Pre-Empting the Competition: How Do Shareholders View Sponsorships in the Sport Apparel Industry?

in Journal of Sport Management
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  • 1 The University of Tulsa
  • 2 Saint Louis University
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Gaining exclusive sponsorship rights to international football club apparel has become increasingly competitive, resulting in larger deal values. The first objective of this study was to analyze the effect of kit sponsorship announcements on the underlying value of sponsoring firms. Utilizing event study analysis, we found that firms announcing kit sponsorships experience negative abnormal returns. This finding may not be surprising given the fierce competition for obtaining valuable, scarce marketing space and the well-known winner’s curse. The second objective was to shed further light on the value of kit sponsorship deals by conducting a novel test in which we analyzed a subset of sample observations where the kit sponsorship changed to a new sponsor. We found that firms may be willing to overpay for sponsorships to pre-empt their direct competitors from obtaining valuable, scarce marketing space. Firms losing a pre-existing sponsorship to a direct competitor experience large negative abnormal returns.

Adrien Bouchet is with the Department of Management & Marketing, Collins College of Business, The University of Tulsa, Tulsa, OK. Thomas W. Doellman is with Finance, Cook School of Business, Saint Louis University, St. Louis, MO. Mike Troilo is with the School of Finance, Operations Management, and International Business, Collins College of Business, The University of Tulsa, Tulsa, OK. Brian R. Walkup is with the School of Finance, Operations Management, and International Business, Collins College of Business, The University of Tulsa, Tulsa, OK.

Address author correspondence to Adrien Bouchet at adrien-bouchet@utulsa.edu.
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