The performance of sponsored athletes in sporting events can have an influence on an organisation’s stock price, according to a study published in the Journal of Advertising Research (JAR).
Keiya Mori, Tatsuaki Morino and Fumiko Takeda (all from the University of Tokyo) discussed this topic in a paper entitled, Does athletes’ performance influence a sponsor’s stock-market value? Assessing the effects of sponsored athletes who represent Japan in international tournaments.
And their analysis revealed that “a sponsor’s stock price reacted positively to sporting events in which sponsored athletes participated”.
These results were stronger if “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 argued 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 study added.
These conclusions drew on an assessment of a group of sponsors that were all “large and well-known brands” on the Tokyo Stock Exchange.
In all, three figure skaters, two golfers, a speed skater, a gymnast, a boxer, a swimmer and a marathon runner were featured in the study. Collectively, they competed in 170 tournaments.
More specifically, the study used a series of “windows” to compare 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 if the sponsored athlete ranked third place or better in their event and the length of a contract (that is, if the event occurred a year from the start of the deal).
Whether the athlete was Japanese or from overseas, if the sponsor was in a sports-related business, and the interaction of these various factors were also considered.
The Olympic Games was similarly broken out as 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”.
Sourced from WARC