The impact of title event sponsorship announcements on shareholder wealth
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The impact of title event sponsorship announcements on shareholder wealth John M. Clark & T. Bettina Cornwell & Stephen W. Pruitt
Published online: 21 October 2008 # Springer Science + Business Media, LLC 2008
Abstract 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. Keywords Sponsorship . Title . Marketing . Finance . Sport . Event study Corporate sponsorship of sports, events, the arts, and charities is a major component of communications spending. According to the IEG Sponsorship Report, spending on sponsorships, approximately $34 billion worldwide in 2006; grew to $37 billion J. M. Clark University of Southern Mississippi, Hattiesburg, MS, USA T. B. Cornwell University of Michigan—Ann Arbor, Ann Arbor, MI, USA S. W. Pruitt (*) Henry W. Bloch School of Business and Public Administration, University of Missouri—Kansas City, 331 Bloch School, 5100 Rockhill Road, Kansas City, MO 64110-2499, USA e-mail: [email protected]
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in 2007 (IEG 2005, 2007). Cornwell (2008) has documented a growth trend in sponsorship over traditional advertising that began in 1990. Moreover, sponsorship figures only represent the packaged sponsorship fee and do not include the leverage and activation costs that accompany most sponsorship activities. For perspective, it is meaningful to compare it to another growth area, namely, much discussed internet advertising which was estimated to be only $16 billion in 2006 (IAB 2006). Interestingly, one type of sponsorship—that of title event sponsor—has received relatively little attention in the literature except with regards to recall of the sponsor (for a review, see, e.g., Cornwell et al. 2005). To date, no study has considered the financial value and strategic success of these decidedly expensive and remarkably high profile sponsorships. Accordingly, this study presents the first analysis of the impact of title event sponsorships on the s
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