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 cash flow (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.

Football championships and jersey sponsors’ stock prices: an empirical investigation

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Mellowing Skeptical Consumers: An Examination of Sponsorship-Linked Advertising

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Consumer, Investor, and Combined Reactions Following Product-Harm Crises

“…To capture the effects on the stock price and shareholder value, event-study methodology is broadly applied in the finance, economics, and accounting literature, and more recently in the marketing literature (e.g., Cornwell, Pruitt, & Clark, 2005;Evans, 2010). This study follows previous marketing literature and applies event-study methodology to examine effects to the shareholder.…”