Current Issue Summary
Dec 2020 (Vol. 60, Issue 4):

Does Athletes’ Performance Influence a Sponsor’s Stock-Market Value? Assessing the Effects of Sponsored Athletes Who Represent Japan in International Tournaments
The answer to this article’s title question is an emphatic “Yes”. Keiya Mori, Tatsuaki Morino and Fumiko Takeda (all at University of Tokyo) write: “Regardless of the sporting results, stock prices (of Japanese sponsors) reacted positively to the participation of athletes selected as country representatives in international tournaments.” Other factors that determined a strong outcome included when “sponsored athletes performed well; when the sponsorship contract was longer; if the athlete was from the same country as the sponsor, and if the brand is in a sports-related category.”

In understanding the relationship between market reactions and athletes, the research argues that sporting success typically yields greater fan support, media coverage, and exposure to the assets of brand sponsors. “As more consumers come to view a sponsor’s brand more favorably, this likely will increase their demand for the sponsor’s goods or services,” the authors noted.

These conclusions drew on an assessment of a group of major sponsors that are well-known brands on the Tokyo Stock Exchange. In all, the study featured three figure skaters, two golfers, a speed skater, a gymnast, a boxer, a swimmer and a marathon runner. Collectively, they competed in 170 tournaments between 1991 and 2017. Specifically, the study used a series of “windows” comparing periods during which events might be expected to impact the daily stock price, and timeframes when they would not. Among the sporting factors included in the analysis were:

• whether the sponsored athlete ranked third place or better in their event;
• the length of a contract (if the event occurred a year from the start of the deal);
• whether the athlete was Japanese or from another country;
• whether the sponsor was in a sports-related business.

The interaction of the various factors also was considered.

The Olympic Games similarly was broken out among the data, in case it delivered higher returns, as was the variable of an athlete having multiple sponsors. Another factor was whether newspapers reported other important news about a sponsor in the event “window,” which was termed a “confounding event.” In all, the authors found no “significant results for the relationship between market reactions and multiple sponsors, the Olympic games, and confounding events.” In fact, “sponsoring a less-costly underdog who may perform well in an event may yield better results than sponsoring a more costly star athlete.”

Read the full article here.