of victory or defeat.  (We’ll need to eventually incorporate more information, but this simplicity is what allows the model to be used for almost any sport.)

So how should we use that information for each game?  In the simplest setup, we can simply add the two numbers together.  Let $$x_i $$ be the strength of team $$i$$, and $$m_{i,j}$$ be the margin of team $$i$$’s game against team $$j$$.   (Right now, we’re assuming nobody has played anyone twice yet.)  So for Houston’s win over Indy, the contribution to Houston’s strength rating looks like

$$m_{hou,ind} + x_{ind} = 10 + x_{ind}$$.

Notice that the 10 is positive, since Houston won the game, and notice also that the larger the opponent’s strength rating and margin of victory, the larger the sum will be.

Now let’s say that a team’s strength rating will be the average of these terms for each game it has played.  Then in Houston’s case,

$$x_{hou} = \frac{1}{3}\big((m_{hou,ind} + x_{ind}) + (m_{hou,was} + x_{was}) + (m_{hou,dal} + x_{dal})\big)$$ or

$$x_{hou} = \frac{1}{3}\big((10+x_{ind})+(3+x_{was})+(-13+x_{dal})\big)$$.

Set up an equation like this for each team, and we’re left with a system of 32 equations in 32 unknowns.  This system won’t always have an exact solution, but we can use an optimization routine to find the set of team strength ratings that best fits the data.  (That is, the total error in the system is minimized.)

We need to make one final assumption in order to get values that have any meaning to us.  Notice that the units in the margin of victory numbers $$m_{i,j}$$ are simply “points.”  To be consistent, we want the units for the strength ratings to be “points” as well.  So if we require that the $$x_i$$’s sum to 0, we can interpret them as the amount of points per game by which each team is better or worse than average, after accounting for strength of schedule.  Make sense?

The Strength Ratings

Finally, we’re in a position to calculate the team strengths.  But first, please note: You should NOT bet based on these numbers!  The actual model I use for betting is far more complicated than this (you didn’t think beating the sportsbooks was that easy, did you?).  I’ve calculated these numbers using only the simple model I’ve explained above, in addition to a small homefield adjustment to each margin of victory.

At a glance, we see that Pittsburgh is the best (even without Roethlisberger, a scary thought), and that Carolina is the worst.  Sounds about right.

Now, if you were to bet based on these numbers, here’s how you’d do it. (Like I said, this wouldn’t help you much. But because the market is relatively efficient, you wouldn’t be any worse off this way than you’d be by betting randomly.)

Let’s say you actually wanted to bet that Houston-Oakland game.  Look at the chart and see that Houston is .34 points worse than average.  Oakland is about 5.25 points worse than average.  Subtracting, we find that Houston is just less than 5 points better than Oakland.  But since Oakland is home, add 2.5 points to the difference, and our model predicts that Houston should win by 2-3 points.  Since the spread has Houston laying 4 points, we’d take Oakland with the points.  Simple, right?  (Actually, with the line that close to our projected outcome, this probably wouldn’t be a bet at all.)

But again, this is an overly-simplified model.  We’re failing to account for a lot of stuff here, including mean reversion, any injuries that make the past data a poor representation of the teams that will be on the field on Sunday, and more.

Here are a few ideas I have for improving the model, some of which I’ve already implemented and others which I haven’t.  I’m listing them here in hopes that they’ll get the wheels turning in your head to come up with more ideas about how we might make this better.

• Using a “forgetting factor” to weight recent games more strongly than games from several weeks ago
• Using thresholding or tapering to minimize the impact of blowouts
• Our additive model for a team’s strength can be interpreted as “average margin of victory plus average opponent strength.”  A multiplicative model would better capture interaction between teams
• Rather than using margin of victory, use yards, turnovers, and other data that is less noisy (luck impacts the final score more than the final yard and turnover totals).  Convert this back to points after it is output from the model, using some form of regression, to make bets
• Find a way to efficiently account for injuries by determining how many points an injured or returning player is worth
• Use a pattern-recognition algorithm to determine what a favorable bet “looks like” in terms of the spread and team strength ratings
• Filter data through a neural network or other filter to determine best way to combine team strengths and current week number to determine expected outcome.  Use a model which produces offensive and defensive ratings to capture interactions and use current week number to account for mean reversion

Offense/Defense Model Ratings

The final point above mentions an offensive/defensive model, one which uses points scored and points allowed rather than simply margin of victory.  In fact, it’s very easy to expand the basic model in this way, with the nice result that for each team, the offensive and defensive ratings sum to the total ratings from above.

There’s not much we can do with this new information, since the model is still additive (once we add them, we get the same implied bets as in the simpler model).  Still, this is the model we want to build upon, so I’ll do my best to run this version of the system and publish the results by this weekend.

Alright, that’s plenty for today.  This math-on-a-blog stuff is brand new to me, so I’m to figure out the right balance between what’s interesting and necessary and what will put you to sleep.  So let me know what you think.  We could certainly go much deeper into the math with some matrix theory, even for the simple model in this post, but I’m doing my best right now to keep my inner nerd at bay.

I’m going to try to start posting more frequently here, maybe two or three times a week.  So check back soon and subscribe to get post updates automatically.