CME to Launch First Sports Index Futures for $650B Market

CME Group plans to list futures and options tied to Futuresports performance indexes, creating exchange-traded contracts that let companies manage financial exposure linked to sports. The first cash-settled monthly and quarterly contracts are expected to trade this summer, subject to regulatory review.

CME announced a long-term partnership with Futuresports on July 29. Futuresports converts official league statistics into performance indexes that can be used as benchmarks for contracts. CME and Futuresports said the products are intended for broadcasters, sponsors, insurers, stadium operators, apparel firms and other businesses whose revenue can change with team performance, player availability, attendance and audience interest.

The contracts will track broad indexes built from officially reported, league-approved statistics rather than the outcome of individual games. They will settle in cash, allowing parties to exchange the final index value without taking delivery of an underlying asset. Futuresports will administer the indexes using official league data; participating leagues will supply statistics but will not control the calculations.

CME has not disclosed which sports, leagues or performance measures will appear in the initial contracts. Final specifications, league agreements and regulatory approval under Commodity Futures Trading Commission procedures will determine the product lineup and timing. Under CFTC rules, exchanges may introduce products by self-certification or by seeking CFTC approval; CME said it expects to release full details before trading begins.

Firms exposed to weaker attendance, lower merchandise demand, falling sponsorship value or smaller television audiences could use the contracts to offset some risk. Futuresports also expects the indexes could support exchange-traded funds and over-the-counter swaps.

Leigh Taylforth, co-founder of Futuresports, noted: ‘The global sporting industry generates $650 billion a year, yet there has been no liquid, robust opportunity to hedge the extensive and varied industry risks that range from weather events, to injuries, to unanticipated behavior issues and more.’

Terry Duffy, CME Group chairman and chief executive, commented: ‘The contracts we’re developing with Futuresports are built on rigorous indexes and backed by the transparency and integrity that only exchange-traded products deliver.’