The Value of Winning in Motorsports: Sponsorship-linked Marketing

TLDR

Corporate sponsorship of sports is a common marketing tool, yet the economic value of sponsorship and the impact of winning versus mere participation remain largely unexplored, as illustrated by the adage “Win on Sunday, Sell on Monday.” This study aims to assess the share‑price impact of sponsoring Indy 500 drivers to determine whether victories or participation generate greater value for firms. Using historical data on Indy 500 sponsorships and firm share prices, the authors analyzed the effect of sponsorship victories versus participation on corporate valuations. The analysis shows that only sponsors with logical ties to the automotive industry experienced statistically significant share‑price gains from victories, while unrelated sponsors saw little effect. Reference: Economaki, 1997.

Abstract

<h3>ABSTRACT</h3> Corporate sponsorship of events, especially sports, has become a commonplace marketing communications tool. Still at question in sponsorship-linked marketing programs is the economic value of the firm. Also largely unexamined in marketing research on sponsorship is the impact of participation outcomes. For example, is it more valuable to the firm to sponsor a winner, or is it simply participation and, thus, exposure that brings value to the firm? This study presents an analysis of the share-price impact of sponsoring the drivers in the Indianapolis 500 mile race to assess the value of motorsports victories and participation within a firm9s sponsorship-linked marketing strategy. This approach allows the use of historical data in the analysis of the value of sponsorship. While the findings of the study suggest that autoracing sponsorships involving products that are not closely linked to the automotive industry probably offer little chance for increasing overall corporate valuations, sponsors with logical or matched ties to the consumer automotive industry registered statistically and economically significant gains in their share prices around the time of their sponsorship victories. 'Win on Sunday, Sell on Monday-an old adage founded by Detroit9s automakers, which has withstood the racing test of time. -Economaki, 1997