Just a game? The impact of Super Bowl success on local company valuations

This paper examines the impact of success in a major sporting event on the valuation of local companies. The study documents the link between highly local economy and stock market performance associated with wins and losses of Super Bowl games. I look at Super Bowl outcomes and compare the stock market performance of companies whose corporate headquarters are in the winning city with those in the losing city. The empirical analysis adopts the difference-in-difference (DD) approach and uses the near random game result as a source of exogenous variation to explain the observed differences in local company valuation between MSAs represented by the teams appearing in the Super Bowl. More specifically, this paper exploits domestic common stocks traded on the NYSE, AMEX, and NASDAQ over the period from 1969 to 2014 and innovatively assesses the local economic response with MSA-level aggregated total market value of local public companies during a short estimation window in each Super Bowl game. This research complements the existing literature which discusses the effect of mega sporting events from a variety of perspectives, such as domestic violence, crime, stock market sensitivity, abnormal market return behavior, myocardial infarction mortality and etc. Controlling for time and regional fixed effects as well as time trend, the regression results suggest a positive and significant economic impact of Super Bowl wins, possibly through a spillover effect – a general increase in optimism among local investors. There is also empirical evidence showing a sharp “jump” in the market outcome of winning MSAs. Further analysis of the Super Bowl effect across industries shows more striking effects in sectors like construction, personal services and business services.