The Impact of FIFA World Cup Sponsorship on the Expected Return of Adidas Stock: A CAPM Analysis

Abstract

This report examines how sponsoring the FIFA World Cup affects the expected return of Adidas stock according to the capital asset pricing model (CAPM). The report uses historical data from online sources to calculate the expected return of Adidas stock for different periods before and after four recent World Cups which already have their influence passed. The report also compares the results from a similar competitor Nike to Adidas. The report finds that sponsoring the FIFA World Cup has a positive effect on the expected return of Adidas stock, as it increases the market exposure and brand value of Adidas. However, results did not come out consistent as variations in the data are observed due to the differences of Adidas sponsored teams, market conditions and public perception. The report also finds that Nike, another sponsor of the World Cup and a major competitor, strongly relates to the influences on Adidass expected return. The report concludes that sponsoring the FIFA World Cup is a beneficial strategy for Adidas while having risks and challenges simultaneously. The report also suggests some recommendations for future research based on the results.