The Super Bowl Rule: Will Chiefs’ win mean US stocks turn choppy?

Gamblers who sided with the two-point favourite Philadelphia will have lost their money as the Eagles lost the fifty-seventh Super Bowl to the Kansas City Chiefs and their quarterback, Patrick Mahomes, is now a two-time winner and Most Valuable Player in the NFL’s biggest game. But it’s not just punters who may be a little disappointed, at least if the old ‘Super Bowl’ rule has anything to do with it, because Kansas City hails from the American Football Conference, or AFC.

As a result of the merger between two rival leagues in the 1960s, the National Football League is split into two conferences, National (NFC) and American (AFC), whose winners meet in the Super Bowl to decide the overall champion.

The US stock market, as benchmarked by the S&P 500 index, has, on average, performed better in years when the team from the NFC has won and less well when the team from the AFC has claimed the Super Bowl and the players have won their championship rings.

Source: NFL, Refinitiv data. First Super Bowl played in January 1967. Average returns based on calendar year of each game

This effect has become a little less pronounced over time, but it is noticeable nonetheless. Tampa Bay’s 31-9 win over Kansas City in 2021 looked to reaffirm the trend but the shocking showing of the S&P 500 after last year’s win by the Los Angeles Rams at the expense of the AFC’s Cincinnati Bengals took a bit of the shine off it once more.

Source: NFL, Refinitiv data. First Super Bowl played in January 1967. Average returns based on calendar year of each game

After the early dominance of the National Football League’s (now NFC’s) Green Bay Packers, the 1970s saw the AFC’s Miami Dolphins, Pittsburgh Steelers and Oakland Raiders rule the roost, with only the NFC’s Dallas Cowboys getting in the way. Yet from an economic perspective, those teams ruled the field after an oil price shock, galloping inflation and soaring interest rates made the 1970s difficult years for investors.

Come the 1980s, the Paul Volcker-led Federal Reserve had begun to tame inflation and cut interest rates, while Reaganomics were helping to drag America out of its post-Vietnam funk. As it happened, the NFC dominated that decade, as the team now known as the Washington Commanders, the New York Giants and San Francisco 49ers bagged multiple Vince Lombardi Trophies, thanks in no small part to their remarkable coaches, Joe Gibbs, Bill Parcells and Bill Walsh (and Andy Reid, Kansas City’s coach, hails from the ‘coaching tree’ of Super Bowl winners who worked directly under the 49ers’ Walsh or coaches who were in turn tutored and mentored by them).

Dallas and Green Bay established fresh dynasties in the 1990s, when benign inflation, low interest rates, globalisation, the Greenspan put and the rise of technology stocks gave US equities a further boost – although the AFC got its slice of the action as the Denver Broncos, under quarterback John Elway, ended a rotten run of three Super Bowl defeats to win back-to-back titles as the technology bubble inflated in 1998 and 1999.

AFC teams, in the form of the Baltimore Ravens and the New England Patriots (for Tom Brady’s first win), then copped the downdraft as the bubble burst and the S&P 500 plunged in 2001 and 2002, although it was the NFC’s New York Giants who were kings of the NFL hill when the Great Financial Crisis struck in 2008.

Since then, the Patriots, Broncos and Steelers have returned to the summit, giving the AFC a chance to shine as US equities have forged a long bull run and close up the historic stock market performance gap between the two conferences – but that gap is still large enough to keep watchers of the Super Bowl rule interested.

Source: NFL, Refinitiv data. *Packers’ wins as part of the pre-1967 National Football League classified as National Football Conference (NFC). **Jets’ and Chiefs’ wins as part of the pre-1967 American Football League (AFL) classified as American Football Conference (AFC)

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