Put your name on it? The company characteristics and financial performance of sports’ stadium sponsorship

Abstract

ABSTRACT Purpose/Rationale Sponsoring a professional sports stadium entails significant financial and multi-year commitments. While company managers anticipate net financial gains from such sponsorships, other motivations of the CEO may influence the decision to sponsor. Design/Methodology/Approach The research questions of this study include examining how CEO and firm characteristics impact the propensity to sponsor a stadium and determining the impact of sponsorship on sales growth and stock price returns before, during, and (if applicable) after the sponsorship. The paper uses longitudinal financial modeling to explore the link between sports stadium sponsorship in top American professional leagues and financial performance, incorporating financial and control variables. Data comprises approximately 700 firm-years during sponsorship, 200 non-sponsorship firm-years, and 600 for matched firms, analyzed via regression modeling, including fixed effects. Practical Implications We find no evidence that sponsoring a sports stadium leads to positive or negative financial results. However, CEO characteristics, such as age and salary, do have an impact on the decision to sponsor. Research Contribution Decades of data and many firms, including control variables for industry performance, provide a unique contribution to the field. Originality/Value This research is valuable in assessing stadium sponsorship efficacy and novel in examining CEO motivation.