NFL Playoffs and the Market

Post by: Valley Financial Group

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No one really knows how they pulled it off, but our Philadelphia Eagles have made it back into the playoffs with a chance to defend their Super Bowl LII title. Just one month ago, I don't think a single person in Philadelphia would have believed you if you told them the Eagles would run the table in the last three weeks and that Nick Foles would lead the Eagles back into the dance, but here we are.

The NFL playoffs are an amazing phenomenon, an entire month where 12 cities and the entire sports world collectively holds their breath during the first month and a half of the New Year, waiting for a new champion to be crowned. Not only do these games have an effect on us as fans, they may also have effects on the market. For example, if an AFC team were to bring home the Lombardi trophy, 80% of the time the Dow will go down in the following year, with the opposite being true for NFC teams. Also, teams with a corporate sponsored stadium, such as the New Orleans Saints who play in the Mercedes-Benz SuperDome, can affect their sponsors stock in the range of 1-5% up or down following the result of a big game at home, categorized as a prime time or playoff game, according to a study by University of Connecticut finance professor Assaf Eisdorfer, who compiled data from 3,399 games over the course of 16 NFL seasons.

So what causes these changes? Are people really making important investment decisions based on the outcome of their home team's playoff match ups? I certainly hope not, and I tend to think that we may have a classic case of correlation rather than causation of our hands, but who knows? Sixteen years of data is no high school science project, and it’s hard to argue with the Dow Jones rising or diving with the champion's conference four out of five years. Whatever side you take, I know I'll definitely be doing my research on this year's playoff team's corporate sponsors, you know, just in case.

Happy New Year everyone, and Go Birds!

Disclosure:

This material should not be relied upon by the readers as research or investment advice nor should it be construed as a recommendation to hold, purchase or sell a security.