Skip to main content
Log in

The impact of title event sponsorship announcements on shareholder wealth

Marketing Letters Aims and scope Submit manuscript

Cite this article


Title sponsorships are often considered the crown jewels of sports sponsorship programs. Garnering top media coverage, title sponsorships are prized for both generating brand/product awareness and building image for their sponsors. Not surprisingly, the rising cost of title sponsorships has led some managers to question their underlying value. Accordingly, this study presents an analysis of the impact of 114 title sponsorship announcements of professional tennis and golf tournaments (both men’s and women’s), auto racing (NASCAR), and college bowl games on the stock prices of sponsoring firms. Overall, the results of the study suggest that title sponsorships are generally signed at market-clearing prices. Thus, companies undertaking title sponsorships typically receive exactly what they pay for—except in the case of NASCAR races (which show evidence of increases in share prices). Splitting the sample into new and renewing sponsorships generates results which differ dramatically by sport. Finally, a cross-sectional regression finds congruence of sport and sponsor, sponsorship by high tech firms and sponsorships by large firms all correlated with perceived sponsorship success.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others


  • Amato, C. H., Cara, L. O. P., & Shao, A. T. (2005). An exploratory investigation into Nascar fan culture. Sport Marketing Quarterly, 30, 71–83.

    Google Scholar 

  • Clark, J. M., Cornwell, T. B., & Pruitt, S. W. (2002). Corporate stadium sponsorship, signaling theory, agency conflicts and shareholder wealth. Journal of Advertising Research, 42, 16–32.

    Google Scholar 

  • Cornwell, T. B. (2008). State of the art and science in sponsorship-linked marketing. Journal of Advertising, 37(3), 41–55.

    Article  Google Scholar 

  • Cornwell, T. B., Clark, J. M., & Pruitt, S. W. (2005). The relationship between major-league sports’ official sponsorship announcements and the stock prices of sponsoring firms. Journal of the Academy of Marketing Science, 33, 401–412. doi:10.1177/0092070305277385.

    Article  Google Scholar 

  • Cornwell, T. B., Humphreys, M. S., Maguire, A. M., Weeks, C. S., & Tellegen, C. L. (2006). Sponsorship-linked marketing: the role of articulation in memory. The Journal of Consumer Research, 33, 312–321. doi:10.1086/508436.

    Article  Google Scholar 

  • Cornwell, T. B., Pruitt, S. W., & Van Ness, R. (2001). The value of winning in motorsports: sponsorship-linked marketing. Journal of Advertising Research, 41, 17–31.

    Google Scholar 

  • Cornwell, T. B., Roy, D. P., & Steinard, E. A. (2001). Exploring manager’s perceptions of the impact of sponsorship on brand equity. Journal of Advertising, 30(2), 41–51.

    Google Scholar 

  • Cornwell, T. B., Weeks, C., & Roy, D. (2005). Sponsorship-linked marketing: opening the black box. Journal of Advertising, 34, 23–45.

    Google Scholar 

  • Crimmins, J., & Horn, M. (1996). Sponsorship: from managerial ego trip to marketing success. Journal of Advertising Research, 36, 11–21.

    Google Scholar 

  • Fama, E. F. (1970). Efficient capital markets: a review of theory and empirical work. The Journal of Finance, 25, 383–417. doi:10.2307/2325486.

    Article  Google Scholar 

  • Foust, D., & Grow, B. (2002) The PGA tour: where’s the Green? Business Week Online

  • Fry, A. (2005). Sports marketing—a piece of the action. Media and Marketing Europe, 25, 25.

    Google Scholar 

  • Interactive Advertising Bureau. (2006). :

  • IEG, Inc. (2000). Year one of IRL title builds traffic, awareness for northern light. IEG Sponsorship Report, 19, 1–3.

    Google Scholar 

  • IEG, Inc. (2005). 06 Outlook: sponsorship growth back to double digits. IEG Sponsorship Report, 24, 4–5.

    Google Scholar 

  • IEG, Inc. (2007). Projection: sponsorship growth to increase for fifth straight year. IEG Sponsorship Report 26, 1, 4.

    Google Scholar 

  • Jensen, M. (1986). Agency costs of free cash flow, corporate finance and takeovers. The American Economic Review, 76, 323–339.

    Google Scholar 

  • McDaniel, S. R. (1999). An investigation of match-up effects in sport sponsorship advertising: the implications of consumer advertising schemas. Psychology and Marketing, 16, 163–184. doi:10.1002/(SICI)1520-6793(199903)16:2<163::AID-MAR6>3.0.CO;2-Y.

    Article  Google Scholar 

  • Mishra, D. P., Bobinski Jr., G. S., & Bhabra, H. S. (1997). Assessing the economic worth of corporate event sponsorship: a stock market perspective. Journal of Market Focused Management, 2, 149–169. doi:10.1023/A:1009731419345.

    Article  Google Scholar 

  • Miyazaki, A. D., & Morgan, A. G. (2001). Assessing market value of event sponsoring: corporate olympic sponsorships. Journal of Advertising Research, 41, 9–13.

    Google Scholar 

  • Pruitt, S., Cornwell, T. B., & Clark, J. (2004). The NASCAR phenomenon: auto racing sponsorships and shareholder wealth. Journal of Advertising Research, 44, 281–296. doi:10.1017/S0021849904040279.

    Article  Google Scholar 

  • Ross, S. (1977). The determination of financial structure: the incentive-signalling approach. The Bell Journal of Economics, 8, 23–40. doi:10.2307/3003485.

    Article  Google Scholar 

  • Scholes, M., & Williams, J. (1977). Estimating betas from nonsynchronous data. Journal of Financial Economics, 5, 309–327. doi:10.1016/0304-405X(77)90041-1.

    Article  Google Scholar 

  • Simões, C., Dibb, S., & Fisk, R. P. (2005). Managing corporate identity: an internal perspective. Journal of the Academy of Marketing Science, 33, 153–168. doi:10.1177/0092070304268920.

    Article  Google Scholar 

  • The Economist. The business of sport: Sponsorship form. July 31, 2008.

  • Weston, J. F., Johnson, B. A., & Siu, J. A. (2002). Takeovers, restructuring, and corporate governance (3rd ed.). New York, NY: Prentice-Hall.

    Google Scholar 

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Stephen W. Pruitt.



Known as “event analysis,” the technique used here estimates a time-series of expected stock market returns which are then subtracted from actual security returns over the same period of time to arrive at an estimate of the unexpected or “abnormal” returns associated with a particular event. Slope and intercept coefficients for the market model methodology were estimated using a procedure suggested by Scholes and Williams (1977). Specifically, the Scholes–Williams slope coefficient for stock j was estimated over the period 146 to 21 trading days (event days t = −146 through t = −21) prior to the date of each event sponsorship announcement (event day t = 0) and is defined as:

$$\widehat\beta _j^ * = \frac{{\widehat\beta _j^ - + \widehat\beta _j + \widehat\beta _j^ + }}{{1 + 2\widehat\rho _m }}$$

where \(\widehat{\rho }_{m} \) is the estimated first-order autocorrelation coefficient of the market index over the period t = −146 to −21, and the beta terms were the ordinary least squares coefficients estimated from leading, lagging, and coincident regressions between each firm and the CRSP value-weighted index of all stocks included in the CRSP database. As noted above, the Scholes–Williams technique controls for biases associated with less-actively traded stocks.

Abnormal returns associated with sponsorship events were defined as:

$$A_{jt} = R_{jt} - \left( {\widehat\alpha _j + \widehat\beta _j R_{mt} } \right)$$

where R jt is the actual return on stock j on event day t and the alpha and beta coefficients result from the Scholes–Williams procedure discussed above.

The average abnormal return (AAR t ) event day t for a sample of event sponsorships is defined as:

$${\text{AAR}}_t = \frac{{\sum\limits_{j = 1}^N {A_{jt} } }}{N}$$

where N is the total number of firms in the respective sponsorship sample.

Finally, the cumulative average abnormal return (CAAR T1,T2 ) over a specific event window from event days t = T 1 to T 2 for a sample of N firms is calculated as:

$${\text{CAAR}}_{T_1 ,T_2 } = \frac{1}{N}\sum\limits_{j = 1}^N {\sum\limits_{t = T_1 }^{T_2 } {A_{jt} } } $$

The actual statistical procedures involved in the evaluation of the average abnormal return (AAR t ) and cumulative average abnormal return (CAAR T1,T2 ) levels are described in detail in the Eventus User’s Manual available without charge online at and are not reproduced here due to space limitations.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Clark, J.M., Cornwell, T.B. & Pruitt, S.W. The impact of title event sponsorship announcements on shareholder wealth. Mark Lett 20, 169–182 (2009).

Download citation

  • Published:

  • Issue Date:

  • DOI: