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Report: Sports sponsors see stock lift
Professor's study says that bump comes in first week following announcement of sponsorship deals.
October 14, 2005: 8:14 AM EDT
Sports sponsors see a bump in stock price after the deals are announced, according to a new study.
Sports sponsors see a bump in stock price after the deals are announced, according to a new study.
SportsBiz SportsBiz Column archive Sports Illustrated email Chris Isidore

NEW YORK (CNN/Money) - Sports sponsorships can give at least a short-term lift to a sponsor's stock price, according to a published report.

USA Today reported a study by University of Missouri-Kansas City finance professor Stephen Pruitt found that stocks of sponsors generally saw a gain in stock price the first week after a sponsorship is announced.

"I personally thought when we started this research that these sponsorships were being driven by ego rather than economics," Pruitt told the newspaper.

But Pruitt's study of 53 sponsors found that sponsorship deals with the National Football League and Major League Baseball left sponsors' stocks essentially unchanged as a group, while Professional Golf Association sponsorships led to a 3 percent rise, deals with the National Basketball Association lifted stocks 1.9 percent on average, and National Hockey League sponsors posted an average 1.8 percent.

Pruitt said the difference could be due to the higher costs for an NFL or MLB sponsorship deal.

"No way are we saying that NFL and MLB are bad," Pruitt told the newspaper. "It's just that dollar-for-dollar, hockey, golf and basketball appear to be better."

Pruitt had done an earlier study that showed NASCAR sponsors saw a 1.3 percent above the market as a whole in the wake of the sponsorship deal, with a net 2.4 percent gain for those sponsors selling automotive products.

The newspaper reports Pruitt's most recent study also suggests that sponsors whose products are seen as being more closely tied to the sport, such as John Deere being the official golf course equipment provider, see an 11 percent better return than the less directly related sponsors, such as Century 21's status as the official real estate organization of MLB.

Terry Lefton, editor at large of the trade publication Sports Business Daily, said that Pruitt's study is probably good news for the sports leagues seeking new sponsorship deals.

"It's not why people buy these things, but if it gives (leagues) another sales point, they're happy to have it," he told the newspaper.

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