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| The fact that Dale Jarrett won the pole position for the Daytona 500 isn't necessarily good news for UPS, his sponsor. |
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NEW YORK (CNN/Money) -
The Daytona International Speedway will be packed with executives from corporate sponsors this Sunday, cheering on their marketing investments as the Nascar season gets underway.
But shareholders may not be cheering as hard for the company car to win the Daytona 500.
That's because over the last 20 years the stock of the sponsor of the winning car at Daytona has ended up badly trailing the broader market in the year of their win.
Eleven times over that period, the sponsor's stock has trailed the Standard & Poor's 500 index, by an average of 27 percent. The only four years in which the winning sponsor's stock beat the broad market, it was by an average of only 7 percent. (The other winning sponsors were not publicly traded.)
Last year was no exception.
The executives at Anheuser-Busch Cos. (Research) must have been happy when Dale Earnhardt, Jr. captured the checkered flag in a car adorned with Budweiser logos.
But the company's stock -- which had been on a 10-year winning streak -- suddenly lost its footing after the win. It ended the year off nearly 4 percent, while the S&P gained 9 percent.
This is not to suggest that being a Nascar sponsor is a bad business move. Nascar fans are renowned for their financial support of their favorite team's sponsors.
Fans "see a direct relationship between sponsor and how the good their teams are," claims Susan Rosenberg, spokeswoman for United Parcel Service (Research), a Nascar sponsor since 2000. Rosenberg said UPS has enjoyed far more direct gains in revenue as a result of its Nascar deal than it saw in previous sports sponsorships, including the Olympics.
Investors seem to appreciate this loyalty, too, Daytona curse notwithstanding.
University of Missouri professor Stephen Pruitt, in a far more scientific study than this column has conducted, found that stocks of Nascar sponsors got a very nice bump in the two days following the announcement of their sponsorship deals.
During that window, sponsors' stocks rose about 1.3 percent above the market as a whole, with a net 2.4 percent gain for those sponsors selling automotive products. It proves that Nascar has more fans among portfolio managers than you might assume.
"If every Nascar fan in the world decided to buy stock, it wouldn't be enough to move their shares this much," said Pruitt, noting that the average capitalization increase for the stocks was about $334 million above the actual sponsorship costs. "They're huge companies."
As for this year's race, UPS maybe should be a little nervous. Its car, driven by Dale Jarrett, won the prime pole position in Sunday's race.
Rosenberg laughed it off when told of the Daytona curse, though.
"We're breaking all sports curses this year," she said, referring to the Boston Red Sox recent World Series triumph. "We won the pole on Sunday and our stock has gone up this week. Maybe that's an indication this curse is broken, too."
She could be right. Maybe this is an era when all sports curses, like my beloved stadium sponsor curse and the Super Bowl stock market indicator, are doomed to failure.
In fact, the nation's largest brewer might even cheer for Dale Jr. without worrying about doing harm to shareholder value.
The only two times in the last 15 years that a winning sponsor's stock did shake the curse were also the years they captured a quick second win -- in 1995 when Sterling Martin was capturing back-to-back wins for Kodak, and in 1999, when Jeff Gordon repeated his 1997 win for DuPont.
Still, I'd think twice before I made a big investment in whatever company finds its logo front and center in the winner's circle this Sunday. Just in case.
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