Hostname: page-component-745bb68f8f-kw2vx Total loading time: 0 Render date: 2025-02-05T22:51:29.386Z Has data issue: false hasContentIssue false
  • English
  • Français

The NASCAR Phenomenon: Auto Racing Sponsorships and Shareholder Wealth

Published online by Cambridge University Press:  31 January 2005

STEPHEN W. PRUITT ,
T. BETTINA CORNWELL  and
JOHN M. CLARK
STEPHEN W. PRUITT
Affiliation:
Henry W. Bloch School of Business and Public Administration, University of Missouri—Kansas City, [email protected]
T. BETTINA CORNWELL
Affiliation:
University of Queensland, Brisbane, Australia, [email protected]
JOHN M. CLARK
Affiliation:
University of Southern Mississippi, [email protected]
Get access

Abstract

This study presents the first analysis of the impact of NASCAR sponsorship announcements on the stock prices of sponsoring firms. The primary finding of the study—that NASCAR sponsorship announcements were accompanied by the largest increases in shareholder wealth ever recorded in the marketing literature in response to a voluntary marketing program—represents a striking and unambiguous stock market endorsement of the sponsorships. Indeed, the 24 sponsors analyzed in this study experienced mean increases in shareholder wealth of over $300 million dollars, net of all of the costs associated with the sponsorships. A multiple regression analysis of firm-specific stock price changes and select corporate and sponsorship attributes indicates that NASCAR sponsorships with more successful racing teams, corporate (as opposed to product or divisional) sponsorships, and sponsorships with direct ties to the consumer automotive industry are all positively correlated with perceived sponsorship success, while corporate cash flow per share (a well-known proxy for agency conflicts within the firm) is negatively related with shareholder approval.

Type
Research Article
Information
Journal of Advertising Research , Volume 44 , Issue 3 , September 2004 , pp. 281 - 296
Copyright
© Copyright © 1960-2004, The ARF

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Arthur, Dave, Garry Dolan, and Michael Cole. “The Benefits of Sponsoring Success: An Analysis of the Relationship between Television Exposure and the Position of the Motorcyle Rider.” Cyber-Journal of Sport Marketing 2, 2 (1998).Google Scholar
Baldwin, Amy. “Corporations Zoom to Sponsor NASCAR.” Dayton Daily News, February 17, 2001.Google Scholar
Brown, Stephen J., and J.B. Warner. “Using Daily Stock Returns: The Case of Event Studies.” Journal of Financial Economics 8, 3 (1985): 205–258.Google Scholar
Clark, John M., T. Bettina Cornwell, and Stephen W. Pruitt. “Corporate Stadium Sponsorships, Signaling Theory, Agency Conflicts, and Shareholder Wealth.” Journal of Advertising Research 42, 6 (2002): 16–32.Google Scholar
Cornwell, T. Bettina. “Sponsorship–Linked Marketing Development.” Sport Marketing Quarterly 4, 4 (1995): 13–24.Google Scholar
Cornwell, T. Bettina, Stephan W. Pruitt, and Robert Van Ness. “The Value of Winning in Motorsports: Sponsorship-linked Marketing.” Journal of Advertising Research 41, 1 (2001): 17–31.Google Scholar
Cornwell, T. Bettina, Donald P. Roy, and Edward A. Steinard. “Exploring Managers' Perceptions of the Impact of Sponsorship on Brand Equity.” Journal of Advertising 30, 2 (2001): 41–51.Google Scholar
Cowen Research. “Eventus 6.3c User's Guide,” 2000.
Crimmins, James, and Martin Horn. “Sponsorship: From Managerial Ego Trip to Marketing Success.” Journal of Advertising Research 36, 4 (1996): 11–21.Google Scholar
Dunnavant, Keith. “Middle America at 170 MPH.” Mediaweek 11, 7 (2001): 20–24.Google Scholar
Godwin, Kelly. “Brand Loyalty: Sponsor, Sport Go Hand in Hand.” Daytona Beach News Journal, July 1, 2004.Google Scholar
Isidore, Chris. “Nascar Leaving Indy Cars in the Dust.” CNNMoney, “Sportsbiz.” [URL: http://money.cnn.com/2002/05/24/commen-tary/column_sportsbiz/indy/], May 24, 2002.
Jenson, Michael, and William Meckling. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics 3, 4 (1976): 305–360.Google Scholar
Johar, Venkataramani, and Michel Tuan Pham. “Relatedness, Prominence, and Constructive Sponsor Identification.” Journal of Marketing Research 36, 3 (1999): 299–312.Google Scholar
Johnsen, Michael. “As NASCAR's Fan Base Grows, So Does Drug's Sales.” Drug Store News 26, 8 (2004): 16.Google Scholar
Jones, Chris. “NASCAR Sponsors: Drive-By Marketing.” The Las Vegas Review-Journal, March 7, 2004.Google Scholar
Kover, Arthur. “Editorial: Decisions.” Journal of Advertising Research 42, 6 (2002): 5.Google Scholar
Lapio, Ralph, Jr., and K. Morris Speter. “NASCAR: A Lesson in Integrated Relationship Marketing.” Sport Marketing Quarterly 9, 2 (2000): 85–95.Google Scholar
Mathur, Lynette Knowles, Ike Mathur, and Nanda Rangan. “The Wealth Effects Associated with a Celebrity Endorser: The Michael Jordan Phenomenon.” Journal of Advertising Research 37, 3 (1997): 67–73.Google Scholar
McDaniel, Stephen R. “An Investigation of Match-up Effects in Sport Sponsorship Advertising: The Implications of Consumer Advertising Schemas.” Psychology and Marketing 16, 2 (1999): 163–184.Google Scholar
Meenaghan, John A. “Commercial Sponsorship.” European Journal of Marketing 17, 7 (1983): 5–73.Google Scholar
Meenaghan, John A. “The Role of Sponsorship in the Marketing Communications Mix.” International Journal of Advertising 19 (1991): 35–47.Google Scholar
Meenaghan, John A. “Ambush Marketing: Threat to Corporate Sponsorship.” Sloan Management Review 38, 1 (1996): 103–113.Google Scholar
Menzer, Joe. The Wildest Ride: A History of NASCAR (Or how a bunch of good ol'boys built a billion-dollar industry out of wrecking cars). Upper Saddle River, NJ: Simon and Schuster, 2001.
Napoli, Lisa. “Fan Loyalty and a Commitment to Nascar Sponsors Attract Marketers.” The New York Times, July 14, 2003.Google Scholar
Otkar, Ton, and Peter Hayes. “Judging the Efficiency of Sponsorship.” European Research 15, 4 (1987): 53–58.Google Scholar
Pyne, George. “NASCAR Sharpens Winning Strategy.” Advertising Age 73, 43 (2002): S6.Google Scholar
Quester, Pascale G. “Awareness as a Measure of Sponsorship Effectiveness: The Adelaide Formula One Grand Prix and Evidence of Incidental Ambush Effects.” Journal of Marketing Communications 3, 1 (1997): 1–20.Google Scholar
Thjomoe, Hans Mathias, Erik L. Olson, and Peggy Simicic Bronn. “Decision-making Processes Surrounding Sponsorship Activities.” Journal of Advertising Research 42, 6 (2002): 6–15.Google Scholar
Weston, J. Fred, Juan A. Siu, and Brian A. Johnson. Takeovers, Restructuring, and Corporate Governance, 3rd ed. New York: Prentice-Hall, 2002.
White, Rea McLeroy. “Racing Fundamentals.” The Richmond Times-Dispatch, February 10, 2002.Google Scholar
Willis, Ken. “Drivers' Deaths Don't Diminish Fans' Loyalty.” Daytona Beach News Journal, July 1, 2004.Google Scholar
Wood Brothers Racing. “Bob Graham for President to Sponsor Jon Wood.” [URL: http://www.woodbrothersracing.com/team_news2.cfm?ID=581], July 4, 2003.