How the NFL Moves the Stock Market

How the NFL Moves the Stock Market

Official Scott Halverson signals a made field goal during a game between the San Francisco 49ers and the Philadelphia Eagles at Levi's Stadium in Santa Clara, California.

Why you should care

Because over an entire season you can make some real money. 

For years it has been a widely held superstition among sports fans that the outcome of key games has an effect on the stock market. With the Super Bowl, it’s called the halo effect — a solid 80 percent of the time, the Dow declines for a year after the AFC team wins, and goes up, also for a year, when the NFC team wins. But, hey, investors: The pundits may be telling it all wrong. Turns out there’s a curious link between the corporate name on a stadium — think Mercedes-Benz Superdome in New Orleans or M&T Bank Stadium in Baltimore — and a winning home team.

New research shows that stock values of a stadium sponsor go up or down depending on who wins high-profile NFL games.

There is a “strong shared identity” between the team and the stadium sponsor, says lead author and University of Connecticut finance professor Assaf Eisdorfer. The study analyzed data from 3,399 games between 1997 and 2013 and found that, for the trading week following Monday-night and playoff matches, the home team stadium sponsor earned a stock return that was on average between 1 and 5 percent higher or lower depending on the game’s outcome. The findings also hold true for games with unexpected outcomes, which researchers determined based on pregame betting spreads. Why just those certain contests? They’re shown on national TV during prime time (which means more eyeballs), they get more publicity afterward (SportsCenter reruns, anyone?) and, in the case of the playoffs, one game singularly determines the team’s fate.

Then there’s the sentimental side of it: Fans associate the stadium sponsor with the team, and that bias directs their investment decisions. Or as Eric Simons, author of The Secret Lives of Sports Fans, points out, winning is often associated with testosterone surges, and testosterone is linked to financial risk-taking. (No one knows, though, how long the testosterone spike lasts.) But warm fuzzies and neuroses aren’t the only explanation for the swings. Just think about it: A winning team means more dramatic aerial shots of FedEx Field, and Chris Berman announcing, “Brought to you by AT&T,” before every commercial break. Because the NFL season is so short — 16 games compared with the MLB’s 162 — each contest carries extra weight; and if a team doesn’t make it to the playoffs, that’s less exposure for the stadium sponsor, which on average shells out $120 million for 17 years.

Other sports economists say more research is necessary — specifically, replications using different models — to prove a stronger link. Unlike in soccer, the sponsors are tied to stadiums and not teams; given that, Loyola University economics professor Stephen Walters says it’s “a bit of a stretch” to conclude that viewers link a company’s fortunes to a team’s win or loss at a venue it has sponsored. And don’t forget that the impact of one week’s home win is likely to be short-lived.

Still, the number of professional teams playing in corporate-named arenas has shot up over the past two decades. Publicly traded companies now sponsor 21 out of the NFL’s 32 squads. The question is: How will the market respond to the next marketing innovation?

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