How NFL Game Scores Affect Stock Market Returns

The effect of National Football League game outcomes extends well beyond the locker room — it ripples all the way to Wall Street, new research shows.

Home game scores affect the stock returns of companies that sponsor NFL team stadiums, according to an analysis that will be published in the journal Critical Finance Review. This relationship is direct, meaning wins are associated with higher sponsor returns and losses associated with lower returns.

The study is based on data from about 3,400 games, 21 teams and 26 sponsoring companies from 1997 through 2013. The research was conducted by Assaf Eisdorfer, who teaches finance at the University of Connecticut, and Elizabeth Kohl, who teaches accounting at the University of Cincinnati.

They chose to focus on the NFL partly because 21 home stadiums out of 32 teams are sponsored by publicly traded companies, according to a news release from the University of Cincinnati.

The researchers’ findings include:

• On the next stock-market trading day following a home team win in a televised Monday night game, the team’s stadium sponsor earns a stock return that averages 0.51 percent higher than if the team had lost.
• After postseason games, the losing teams’ sponsors earn a stock return that averages 0.82 percent lower than that of the winning teams’ sponsors.
• Similarly, after games with unexpected outcomes (as determined by pregame betting spreads and past performances), the home team sponsor earns a stock return that varies by 0.81 percent, depending on whether the home team wins or loses.

The researchers attribute their findings at least partly to what they call sentimental investing.

Kohl explains:

“A dramatic view of the stadium and an announcement of the stadium’s name occurs after almost every commercial break during a televised game. So then there’s this sentiment — I associate the sponsoring company with the stadium and with the team — and we find that what happens on the field affects the financial market value of the company. We’re not seeing these abnormal returns after away games, which supports the position that there’s a sentiment component to the market reaction.”

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