Portal de Periódicos da CAPES

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

2012; Taylor & Francis; Volume: 19; Issue: 3 Linguagem: Inglês

10.1080/1351847x.2012.659268

1466-4364

Michael Hanke, Michael Kirchler,

Consumer Market Behavior and Pricing

Abstract Corporate sports sponsorship is an important part of many companies' corporate communication strategy. In this paper, we take the example of major football tournaments to show that sponsorship indeed affects the sponsor's (stock) market value. We find a statistically significant impact of football results (at an individual match level) of the seven most important football nations at European and World Championships on the stock prices of jersey sponsors. In general, the more important a match and the less expected its result, the higher its impact. In addition, we find a form of 'mere-exposure' effect which is difficult to reconcile with the efficient markets hypothesis. Keywords: sports sponsorshipadvertisingstock market efficiencyevent study JEL Classification : G14 Acknowledgements We thank the seminar participants at the Universities of Gothenburg 2010 and Salzburg 2010, participants of the 'AWG' workshop 2007 (Innsbruck), and conference participants of 'Economics and Psychology of Football 2008' (Innsbruck), 'Forecasting Financial Markets 2010' (Hannover), and 'Campus for Finance 2011' (Vallendar) for their helpful comments on earlier versions of this paper. We also thank Daniel Kleinlercher and Nicole Pfeifer for their excellent research assistance. Notes http://www.economist.com/specialreports/displaystory.dfm?story_id=11825607. http://www.sportsbusinessdaily.com/article/109198. This offer amounts to approximately 30% of Nike's 2008 EBITDA (source: Capital IQ). http://www.sportsbusinessdaily.com/Daily/Issue/2008/02/Issue-108/Sponsorships-Advertising-Marketing/Into-The-Blues-Nike-Signs-$506M-Deal-With-French-Soccer-Team.aspx. Clark, Cornwell, and Pruitt (2009) Clark, J. M., Cornwell, T. B. and Pruitt, S. W. 2009. The impact of title event sponsorship announcements on shareholder wealth. Marketing Letters, 20(2): 169–82. (doi:10.1007/s11002-008-9064-z)[Crossref], [Web of Science ®] , [Google Scholar] provided a very good overview of the literature on the impact of sponsorship announcements. According to a FIFA report on the World Cup 2006 in Germany, the cumulative TV audience for all games was estimated at around 26 billion, and the final alone was watched by 715 million viewers. See http://www.fifa.com/mm/document/fifafacts/ffprojects/ip-401_06e_tv_2658.pdf. We use excess returns and abnormal returns synonymously throughout the paper. Both events take place every four years. We restricted our sample to this time span as Adidas went public in November 1995. This is only relevant for some matches on weekdays during World Cup tournaments. Since we used daily returns, the choice between log returns and simple returns is arbitrary and does not affect our results. We used their modified proxy without adjustment for home advantage. FIFA is the acronym for the International Football Federation. http://www.fifa.com/worldfootball/ranking/lastranking/gender=m/fullranking.html Andersson, Edman, and Ekman (2005) Andersson, P., Edman, J. and Ekman, M. 2005. Predicting the World Cup 2002 in soccer: Performance and confidence of experts and non-experts. International Journal of Forecasting, 21(3): 565–76. (doi:10.1016/j.ijforecast.2005.03.004)[Crossref], [Web of Science ®] , [Google Scholar] and Andersson, Memmert, and Popowicz (2009) provided evidence for the high quality of football rankings, as a betting strategy following the FIFA ranking had outperformed the predictions of experts (e.g. sports journalists and trainers) for the World Cups in 2002 and 2006. An alternative also used in the literature is the probability derived from odds provided by bookmakers (see, e.g. Hausch and Ziemba 1995 Hausch, D. B. and Ziemba, W. T. 1995. "Efficiency of sports and lottery betting markets". In Finance, Edited by: Jarrow, R. A., Maksimovic, V. and Ziemba, W. T. Amsterdam: North-Holland. [Google Scholar]). See www.eloratings.net for further information. For example, assume the following pre-game Elo ratings of the following games: AUT (1562) versus GER (1938) and ITA (2003) versus GER (1938). Hence, % and , whereas and .