The relationship between major-league sports’ official sponsorship announcements and the stock prices of sponsoring firms

Abstract

This study presents analysis of the impact of “official product” sports sponsorships with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL), the National Basketball Association (NBA), and the Professional Golfers Association (PGA) on the stock prices of sponsoring firms. The primary finding of the study is that, in the main, announcements were accompanied by increases in shareholder wealth. The 53 sponsors analyzed experienced mean increases in stock valuations of about $257 million. A multiple regression analysis of firm-specific stock price changes and selected corporate and sponsorship attributes indicates that official product sponsorships with the NBA, NHL, and PGA and those with smaller market shares were associated with the largest gains in share prices. Although corporate cashflow (a proxy for agency conflicts) is statistically unrelated to shareholder approval, sponsorships by high-technology companies were associated with stronger stock price reactions than otherwise. Finally, product congruence with the sponsored sport was positively related to changes in stock prices.

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

References

  1. Agrawal, Jagdish and Wagner A. Kamakura. 1995. “The Economic Worth of Celebrity Endorsers: An Event Study Analysis.”Journal of Marketing 56 (3): 56–62.

    Article  Google Scholar 

  2. Bridger, Chet. 2003. “M&T Bank, Choice One Sign Sponsorship Deals With NFL’s Buffalo Bills.”The Buffalo News, September 8.

  3. Brown, Stephen J. and Jerold B. Warner. 1985. “Using Daily Stock Returns: The Case of Event Studies.”Journal of Financial Economics 14 (1): 3–31.

    Article  Google Scholar 

  4. Business Wire. 1998. “Ricoh Named Official Fax of the PGA of America.” January 6.

  5. Clark, John M., T. Bettina Cornwell, and Stephen W. Pruitt. 2002. “Corporate Stadium Sponsorship, Signaling Theory, Agency Conflicts and Shareholder Wealth.”Journal of Advertising Research 42 (6): 16–32.

    Google Scholar 

  6. Cliffe, Simon J. and Judy Motion. 2005. “Building Contemporary Brands: A Sponsorship-Based Strategy.”Journal of Business Research 58 (8): 1068–1077.

    Article  Google Scholar 

  7. Cornwell, T. Bettina. 1995. “Sponsorship-Linked Marketing Development.”Sport Marketing Quarterly 4 (4): 13–24.

    Google Scholar 

  8. — and Isabelle Maignan. 1998. “An International Review of Sponsorship Research.”Journal of Advertising 27 (1): 1–21.

    Google Scholar 

  9. —, Stephen W. Pruitt, and Robert Van Ness. 2001. “An Exploratory Analysis of the Value of Winning in Motorsports: Sponsorship-Linked Marketing and Shareholder Wealth.”Journal of Advertising Research 41 (1): 17–31.

    Google Scholar 

  10. —, Clinton Weeks, and Donald P. Roy. 2005. “Sponsorship-Linked Marketing: Opening the Blackbox.”Journal of Advertising 34 (2): 23–45.

    Google Scholar 

  11. Cornwell, T. Bettina, Michael S. Humphreys, Angie Maguire, and Cassandra L. Tellegen. 2003. “The Role of Articulation in Sponsorship-Linked Marketing.” InImage Advertising and Consumer Psychology. Eds. Lynn R. Kahle and Chung-Hyun Kim. Society for Consumer Psychology Conference 2003: 8–9.

  12. Cowan Research. 2000.Eventus User’s Guide. Version 6.3C. Ames, IA. Cowan Research, L.C.

    Google Scholar 

  13. Crimmins, James and Martin Horn. 1996. “Sponsorship: From Management Ego Trip to Marketing Success.”Journal of Advertising Research 36 (4): 11–20.

    Google Scholar 

  14. Emory, Thomas, Jr. 1996. “Thrifty Businesses Exploit Cheap Links to Olympics.”Wall Street Journal 227 (72): B1.

    Google Scholar 

  15. Farrell, Kathleen A. and W. Scott Frame. 1997. “The Value of Olympic Sponsorships: Who Is Capturing the Gold?”Journal of Market-Focused Management 2 (2): 171–182.

    Article  Google Scholar 

  16. Foust, Dean and Brian Grow. 2002. “The PGA Tour: Where’s the Green?”Business Week 3783: 133.

    Google Scholar 

  17. Jensen, Michael C. and William H. Meckling. 1976. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.”Journal of Financial Economics 3 (4): 305–360.

    Article  Google Scholar 

  18. Johar, Gita Venkataramani and Michel Tuan Pham. 1999. “Relatedness, Prominence and Constructive Sponsor Identification.”Journal of Marketing Research 36 (3): 299–312.

    Article  Google Scholar 

  19. Lefton, Terry. 1999. “National Ends NFL Drought in Rental Cars.”Brand-week, July 26, p. 4.

  20. Markiewicz, David A. 2004. “Pro Football: Gatorade Pours $500M Into NFL.”The Atlanta Journal-Constitution, p. C2.

  21. Mathur, Lynette Knowles, Ike Mathur, and Nanda Rangan. 1997. “The Wealth Effects Associated With a Celebrity Endorser: The Michael Jordan Phenomenon.”Journal of Advertising Research 37 (3): 67–72.

    Google Scholar 

  22. McDaniel, Stephen R. 1999. “An Investigation of Match-Up Effects in Sport Sponsor Ship Advertising: The Implications of Consumer Advertising Schemas.”Psychology and Marketingld (2): 163–184.

    Article  Google Scholar 

  23. Miller, Richard Lee. 1962. “Dr. Weber and the Consumer.”Journal of Marketing 26 (I): 57–61.

    Article  Google Scholar 

  24. Mishra, Debi, George S. Bobinski, and Harjeet S. Bhabra. 1997. “Assessing the Economic Worth of Corporate Event Sponsorships: A Stock Market Perspective.”Journal of Market Focused Management 2: 149–169.

    Article  Google Scholar 

  25. Miyazaki, Antohny D. and Angela G. Morgan. 2001. “Assessing Market Value of Event Sponsoring: Corporate Olympic Sponsorships.”Journal of Advertising Research 41 (1): 9–15.

    Google Scholar 

  26. Murphy, Bill. 2004. “Ambushing the Super Bowl (or at Least Trying to).”Sports Business News, September 20.

  27. Pickett, Brent. 2004. “As Cingular Ads Parody, Not All Sponsorships Fit the Brand-Building Bill.” Retrieved September 18, from http://www.marketingprofs.com

  28. Proctor, Darrell. 2004. “A Marriage of Sports, Suds: Team Partnerships Likely to Expand With Beer Merger.”Rocky Mountain News, July 24, p. 5C.

    Google Scholar 

  29. Pruitt, Stephen W., T. Bettina Cornwell, and John M. Clark. 2004. “The NASCAR Phenomenon: Auto Racing Sponsorships and Shareholder Wealth.”Journal of Advertising Research 44 (3): 281–296.

    Article  Google Scholar 

  30. Reuters News. 2002. “PepsiCo’s Gatorade, NBA in Marketing Pact,” August 1.

  31. Roy, Donald P. and T. Bettina Cornwell. 2003. “Brand Equity’s Influence on Responses to Event Sponsorships.”Journal of Product and Brand Management 12 (6): 377–393.

    Article  Google Scholar 

  32. Rust, Roland T. and Richard W. Oliver. 1994. “The Death of Advertising.”Journal of Advertising 23 (4): 71–77.

    Google Scholar 

  33. Ruth, Julie A. and Bernard L. Simonin. 2003. “Brought to You by Brand A and Brand B: Investigating Multiple Sponsors’ Influence on Consumers’ Attitudes Toward Sponsored Events.”Journal of Advertising 32 (3): 19–30.

    Google Scholar 

  34. Sandler, Dennis M. and David Shani. 1989. “Olympic Sponsorship vs. ‘Ambush’ Marketing: Who Gets the Gold?”Journal of Advertising Research 29 (4): 9–14.

    Google Scholar 

  35. Schlosser, Jim. 1995. “It’s Official: Logos all Over GGO.”Greensboro News and Record, April 23, p. A1.

  36. Scholes, Myron and Joseph T. Williams. 1977. “Estimating Betas From Nonsynchronous Data.”Journal of Financial Economics 5 (3): 309–327.

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Additional information

T. Bettina Cornwell (b.cornwell@business.uq.edu.au) is Professor of Marketing and Leader of the Marketing cluster in the UQ Business School at the University of Queensland, Australia. She was formerly Professor of Marketing in the Fogelman College of Business and Economics at the University of Memphis. She received her Ph.D. from the University of Texas. Her research focuses on promotion and consumer behavior, especially with regard to international and public policy issues. Other articles on the topic of sponsorship-linked marketing have recently appeared in theJournal of Advertising, the Journal of Advertising Research, theJournal of Business Research, andPsychology & Marketing.

Stephen W. Pruitt (pruittst@umkc.edu) is the holder of the Arvin Gottlieb/Missouri Endowed Chair of Business Economics and Finance in the Henry W. Bloch School of Business and Public Administration at the University of Missouri-Kansas City. He received his Ph.D. from Florida State University. He has published more than 45 articles, most of which employ event study methodologies, in journals such as theJournal of Finance, theJournal of Political Economy, Financial Management, theJournal of Public Policy and Marketing, and theJournal of Advertising Research.

John M. Clark (clarkj@cba.usm.edu) is an assistant professor of finance at the University of Southern Mississippi. He received his Ph.D. from the University of Alabama. His research interests include options and other derivatives, investments, and the impact of real events upon the stock prices of corporations. His work has appeared in scholarly outlets such as theJournal of Advertising Research, theFinancial Review, and theJournal of Business Ethics.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

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

Download citation

Keywords

  • official
  • sponsorship
  • event study
  • stock prices
  • major-league sports