Stock Market Reaction To Football Sponsorship Does Sponsoring

Stock Market Reaction To Football Sponsorship: Does Sponsoring Company’s Ownership Matter? Iuliia N. Naidenova (NRU HSE) Aleksei S. Chmykhov (NRU HSE) International Conference on Economics of Football June 23– 24, 2017, Kazan, Russia

Football Sponsorship Companies: Searching for effective ways of promotion on local and global markets 30. 09. 2020 Football clubs: Attracting funds to buy new players, hire a coach and other staff 2

Football Sponsorship Football sponsorship Jersey sponsorship 30. 09. 2020 Kit sponsorship Stadium naming rights Other sponsorship 3

What is jersey sponsorship? 30. 09. 2020 4

Sponsorship spendings Jersey sponsorship increased by 30% in 2014/2015 30. 09. 2020 5

Previous research on sports sponsorship Miyazaki and Morgan (2001) ü Positive impact of the Olympic sponsorship announcements on sponsors’ stock prices Cornwell, Pruitt, Clark (2005) ü Positive impact of the “Official product” sponsorship announcements only in the NBA and NHL ü For different types of companies the effect is different Deitz, Evans, Hansen (2011) ü Positive impact of the “Official product sponsorship” ü Negative impact of the Olympic sponsorship Reiser (2012) ü The effect of sponsorship announcement is different for various sports Naidenova, Parshakov, Chmykhov (2016) ü Football sponsorship distracts sponsoring company’s market value 30. 09. 2020 6

Data Sample & Period: 39 sponsoring companies from 2006 to 2015 • European football clubs’ jersey sponsors • Sponsors stocks are traded on stock exchange • Football clubs from: England, Germany, Italy, France, Spain Data: • Sponsoring companies’ daily stock returns • Dates of sponsorship announcement in media • News details: sponsorship deal amount and number of years Sources: Bloomberg, Bureau Van Dijk, Yahoo Finance, official web sites of companies and football clubs 30. 09. 2020 7

Announcements • Types of sponsorship announcements: – Signing a contract – Extension of a contract – Expiration of a contract – Breaking of a contract 30. 09. 2020 8

Sponsoring companies features Variable Number of companies Mean Std. Dev. Minimum Maximum 22 3. 6 1. 4 0. 3 5. 6 22 81. 8 94. 3 0. 0 350. 1 ROC (%) 22 10. 7 8. 1 -9. 2 21. 7 Financial institutions (%) 22 60. 3 34. 1 0. 8 100 22 5. 2 13. 174 0. 0 62. 2 22 4. 1 6. 0 0. 0 23. 8 22 18. 7 24. 2 0. 0 79. 1 Log of total assets (million Euros) Debt/Equity (%) Individual private ownership (%) Government (%) Corporation, holding company (%) 30. 09. 2020 9

Sponsorship announcements 9 8 7 6 5 4 3 2 1 0 2005 2006 2007 Signings 30. 09. 2020 2008 2009 Extensions 2010 2011 2012 2013 2014 2015 Expirations & Breakings 10

Methodology (1) • 30. 09. 2020 11

Methodology (2) • 30. 09. 2020 12

Analysis of CAR significance Extension announcement (Std. Coef R 2 error) Expiration or break announcements (Std. Coef R 2 error) 0, 371 (0, 530) 0, 032 -0, 467 (0, 578) 0, 035 -0, 028 (0, 476) 0, 001 0, 013 (0, 785) 0, 000 1, 040 (0, 884) 0, 071 -2, 249 (2, 232) 0, 192 -0, 496 (1, 100) 0, 013 1, 311 (1, 304) 0, 053 -1, 676 (2, 556) 0, 079 -1, 213 (1, 197) 0, 064 0, 779 (1, 038) 0, 030 -3, 580 (3, 183) 0, 202 Event window Signing announcements Coef 1 day [0] 3 days [-1; +1] 7 days [-3; +3] 11 days [-5; +5] (Std. error) R 2 Number of 16 19 observations Note: * - significant at 0, 1 level, ** - at 0, 05 level, *** - at 0, 01 level 30. 09. 2020 6 13

Determinants of stock market reaction Sign Expire or Break Sum of the contract dummy Financial institution ownership Individual ownership Government ownership Size Place of the club League Constant Observations R-squared 30. 09. 2020 CAR(-1; 1) -1. 568 -13. 407** (1. 04) (4. 79) -0. 216 (0. 13) -0. 192 (0. 12) 0. 122 (0. 06) 0. 024 (0. 93) 0. 031 (1. 14) 0. 029 (1. 07) 0. 249** (3. 78) -0. 080 (0. 62) included 0. 232 (0. 10) 33 0. 47 -1. 921 (1. 19) -2. 096 (1. 35) -14. 060** (4. 28) -14. 997** (3. 63) 0. 205** (3. 24) 0. 009 (0. 07) -1. 167 (1. 33) included 4. 530 (1. 22) 33 0. 49 0. 210** (3. 21) 0. 025 (0. 20) -1. 289 (1. 33) 0. 107 (0. 37) Included 4. 300 (1. 09) 33 0. 50 14

Conclusions • Stock market investors on general do not react to sponsorship announcements • Expiration or breaking the contract lead to significant negative reaction • Sponsorship announcements are incorporated in stock prices only by individual investors 30. 09. 2020 15

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Thank you for your attention! 30. 09. 2020 17