Benefits of Sponsoring a Football Club: An Event Study

Abstract: Motivated by an increasing interest in sports industry, this paper examined the relationship between a football club's performance in the UEFA Champions League and its jersey sponsor's stock price. The paper aims to quantify the benefits of football sponsorships, expand current academic knowledge about sport sponsorships and provide insights why companies are investing increasing amounts of money into football clubs. A total of 9 teams and 12 sponsoring companies were used in this analysis which covered 12 seasons, starting from 2001/02. Using the event study methodology it was found that despite the outcome, positive abnormal returns can be observed after every game. Additionally, size of a company and stock exchange where the company is listed seem to be important factors affecting abnormal returns. There is some evidence that pre-game probability of a team winning or losing a game decreases abnormal returns however these results lack statistical significance.