When NFL Teams Lose, Do Their Sponsors Take a Hit?

Wesley Gray  |

The NFL is Back! Unfortunately, the Eagles may need a new kicker…and now we have to listen to Wes talk trash about the Cowboys victory around the office. Tragic!

In the spirit of the new NFL season, I figured it was a good time to highlight a newer paper titled “Corporate Sport Sponsorship and Stock Returns: Evidence from the NFL” written by Assaf Eisdorfer and Elizabeth Kohl. Versions of the paper can be found here and here.

Here is the abstract:

Most of the home stadiums/arenas of major sports teams in the US are sponsored by large publicly traded companies. Using NFL data, we find that stock returns to the sponsoring firms are affected by the outcomes of games played in their stadiums. For example, the mean difference between next-day abnormal returns after a win and after a loss of the home team is 50 basis points for Monday night games and 82 basis points for post-season elimination games. Evidence suggests that this effect is partially driven by investor sentiment. The next-day abnormal return is further carried to subsequent days, providing profitable trading strategies."

Here is an interesting table from the paper:

The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained. Indexes are unmanaged, do not reflect management or trading fees, and one cannot invest directly in an index. Additional information regarding the construction of these results is available upon request.

Is This a Tradeable Strategy?

Possibly, but I would not want to bet my own capital based on the outcome of a previous football game.

However, I am happy football is back!

Written by Alpha Architect Managing Member Jack Vogel. Here is the original post from Alpha Architect. For more articles from Wesley R. Gray, visit his blog at Alpha Architect.  

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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