Current Issue Summary
June 2022 (Vol. 62, Issue 2)
Do Sport Sponsorship Announcements Help or Hurt Rival Sponsors’ Market Values? Comparing the Stock Returns of Sponsors and Their Rivals in the United States and Japan
Sponsors aim to enhance the value of their brand through image transfer and bringing people’s attention to their products and services. The most popular sponsorship type is for sports events. North America carries out more than one-third of world sports sponsorship investment, while the Asia-Pacific region records the highest growth in recent years. Yet, “despite the intended benefits, sports sponsorship may not necessarily benefit sponsors”—particularly when it comes to how sponsorship announcements affect those companies’ stock-market valuations, researcher Fumiko Takeda (University of Tokyo) observes. Her work adds to a growing body of research that questions the value of sports sponsorship investment.
Takeda analyzed data from two previous event studies covering market responses to sport sponsorship between 1999 and 2010. One focused on the U.S. market, and the other (which Takeda coauthored) focused on Japan. From the U.S. side of the study (Reiser, 2012), the data sample is narrowed down to 186 (from 284) sports sponsorship announcements for auto racing, golf, basketball, football, baseball, soccer, arena, tennis and the Olympic games. From the Japan study (Hino and Takeda, 2020), the research includes 105 (out of 188) samples, each of a similar variety of sports categories.
The data from these two studies reveal insights into competitive advantages (or lack thereof) between sponsors and their rivals, depending on market reactions in each country, whether the sporting event is held in a home country and the market impact between rival firms.
Among the takeaways:
- In Japan, market reactions to sports sponsorship announcements are significantly positive for sponsors, whereas those for rivals are significantly negative.
- In the United States, both sponsors and rivals experience increased market value.
- “Positive market reactions for sponsors and rivals in the U.S. suggest that sports sponsorship investments may be effective in increasing marketwide demand, benefitting both sponsors and rivals.
- “By contrast, negative reactions for rivals in Japan indicate that Japanese sponsors may use sport sponsorship effectively to establish a competitive advantage over their rivals by attracting more customers away from rivals.”
- Market responses for sponsors are significantly positive when the events are held in Japan and U.S. domestic markets.