Does football sponsorship improve company performance?

ABSTRACT

Research question: This paper investigates how football sponsorship influences the financial performance of sponsors. We suggest a new instrumental variable (IV) to avoid endogeneity.

Research methods: We use an IV regression framework combined with a fixed effects model. The number of tweets containing both team and sponsor names are collected to use as the IV.

Results and findings: We analyze top European leagues. Our results show that football sponsorship is more charity than commercial investment. The analysis of determinants of becoming a sponsor and sponsorship amount shows that companies owned by individuals are more likely to become a sponsor.

Implications: Shareholders should be aware of sponsorship deals, and senior management should analyze the financial assumptions of such projects carefully.

KEYWORDS:

• Football
• sponsorship
• instrumental variable
• Twitter

JEL CLASSIFICATIONS:

• L83
• O16

Acknowledgments

We would like to thank Marina Zavertiaeva, Dennis Coates, Elena Shakina, Angel Barajas, Maria Molodchik, Félix J. López Iturriaga, Carlos M. Jardon, and Vitaliy Strokachev, participants of 2014 Southern Economics Association meetings, 6th ESEA Conference in Sports Economics and anonymous referee for the valuable advice.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. All data are available on a request.

Additional information

Funding

This work is an output of a research project implemented as part of the Basic Research Program at the National Research University Higher School of Economics (HSE).