The Impact of Title Sponsorship on the Stock Return of Sponsoring Companies on the PGA Tour Since the Inception of the FedExCup in 2007

Abstract

The purpose of this study was twofold: (1) to present an analysis of the impact of title sponsorships on the stock return of sponsoring companies on the PGA Tour since the introduction of the FedExCup in 2007 and (2) to assess the individual effects of specific tournament characteristics on the sponsoring company’s stock return. To measure such impacts, this study utilized an event study analysis through the implementation of a panel event study (Clarke & Schythe, 2020) and through a multiple regression analysis. The PGA Tour was selected since it is one of the most popular major-league sports in the United States, it consistently sells title sponsor rights for most events in each PGA Tour season, and due to the ‘high profile nature’ and ‘consistent visibility’ of golf sponsorships within the sport (Ko et al., 2008). All these features combined suggest that the PGA Tour is a particularly appealing investment option for companies and corporations in the United States. Thus, there is an opportunity to measure sponsorship effectiveness within the sport of golf by analyzing the various effects of title sponsorship associated with each of the 11 chosen FedExCup PGA Tour tournaments on the sponsoring company’s stock return. This study utilizes PGA Tour data on FedExCup events throughout 6 PGA seasons: 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2017-2018, and 2018-2019 to help narrow the literature of sponsorship effectiveness through title sponsorship in major-league sports. The findings of this study present an outcome consistent with previous literature – measuring sponsorship effectiveness in major-league sports is a difficult task. However, the results of this study suggested small, but statistically significant, effects of title sponsorship on the stock return of sponsoring companies in the days leading up to and following the event day of each FedExCup tournament.