Title

Assessing the short-term and long-term economic effects of corporate partnerships with major sports organizations

Date of Completion

January 2006

Keywords

Business Administration, Marketing|Economics, Commerce-Business|Economics, Finance|Recreation

Degree

Ph.D.

Abstract

While corporate partnerships with major sports organizations are growing at an increasing rate, marketers have had difficulty in assessing the value of such partnerships. The current study addresses this valuation dilemma by employing event study analysis. Using stock return data, I examine the economic effects of corporate partnerships with six major sports organizations (NFL, MLB, NBA, NASCAR, NHL, PGA) via changes in the partnering firm's value, measured by cumulative abnormal returns. It is found that on average, the partnering firm experiences a net-of-market increase of shareholders' value of 0.93% from the new announcement of a corporate partnership with a major sports organization from the announcement day to the first trading day, but my results also indicate that, on average, the firm that announces the renewal of a corporate partnership with a major sport organization, experiences a net-of-market decrease of 1.85% from the announcement day to the first trading day. Furthermore, results also indicate that the long-term effects linked to partnership announcements are consistently positive and significant in both the one-year and three-year horizon. Using cross-sectional regression framework, this research further explores the associations of the cumulative abnormal returns with the event-related characteristics, firm specific financial characteristics and firm's ownership structures. Theoretical and practical implications are presented. ^