Collins College of Business Magazine

2 4 T H E U N I V E R S I T Y O F T U L S A B U S I N E S S M A G A Z I N E Companies have been using sport sponsorships as a way to reach target audiences since professional sports first began. IEG, a company that measures sponsorship spending, estimates that companies will spend around $14.3 billion on sport sponsorships in North America. Collins College of Business professors Adrien Bouchet (sports administration), Mike Troilo (international business) and Brian Walkup (finance), along with University of St. Louis Professor Thomas Doellman, have teamed up to explore whether sport sponsorships have an international reach that is worthy of their high price tag. The study focuses on top soccer teams and the international matches they play. The authors perform an event study on inter - national soccer matches. (An event study measures whether the stock price of a company fluctuates after a specific event). In this particular study, the event was international soccer "friendlies," international soccer games played before the regular season, similar to American football pre-season games. Many of the marquee soccer clubs, such as Manchester United, will travel great distances to play other top clubs. Increasingly, the soccer teams are using these "friendlies" to help their main corporate sponsor, whose name is on the front of their jerseys, gain exposure in a foreign market. Bouchet notes, "We wanted to see if these corporate investments paid off. To test it, we looked at the stock prices of the sponsoring compa - nies when the soccer clubs played friendlies in North America and China. We chose North America and China because those are the two largest countries by GDP. We explored the top 50 international soccer clubs and where they played their friendlies over the last decade. We then looked at the stock price before and after the game and adjusted for normal stock fluctuations." As an example, Manchester United, Forbes magazine's most valuable professional sports club, recently signed the largest sport sponsorship in history. The England-based soccer club, which plays in the high-powered English Premier League, announced in 2012 that Chevrolet would become the club's marquee sponsor. Chev - rolet, a brand of General Motors based in the U.S., has committed to a partnership that will pay Man U, as the team is known, a fee of $560 million for seven years. One of the chief objectives of Chev- rolet's investment was the global reach of the Manchester United brand. When Chevrolet made the decision to invest in Man U, they noted as one of the main reasons the global reach of the team. In an article in Adweek magazine, Chevrolet's Global Marketing Chief Tim Mahoney states, "The partnership with Manchester United is of a global nature, and we intend to continue this relationship to help build the Chevrolet brand around the world." He went on to cite the growing importance of the East Asian market, specifically the Chinese market. To help Chevrolet reach its intended audience, Manchester United's 2013 friendlies schedule included games in Bangkok, Japan and Hong Kong. A key component of the sponsorship was advertising placement on the front of Manchester United's jerseys starting in the 2014 season. In the world of sport sponsorships, this is hallowed real estate. For Chevrolet, this real estate is especially valuable because of Man U's international following, which numbers around 659 million. By signing this sponsorship deal, Chevrolet hopes to increase the long-term value of its stock price. Results from the event study show a cumulative abnormal return to the stockholders of the sponsoring companies. The returns were greater for the marquee clubs such as Manchester United. A paper based on this study is currently under review at the Journal of Sport Management, the leading academic journal in the sport management field. is Chevrolet's stock price affected when Manchester united travels abroad? Adrien Bouchet, Warren Clinic Endowed Assistant Professor of Sports Administration; Michael Troilo, Wellspring Assistant Professor of International Business; Brian Walkup, Assistant Professor of Finance Faculty Research

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