Corporate Sponsorship in Professional Soccer: Does it Pay to Support a Winner?

Abstract

In this paper I examine how jersey sponsorship in professional sports translates to the stock market. Companies such as Chevrolet and Yokohama Tyres invest millions of dollars every year to have their name printed in bold across the jerseys of the best professional soccer teams around the world. I investigate whether there are tangible market returns to this investment, as well as whether soccer games are enough of a shock to swing investor sentiment. I use a two-step OLS methodology using 53,000 stock market price observations and 701 game observations from 2007-2018 for 14 elite European soccer teams. I measure stock price changes of the sponsoring company based on game results, importance of the match, pre-game odds, and whether the sponsor company is located in the team’s home country. I find no significant link exists between game characteristics and sponsor stock price. This leads to the question of what tangible returns sponsors are seeing as well as how much sports affect investors’ decision making.