A stakeholder approach to international and
national sport sponsorship
Rodoula Tsiotsou
Department of Marketing & Operations Management, University of Macedonia, Thessaloniki, Greece
Abstract
Purpose – Using a stakeholder perspective, this paper aims to investigate the effectiveness of sponsorship as a business investment by assessing the
impact of sponsorship announcements on the shareholders’ reactions of the sponsoring firms. These reactions are examined in two different occasions:
in an international mega sport event such as the Olympic Games and in sport organizations such as sport federations/associations.
Design/methodology/approach – Event study analysis by using multiple regression models and bootstrapping techniques were employed to study
the effects of sponsorship announcements. The sample consisted of sponsors of the 2004 Olympic Games and sponsors of national sport federations.
Findings – Overall, the results of the study did not indicate any significant effects of sponsorship announcements on the stock prices of sponsoring
firms, suggesting that shareholders’ reactions to this business activity are limited.
Originality/value – This is the first research initiative that utilizes a stakeholder approach in examining sponsorship effectiveness. The findings
provide evidence that shareholders do not perceive sport sponsorships as business investments due to limited information provided by the sponsoring
firms. In addition to theoretical and practical implications, the study proposes a new methodological approach in evaluating the impact of sport
sponsorship. Multiple regression models applying bootstrap techniques to avoid data distribution and small sample problems are recommended.
Keywords Stakeholder theory, Shareholders, Sponsorship, Event study analysis
Paper type Research paper
in 1984 to $24 billion in 2001 (International Events Group
Sponsorship Report, 2002). According to International
Events Group (IEG), global sponsorship spending reached
$37 billion in 2007, an 11.5 percent increase over 2006
(International Events Group Sponsorship Report, 2008).
However, the above data refers only to the direct costs of
purchasing sponsorship rights. To support, leverage and fully
exploit a sponsorship, businesses spend two to three times
more than what they pay for securing the property of
sponsorship rights (Cooper, 2003) because sponsorship is not
only a communication tool but a commercial investment as
well (Walliser, 2003).
The most widely and often used sponsorship is sport
sponsorship. Sport sponsorship involves sponsoring sport
associations, events, teams, athletes, and sport facilities. Sport
sponsorships received 67 percent of corporate sponsorship
spending in North America in 1994 (Ukman, 1995) while the
majority of sponsorship funds are spent on buying the
sponsorship rights for the “king of sport events”, the Olympic
Games. Due to the mammoth amounts of money invested,
sponsorship effectiveness has become of central importance to
academics and marketing managers.
Different measures have been used to evaluate the impact of
sponsorship. Stock prices of sponsors (Cornwell et al., 2001;
Farrell and Frame, 1997; Miyazaki and Morgan, 2001),
brand awareness and recall (Johar and Pham, 1999; Quester,
1997), behavioral intentions (Tsiotsou and Alexandris, 2009)
and media coverage are some of the most common variables
1. Introduction
The intense competitive pressure and media cluttering
businesses are facing in today’s global market require careful
planning and execution of well-reasoned and effective
promotional tools. One of these marketing communication
strategies that is growing rapidly and is becoming big business
over the last decades is sponsorship. Sponsorship is a business
agreement between two companies in order for both parties to
mutually benefit and accomplish their profit and non-profit
objectives. According to Walliser (2003), sponsorship is a
business relationship between a corporation and an
individual, event or organization that is based on an
exchange relationship between the sponsor and the
sponsored, and where marketing communication objectives
are pursued through associations. A corporation (the sponsor)
provides funds, resources or services and buys rights and
association with the sponsored firm (Busby, 1997). Ukman
(1995) defines sponsorship as “a cash and/or in-kind fee paid
to a property . . . in return to access to the exploitable
commercial potential associated with that property” (p. 1).
The current size of sponsorship investment as well as its
dynamic growth is substantial over the years. Corporate
sponsorship expenditure worldwide increased from $2 billion
The current issue and full text archive of this journal is available at
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Journal of Business & Industrial Marketing
26/8 (2011) 557– 565
q Emerald Group Publishing Limited [ISSN 0885-8624]
[DOI ]
Received: 12 April 2009
Revised: 12 June 2009
Accepted: 25 July 2010
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International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
used to assess the value of sponsorship. Cooper (2003)
proposes two principal ways in evaluating sponsorship: reach
(how many people were exposed to the sponsorship via
media) and awareness (how many people recall the brand
sponsoring an event). However, Johar and Pham (1999)
reported that sponsor identification is biased toward brand’s
perceived affinity to the event and towards prominent brands.
Various theoretical approaches have been used to test explain
and test sponsorship effectiveness. Thus, scholars have tested
Ehrenberg’s Awareness-Trial-Reinforcement model (Hoek
et al., 1997), the Attitude toward the Advertisement and the
Attitude toward the Brand models (Bloxham, 1998), and the
brand-event relatedness and market prominence (Johar and
Pham, 1999) in order to measure the effectiveness of
sponsorship. In general, research on sponsorship
effectiveness has been focused either on consumers (Miloch
and Lambrecht, 2006; Gwinner and Swanson, 2003;
Tsiotsou and Alexandris, 2009) or on shareholders reactions
(Cornwell et al., 2001; Kinney and Bell, 2003; Miyazaki and
Morgan, 2001; Pruitt et al., 2004).
However, the studies on shareholders reactions to
sponsorship agreements share several deficiencies: they lack
a sound theoretical framework, they do not justify why they
select the specific group (shareholders) to be studied over
others (e.g. community or consumers), and they do not
explain why they expect reactions from its members. Contrary
to these investigations, the present study proposes stakeholder
theory as its theoretical foundation where shareholders
constitute one of the most important stakeholder groups.
Shareholders are not only influenced but also influence
management decisions and achievements of a corporation.
Thus, their reaction to a sponsorship agreement should be of
great interest to corporate sponsors. Especially, sponsorship
agreements of international sport events become even more
important to companies that do international business. These
companies can use sponsorship as a communication platform
to increase their image, reputation, and visibility in foreign
countries, and consequently attract the interest of national
and international investors.
This study evaluates Olympic and sport federation
sponsorships at the international and national level
respectively in order to assess its effectiveness as a business
investment. To accomplish this objective, the impact of
sponsorship announcements on the stock prices of
international sponsoring firms was evaluated. The
contribution of this study is threefold. First, it employs
stakeholder theory to approach the issue of sponsorship.
Previous stakeholder approaches in sports have been confined
to the management of sport organizations in order to either
identify key stakeholders of specific sport entities (Friedman
et al., 2004; Tesone et al., 2005) or analyze sport
organizations’ corporate social responsibility (Smith and
Westerbeek, 2007; Walters and Chadwick, 2009). To the
author’s knowledge, this is the first endeavor that deploys
stakeholder theory in sponsorship in order to examine its
effectiveness and provide managerial guidelines. Second, this
research utilizes two types of sponsorship (event and sport
organization sponsorship) to evaluate its effectiveness in an
international mega sport event such as the Olympic Games,
and in sport organizations such as sport federations. Third,
this study differentiates from previous research in several
methodological issues. Besides the standard approach, event
study methodology, a multiple regression model has been
used in combination with a bootstrapping technique in order
to relax the limitations of the distribution assumptions
associated with the standard approach (skewness and
heteroscedasticity of the abnormal returns).
The paper is organized as follow. First, the relevant
literature that provides the theoretical framework of the study
(stakeholder theory) and informed the development of
hypotheses is reviewed. Then, the method section describes
the event study methodology along with the procedures of
data collection. In the following sections, the results are
presented and discussed with their implications. Finally, the
limitations and future research recommendations conclude
the paper.
2. Theoretical framework
2.1 Stakeholder theory and perspectives
Stakeholder theory attracted the interest of scholars in various
fields after the publication of Freedman’s seminal work in
1984. Freedman (1984) linked stakeholder interests to
corporate strategy and supported that an organization’s
success depends on the needs, motives and goals of the
stakeholders with whom the organization interacts.
Stakeholder theorists suggest that the primary financial and
social responsibility of a company is to generate positive
returns and serve the divergent (and often conflicting)
interests of all the stakeholders involved in order to
maintain profitable relationships with them and be
successful in the long-run (Smith, 2003). Stakeholder
theory supports the notion that managers’ primary
obligation is to balance the shareholders’ monetary interests
against the interests of other stakeholders such as customers,
local communities and employees (Smith, 2003).
A stakeholder is “any group of individual who can affect or is
affected by the achievement of the organization’s objectives”
(Freedman, 1984, p. 46). The identification of the stakeholders
of a business is at the core of stakeholder theory. Four
qualifications have been provided in the literature in identifying
stakeholders (Starik, 1994). First, a (contractual or non
contractual) connection between a stakeholder and a company
must exist. Second, a stakeholder seeks specific benefits and
represents certain interests. Third, due to the stakeholder’s
interest, a stakeholder exists in a company’s environment.
Fourth, stakeholders may encompass various configurations
such as individuals and constituencies. Initially, Freedman
(1984) proposed seven stakeholders: shareholders, employees,
customers, suppliers, financial community, activist groups and
the government. Other stakeholders mentioned in the literature
are the media (Logsdon and Lewellyn, 2000), special interest
groups, competitors, trade unions, lenders, NGOs, the general
public, and partners (Friedman and Miles, 2002). Mitchell
et al. (1997) provide a broader definition of the term and argue
that stakeholders are all the groups with salient claims on the
firm which can be distinguished based upon three criteria:
1 legitimacy;
2 power; and
3 urgency.
Legitimacy refers to the validity of a stakeholder’s claim upon
the firm; power is the ability of a party to achieve desired
outcomes despite resistance; and, urgency refers to the
stakeholder’s need for resolution in terms of time-sensitivity
and degree of impact upon its interests.
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International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
According to Donaldson and Preston (1995), stakeholder
theory can be utilized in three ways: in a descriptive/empirical
mode by simply describing and explaining specific corporate
characteristics and behaviors; in an instrumental manner by
identifying the connections between stakeholder management
and the desired outcomes of a company; and in an normative
way by providing moral/philosophical guidelines on how
corporate managers ought to behave.
Communication between a firm and its stakeholders plays a
central role in stakeholder theories. Rowley (1997) proposed the
structural theory of stakeholder influences in an effort to explain
the relational context of a firm and its stakeholders. According
to this approach, two structural factors determine the manner of
interaction between an organization and its stakeholders: the
density of the network and the focal organization’s centrality in
the network. Densely connected networks allow for information
exchanges, the coordination of activities (Oliver, 1991), and for
the creation of efficient communication mechanisms between
stakeholders and shared behavioral expectations (Rowley,
2000). Polonsky (1995) states that a firm’s co-operation and
communication with all stakeholders is vital while the direct
communication with its stakeholders assists in making them
involved for achieving common goals.
The stakeholder perspective provides a valuable tool for
dealing with multiple stakeholders and multiple conflicting
interests (Freedman, 1984) by encouraging a stakeholder
symbiosis and enabling each stakeholder to flourish but not at
the expense of others (Andersen, 1997). However, because
each firm faces different set of stakeholders, it is prudent to
focus on individual stakeholder relationships for exploring
their interests and behaviors (Rowley, 2000).
through the size of their shareholding and can act as
intermediaries for smaller shareholders” (p. 9), whereas the
second group has limited voting rights and their main actions
are confined to selling or buying shares.
2.2 A Stakeholder approach to sponsorship
The most often used theoretical approach to sponsorship has
been the exchange relationship between the sponsor and the
sponsored guided by the tenets of rationality, marginal utility
and fairness (McCarville and Copeland, 1994). According to
these notions successful sponsorships involve the exchange of
valued resources on the basis of each partner’s contribution
leading to balanced relationships and to satisfied partners.
Meenaghan (2001) proposed a more complex theoretical
framework predicated on key axioms such as goodwill in
sponsorship, the process of image transfer and the concept of
fan involvement. The first tenet posits that consumers perceive
commercial sponsorship as involving benefits to society (a halo
of goodwill effect) resulting in a lowering of consumer defense
mechanisms. This halo of goodwill phenomenon differentiates
sponsorship from advertising and may encounter to consumers
varied receptivity to these two alternative methods of marketing
communications. The second notion argues that different
sponsorship categories (i.e. sports, arts, or social causes)
transfer different image values to the sponsor whereas the last
notion states that sponsorship intervenes in the emotional
relationship between consumers and their leisure/social
activities. However, both of the above approaches are
confined to certain parties: the exchange perspective
examines the relation between the sponsor and the sponsored
organization whereas Meenaghan’s (2001) view, although
considers more constituencies (e.g. sponsors, consumers, and
sport fans) and recognizes the effects of sponsorship on society,
does include all the parties involved.
To consider all the constituencies involved in a sponsorship,
stakeholder theory is proposed here as the most appropriate
theoretical framework in managing sponsorship. A stakeholder
perspective in sponsorship can benefit academic scholars and
practitioners in identifying all the stakeholders involved in a
corporate sponsorship; in understanding their needs, influences,
and goals; in prioritizing stakeholders; and in providing a
comprehensive picture that will assist in better evaluating
sponsorship effectiveness. Overall, a stakeholder approach
provides useful guidelines in effectively managing sponsorship
investments by taking into consideration and serving the
divergent (and often conflicting) interests of all the stakeholders
involved. Thus, to maintain profitable relationships with all
stakeholders and be successful in the long-run (Smith, 2003), a
corporation needs to take into account all the stakeholders
involved in a sponsorship. Furthermore, a stakeholder approach
provides the foundation for further research initiatives in
sponsorship by examining its effects on stakeholders that have
not taken into account before (e.g. communities, media,
suppliers, competitors) or by combining stakeholder groups and
their reactions to sponsorship.
Taking an instrumental stakeholder perspective, the present
study proposes that a number of stakeholders are affected and
affect a corporation in a sponsorship. As shown on Figure 1,
these stakeholders are the initial ones (employees, managers,
customers, competitors, media, suppliers, community, and
shareholders), and new stakeholders (sport consumers,
sponsored organization, and sponsorship agencies). Because
analysis of all the stakeholder groups and their role in
2.1.1 The role of shareholders in stakeholder approaches
Based on Mitchell’s et al. (1997) attributes of stakeholders,
research has shown that shareholders encompass all of them
(power, legitimacy and urgency) and to a higher degree than
any other stakeholders (Agle et al., 2000). Shareholders not
only constitute the principal stakeholders of a firm but also
determine its market growth strategy (Logsdon and Lewellyn,
2000). The main interests of the shareholders are usually
addressed through profits. Shareholders invest their capital
and expect to get a return either through dividends paid out
by the corporation or through increased share prices (Smith,
2003). However, shareholders can create the appropriate
incentives for top managers and monitor their behaviors in
order to maximize a company’s profits (Jensen and Meckling,
1976). Furthermore, shareholders can act as activists who
take actions (e.g. submit a shareholder resolution) to bring
about social change by pressing their interests in order to
influence corporate behavior (Van Buren and Paul, 2000).
Shareholder activists make sure that moral standards
characterize all corporate activities, and information about
these activities and corporate social performance is available
(Van Buren and Paul, 2000).
Friedman and Miles (2002) have identified four types of
relations/contracts between a firm and its stakeholders: explicit
recognized contracts, implicit recognized contracts, implicit
unrecognized contracts and no contracts. In explicit recognized
contracts, they identify shareholders whose relation with the
top management and the firm is characterized as necessary
compatible. They also distinguish shareholders as large or
institutional and small, individual shareholders. The first group
of shareholders “can directly influence corporate policy
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International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
Figure 1 Stakeholders involved in a corporate sponsorship
corporate sponsorship is beyond the scope of this paper, the
focus here is on the shareholders reactions to sponsorship.
indicated that Olympic sponsorship has a small positive
effect on the marketplace and statistically significant increases
in stock prices. Johnson and Cornwell (2004) studied the
effect of 51 sponsorship announcements of Australian firms
sponsoring the 2000 Olympic Games on their stock prices.
They reported a small, positive increase in firms’ values.
2.2.1 Shareholder reactions to sponsorship announcements
Several studies attempting to evaluate sport sponsorship
effects on shareholders reaction report positive effects.
Cornwell et al. (2004) studied the impact of major league
sports (baseball, basketball, football, hockey and golf) official
product or services announcements on stock prices of 53
sponsoring firms. They found that official sponsorships were
perceived positively by stock market investors. Specifically,
the increase in share values around the time of the
sponsorship announcements ranged between $123 million
to $558million. Sponsorship effectiveness, measured by stock
prices, has been found to be related to the “relatedness” or
“congruence” between a sponsor and the sport (Cornwell
et al., 2001). However, the most impressive results were found
by Pruitt et al. (2004) on a study of the impact of NASCAR
sponsorship announcements on the stock prices of the
sponsors. The 24 companies that sponsored NASCAR
between 1995 and 2001 gained an average increase in stock
value of $324 million. Their findings indicated the largest
increases in shareholder wealth ever recorded in the
sponsorship literature. Only one study failed to convey
statistically significant positive changes in stock prices
probably due to the diversity of the data. Kinney and Bell
(2003) studied 61 sport sponsorships announced in the Wall
Street Journal. Overall, they found no statistical evidence of
positive impact on the stock prices of the sponsoring firms.
With regard to the impact of Olympic sponsorships, the
literature presents similar findings. Miyazaki and Morgan
(2001) used event study analysis to assess the market value of
the 1996 Olympic Games sponsorships. Their results
3. Method of the study
This research examines the connections between the practice
of shareholder management and achievement of corporate
performance goals in a business to business situation such as
sponsorship. Due to their central role in a corporation,
shareholders were chosen to be studied and specifically, their
reactions to sponsorship investments. Financial constraints
did not allow research on all stakeholders involved in
sponsorship. Moreover, because communication between a
firm and its stakeholders is crucial for getting the latter
involved in accomplishing common objectives, the
information provided to stakeholders regarding sponsorships
was also taken into account in evaluating the results.
The hypotheses examined were:
H1.
H2.
H3.
560
Olympic sponsorship announcements will result on
positive shareholders’ reactions, expressed as
statistically significant returns of listed firms.
Sport federation sponsorship announcements will
result on positive shareholders’ reactions, expressed
as statistically significant returns of listed firms.
All the events (Olympic sponsorship þ sport
federation sponsorship announcements) will result on
positive shareholders’ reactions, expressed as
statistically significant returns of listed firms.
International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
3.1 Event study analysis
Event study analysis has enjoyed a wide acceptance in the field
of finance, marketing, and management by using the CAR
analysis (Cumulative Abnormal Returns). In marketing, event
study analysis has been used to assess the impact of marketing
variables such as sponsorship (Cornwell et al., 2004; Johnson
and Cornwell, 2004; Miyazaki and Morgan, 2001), new
product (Chaney et al., 1991), brand extension (Lane and
Jacobson, 1995) and celebrity endorsement (Agrawal and
Kamakura, 1995) announcements on stock returns.
Mackinley (1997) reviews several studies using event study
analysis. Most of these studies show that excess returns are
not normally distributed. The violation of normality
hypothesis is due to excessive skewness and
heteroscedasticity, which can cause significant statistical
inference problems (Brown and Warner, 1985). On the
other hand, researchers have recently applied multivariate
regression models (MRM) using a dummy variable to
represent a significant event date of different events (e.g. a
variable takes the value of 1 in the event date and 0
otherwise). The MRM approach relies on traditional t-test
statistic and is not as sensitive to the violation of the normality
hypothesis especially when bootstrapping is used (Hein et al.,
2001); Krammer, 2001). The bootstrap technique often
provides inferences that are substantially more accurate than
ones based on asymptotic theory (Mickinnon, 2002).
Therefore, both techniques the CAR analysis and the
MRM/bootstrap approach were used in this study to
examine the impact of sponsorship announcements on stock
prices.
The event type methodology is used to test the sort-term
reaction hypothesis and the extent to which this is related to
sponsorship announcements, by analyzing the excess return
or abnormal return. Abnormal returns are computed
according to the market model which explains the stock
returns movements in relation to market’s returns. Estimating
the market model produces t-statistics for each estimated
dummy variable coefficients. Because returns display even a
small degree of heteroscedasticity and skewness, the sample
standard deviation was used to normalize the t-statistic
(Krammer, 2001). In this study, the market model is
estimated to produce the abnormal returns (AR) and
cumulative abnormal returns (CAR). T-statistic was
examined to evaluate the power of the tests and the
bootstrap technique proposed by Krammer (2001) was
employed to test for statistical significance of the dummy
variable (MRM approach). Finally, SHAZAM econometric
software for windows standard edition was used for all the
statistical calculations of the study.
analysis because they met all the above criteria. The same
criteria were used for identifying the six sponsors of the
national sport federations. The federations of soccer,
basketball, track and field, and weight lifting were chosen
because of their importance and popularity. Soccer is the
most popular sport not only in Greece but globally with over
3.5 billion people watching and/or playing it (Quinn, 2007).
Basketball attracts the interest of 400 million consumers
(Quinn, 2007) whereas track and field and weight lifting are
most attractive sports found to interest Greeks (attending
and/or watching on TV) along with soccer and basketball.
Thus, the final sample size of the analysis was 11. Tables I
and II presents the firms used for the study where all
sponsoring firms were international companies doing business
mostly in other European countries. Moreover, in addition to
the Athens Stock Exchange, three of these sponsors were
listed in other international Stock Exchanges (New York and
London Stock Exchanges). Data for stock prices were
obtained through the Athens Stock Exchange daily files.
4. Results
4.1 Olympic Sponsorship announcements
Table III presents abnormal returns aggregated over stocks for
the Olympic Sponsors. The power of the z-test for a mean
average standard error of 0.0176 was calculated. Using the
MRM approach, the results regarding the CAR remained the
same (Table IV). However, studying the abnormal returns
(AR), there is a slight positive (0.2 percent) significant effect on
day 22, and a small negative effect on the next day. A possible
explanation is the information leakage by media on day 22,
and day 21. However the overall result on the [22, 0] window
is not significant.
4.2 Sport federation sponsorships
Table V presents the abnormal returns aggregated over stocks
for the sport federation sponsorship announcements.
Significance was found on six days before the official
announcement is made and the fifth and sixth day after
sport sponsorship announcements. However, before the
announcement the effect was negative whereas after the
announcement on days five and six there is a positive effect. It
seems that either the market responded much later than the
sponsorship announcement or the positive effect might not be
related to the event but it is the results of other developments.
Moreover, the negative effect detected on day 2 6 might not
have anything to do with the sponsorship announcement.
The cumulative abnormal returns (CAR) of the stocks of
the sponsoring firms are presented on Table VI. Significant
effect were detected on the time intervals (2 16, 2 20), (2 2,
þ2), and (þ 5, þ9). In two cases a negative effect is presented
and only in the last interval the effect is positive. For the time
interval (þ 5, þ9) the positive effect was 4.35 whereas for the
interval (22, þ2) there was a negative effect of 22.7 and for
the interval (216, þ20) the negative effect was 2 3.4. Further
examination of the data showed that the positive effect of the
sport federation announcements was due to the influence of a
particular stock and it was not present in all stocks. Thus, this
effect should be interpreted with caution because it does not
represent the sport federation sample but only one case of it.
3.2 Sponsorship data
The sponsors of the 2004 Olympic Games (an international
mega sport event) that took place in Athens, Greece and the
sponsors of the football (soccer), basketball, track and field,
and weight lifting sport federations constitute the data of the
study. The basic criteria for selecting a firm were:
.
to be in the Athens Stock Exchange (ASE);
.
to do international business; and
.
to have made an official announcement of the
sponsorship.
From the 28 national sponsors, supporters and suppliers of
the 2004 Olympic Games, only five firms were included in the
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International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
Table I Sponsoring firms of the study
Firm
Product category
Type of firm
International business in
Stock exchange
2004 Olympic sponsors
Alpha Bank
Financial services
Private
Athens, London, New York
OTE
Cosmote
Delta
DEI
Public
Public
Private
Public
Albania, USA, Great Britain, Ukraine, FYROM, Bulgaria, Cyprus,
Romania, Serbia
Albania, FYROM, Bulgaria, Romania, Serbia
Albania, FYROM, Bulgaria, Romania, Serbia
Bulgaria, Cyprus, Romania, Serbia, Ukraine, Georgia, FYROM
Albania, South East Europe
Telecommunications
Telecommunications
Dairy products
Electrical energy
Athens, New York
Athens
Athens
Athens
Table II Sponsoring firms of the study
Firm
Product category
Type of firm
Sport federation
International business in
Stock exchange
National sport federation sponsors
OPAP
Lottery and betting
Peiraius Bank
Financial services
Public
Private
Soccer
Soccer
Athens
Athens
Metrolife Emporiki
Eko-Elda
Eurobank
Insurance services
Petroleum products
Financial services
Private
Public
Private
Track and field
Track and field
Basketball
Ethniki Bank
Financial services
Public
Weight lifting
Cyprus
USA, UK, Egypt, Romania, Bulgaria, Cyprus,
Ukraine, Serbia
Romania
Albania, Serbia, Bulgaria, Georgia, Cyprus
UK, Bulgaria, Cyprus, Luxemburg, Turkey, Poland,
Ukraine, Romania, Serbia
UK, Albania, Australia, Bulgaria, Egypt, FYROM,
Romania, Serbia, South Africa, Turkey
Table III Results for the Olympic sponsorship announcements by day
Day
Abnormal returns
(AR)
Z-statistic
Z-CAR
Abnormal returns
of MRM * *
25
24
23
22
21
0
1
2
3
4
5
20.0044
0.0047
0.0048
0.0025
20.0003
20.0046
20.0120
0.0027
0.0031
0.0016
0.0090
20.5610
0.5767
0.6234
0.3205
20.0254
20.5856
21.5369
0.2879
0.4000
0.1980
1.1387
–
–
–
0.0023 *
20.0006 *
20.0040
20.0120
0.0008
–
–
–
Athens
Athens
Athens
Athens, New York
Table V Results for sport federation sponsorship announcements by day
Notes: *Significant at the 0.05 level; * * in all cases the empirical size was
0.049, very close to the theoretical which was 0.05
Day
Abnormal returns
(AR)
Z-statistic
Z-CAR
Abnormal returns
of MRM * * *
26
25
24
23
22
21
0
1
2
3
4
5
6
20.0127
20.0052
0.0037
20.0053
20.0070
20.0065
20.0061
0.0003
20.0086
0.0013
0.0058
0.0158
0.0209
2 1.7000 * *
2 0.7114
0.4770
2 0.6927
2 0.9197
2 0.8833
2 0.7963
0.0365
2 1.1408
0.1656
0.7554
2.1196 *
2.7684 *
–
–
–
–
20.006
20.007
20.007
0.002
20.009
–
–
–
–
Notes: *Significant at the 0.05 level; the power was greater than 0.8;
* *significant at the 0.10 level; * * *in all cases the empirical size was 0.049,
very close to the theoretical which was 0.05
Table IV Cumulative abnormal returns of Olympic sponsorship
announcements
Time interval
Cumulative abnormal returns (CAR)
Z-CAR
(216, 2 20)
(211, 2 15)
(210, 2 6)
(25, 21)
(22, 2)
(25, 5)
(5, 9)
(10, 14)
(15, 19)
0.006
20.011
20.012
0.006
20.011
0.007
20.008
20.023
20.015
0.43
20.69
20.76
0.42
20.67
0.24
0.43
21.28
20.85
4.3 Total results for sponsorship announcements
The results for the total sample of sponsorship
announcements show that there is no significant effect of
sponsorship announcements on the stock prices of the
corporate sponsors.
5. Discussion/implications
The increasing globalization of sports makes sponsorship an
international communication vehicle, which can assist in
achieving global and local objectives by transmitting a
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Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
Table VI Cumulative abnormal returns of sport federation sponsorship
announcements
usual print media delay usually over television and radio. Thus,
television and radio usually announce sponsorship agreements
before they are officially publicized by the parties involved
resulting probably in an early shareholders reaction. The
positive effects are very small confirming previous findings
(Johnson and Cornwell, 2004; Miyazaki and Morgan, 2001)
and in some cases it is not clear if they are due to sponsorship
announcements. The results differed somewhat on the sport
federation sample where positive effects were found on the 6th
day of the event.
These findings may raise even more questions regarding
whether shareholders consider and understand sponsorship as
an investment (use of resources intended to increase future
production output or income) or if this is just a belief of the
management and marketing team of the firms which is not
adequately communicated to principal stakeholders. An
investigation on the dates of sponsorship announcements
indicate that in several occasions a press conference or any
other event that could provide more publicity and attract
investors’ attention did not follow press releases.
Furthermore, an examination of the Athens Stock Exchange
official announcements showed that corporate sponsors did
not inform shareholders about their sponsorship agreements.
Thus, lack of communicating the sponsorship to target
stakeholders (shareholders) might be another reason that
explains the results of the study. Contrary to the stakeholder
perspective that embraces accountability and communication
as two basic elements of corporate governance (Nwanji and
Howell, 2007), international sponsoring firms do not seem to
take into account the interests of their shareholders nor
communicate their business investments to them.
Consequently, an under-exploitation phenomenon of the
opportunities provided by a sponsorship investment becomes
apparent here making a stakeholder approach even more
imperative. One of the main goals of stakeholder theory is to
help top management:
.
understand their stakeholder environment;
.
manage more effectively their relations with all
stakeholders involved; and
.
improve the value of the consequences of their decisions
and reduce the damage to stakeholders (Nwanji and
Howell, 2007).
Time interval
Cumulative returns (CAR)
Abnormal Z-CAR
(216, 2 20)
(211, 2 15)
(210, 2 6)
(25, 21)
(22, 2)
(25, 5)
(5, 9)
(10, 14)
(15, 19)
20.033
20.007
20.017
20.025
20.028
20.008
0.043
20.018
20.004
2 2.06 *
2 0.05
2 0.98
2 1.23
2 1.66 * *
2 0.44
2.58 *
2 0.15
2 0.19
Notes: *significant at the 0.05 level; * *significant at the 0.10 level
consistent brand image across global markets (Rines, 2002).
This study examined the impact of sponsorship
announcements on shareholders of international sponsoring
firms. The findings provide useful theoretical and practical
implications that deserve mention.
Although no positive effects were found, the study
contributes significantly to the sponsorship literature with the
theoretical foundation proposed here. To the author’s
knowledge, this is the first study that proposes stakeholder
theory in managing and evaluating sponsorship. The
stakeholder perspective can benefit academic scholars and
practitioners in identifying and recognizing all the stakeholders
involved in a corporate sponsorship; in understanding their
behavior and reactions to various types of sponsorships; in
clarifying and categorizing sponsorship goals according to their
stakeholders (prioritization of stakeholders); and in providing a
comprehensive picture that will assist in better evaluating
sponsorship effectiveness. So far, research shows that corporate
sponsors are confined to evaluating sponsorship in terms of
consumers and shareholders reactions. Stakeholder theory
provides the foundation for considering the interests of all the
other parties involved in a sponsorship. In order to maintain
profitable relationships with all stakeholders and be successful
in the long-run (Smith, 2003), a corporation needs to take into
account all the stakeholders involved in a sponsorship. Overall,
a stakeholder approach provides useful guidelines in effectively
managing sponsorship investments by taking into consideration
and serving the divergent (and often conflicting) interests of all
the stakeholders involved. However, a stakeholder perspective
cannot benefit managers only in the management and
sponsorship evaluation process but in the initial stage of their
corporate social responsibility plan. Furthermore, a stakeholder
approach provides the foundation for further research
initiatives in sponsorship by examining its effects on
stakeholders that have not taken into account before
(e.g. communities, media, suppliers, competitors) or by
combining stakeholder groups and their reactions to
sponsorship.
The empirical results provide evidence that the acquisition of
Olympic and sport sponsorships is received almost indifferently
by the national and international investment marketplace. The
data of the study indicated that national and global investors
(shareholders) did not react to Olympic and/or sport federation
sponsorship announcements. However, a small positive effect
two days before the sponsorship announcements was observed
in the Olympic sponsorships. This could be explained by a
Thus, corporate sponsors need to embrace a stakeholder
perspective in order to manage more effectively and fully
exploit sponsorship.
6. Future research recommendations/limitations
This paper has attempted to raise the ambition of sponsorship
studies by seeking a more comprehensive theoretical
framework (stakeholder theory) and research methodology
to measure sponsorship effectiveness. If the saying “if you
can’t measure it, you can’t manage it” holds, then it becomes
apparent that we need to improve our measurements of
sponsorship effectiveness. It becomes apparent that when
assessing sponsorship effectiveness a number of stakeholders
(e.g. community, consumers, employees) need to be taken
into consideration in order to gain a more comprehensive
picture. Thus, when studying international sponsorships of
global firms, the global stakeholders need also to be identified
and evaluate their reactions to this investment. Moreover, the
quality and level of communication between top management
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International and national sport sponsorship
Journal of Business & Industrial Marketing
Rodoula Tsiotsou
Volume 26 · Number 8 · 2011 · 557 –565
of the sponsoring firm and its stakeholders may also stimulate
further research inquiries. Furthermore, there is no study
available in the literature reporting other types of shareholders
reactions (e.g. attitudes and beliefs) to sponsorship
investments. Information about how shareholders feel
regarding sponsorship is necessary in order to better
evaluate and explain their reactions in stock markets.
Another interesting research avenue would be to study if
international firms have different objectives and ways of
managing sponsorship when sponsoring international sport
events or international sport organizations, than when dealing
with national sponsorships. A comparison of the effects of
announcements of different types of event sponsorship
(e.g. international sport events vs international cultural
events) could be a future research task. Proper sponsorship
leveraging and activation strategies take time to implement
and take time for the corporation to realize results. Therefore,
future research should be more longitudinal in nature –
whether that research uses event study methodology or not.
The study was intended to produce meaningful data that
would provide a tool and data source on which quality
marketing efforts and sponsorship activities can be based.
However, a number of limitations became apparent during
the course of this study. First, this research is limited to Greek
sponsorships (Olympic and non-Olympic) within the specific
socio-economic environment. Moreover, event study
methodology is used to test only short-term reactions, thus
limiting our ability to detect long-term effects of sponsorships
announcements. However, when employing event study
methodology by using a longer time window, the isolated
effects of sponsorship announcements cannot be captured
because other business activities might cause stock prices
fluctuations (e.g. mergers, introduction of new products/
services). Regardless of the isolated sponsorship effects
captured on this study, any generalizations of the present
findings should be made with caution.
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About the author
Rodoula Tsiotsou, PhD, is currently an Assistant Professor of
Marketing in the Department of Marketing and Operations
Management at University of Macedonia, Greece. Her
research interests include strategic services marketing, nonprofit marketing, and leisure services marketing (sports and
tourism). She has published in a variety of international
scientific journals such as The Service Industries Journal,
Journal of Marketing Management, International Journal of
Retail and Distribution Management, Applied Financial
Economics Letters, Journal of Targeting, Measurement,
& Analysis for Marketing, International Journal of Non profit
and Voluntary Sector Marketing, Journal of Travel & Tourism
Marketing, and International Journal of Sport Marketing
& Sponsorship. Rodoula Tsiotsou can be contacted at:
rtsiotsou@uom.gr
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