Power ratings are numerical strength estimates for each team that allow you to generate your own point spread before seeing the market line. The comparison between your number and the market line reveals potential value.
Basic power rating process: 1. Start with a base number for each team (often 0 = league average) 2. Adjust after each game based on margin of victory, accounting for opponent strength 3. Add situational factors: home field, rest, travel, injuries
Power rating spreads: Your spread = Home Team Rating − Away Team Rating + Home Field Advantage. If your number is Kansas City -7 but the book opens at -5, you have a potential value bet on Kansas City.
Advanced ratings: Elo-style systems (used in chess and adapted for sports) update ratings after every game using a probability-based update formula. They're self-correcting over time and handle schedule strength automatically.
Model vs. power ratings: A pure power rating model uses margin of victory as the outcome variable, regressed against opponent quality. Machine learning models can incorporate play-by-play features (yards per play, turnover luck, air yards) that reduce noise in the margin signal.
Limitations: Power ratings assume teams are stable. Injuries, scheme changes, and roster turnover break the stationarity assumption. Real-time updates for significant news are essential.