The Relationship between Sports Sponsorship and Corporate Financial Returns in South Africa

Purpose Sponsorship is a major contributor to income in the South African sports arena, and is a critical component allowing sports unions to remain financially viable and sustainable. Sports sponsoring companies, however, have long questioned the financial returns generated from these ventures. The purpose of this paper is to understand whether financial returns of companies with sports sponsorship in South Africa are significantly different to those without. This research was conducted on Johannesburg Stock Exchange (JSE) listed companies that sponsored sport consistently between 2000 and 2015 for a period of two years. A quantitative methodology was employed whereby share price, revenue and earnings growth were analysed, comparing firms that did not adopt strategies involving sports sponsorships to those that did. Design/methodology/approach A quantitative methodology was employed, whereby share price, revenue and earnings growth were analysed, comparing firms that did not adopt strategies involving sports sponsorships to those that did. South Africa is an emerging market and a member of the BRICS Forum ranked 14th in the sport sponsorship market globally (Sport Marketing Frontiers, 2011), becoming increasingly dominant in the global sports industry (Goldman, 2011). The population consisted of JSE-listed Main Board and alternative exchange companies that participated in any form of consistent sports sponsorship in the given time frame: 2000-2015, where the company’s share price, revenue and earnings per share (EPS) data for the period were available from the INET BFA database. The JSE is ranked 17th in terms of market capitalisation (over $1 trillion) in the world, being the largest stock exchange on the African continent with over$30bn being traded on average monthly. Multiple journals today publish research done on the JSE, for example the International Journal of Sports Marketing and Sponsorship, Investment Analysts Journal and the South African Journal of Accounting Research. This stock exchange is 125 years old and has over 400 listed companies of which 358 are domestic (Kruger et al., 2014). Findings Results show that companies involved in sports sponsorship during the period analysed did not experience enhanced share price or revenue growth in excess of those companies not involved in sports sponsorship. As a whole, sports sponsoring companies did however experience greater income growth (EPS) than those companies not involved in sports sponsorship. Enhanced revenue growth was found in the consumer services sector, indicating that sport sponsorship in this sector drives brand image and recall resulting in enhanced revenues. These results though indicate that a multitude of differing objectives may exist for companies engaging with sports sponsorship, with increased sales not the singular objective. In general it is concluded that sports sponsorship is considered to achieve a broad spectrum of outcomes that are likely to contribute to increased profitability. Research limitations/implications The relatively small size of 40 firms on the JSE in the South African sports sponsorship market is a limitation for this research. The purely quantitative approach limited the ability to gain the required level of insight into those sectors with small samples, which a qualitative study would reveal. SABMiller as example could not be analysed against its sector peers, given that it is one of the most prominent and consistent sports sponsors in South Africa across all major sporting codes. The telecommunications sector was represented entirely by companies that were involved in sports sponsorship and, hence, no in-depth comparison could be conducted within this sector. Vodacom, a major sponsor of sport in South Africa, could not be compared with its peers utilising purely financial and statistical methods. Cell C is one of the most prominent sponsors of rugby in South Africa, through its title sponsorship of the Cell C Sharks, and was not included in this study as it is not listed on the JSE. It is suggested that such companies should be included in a qualitative study approach. Practical implications The results of the Mann-Whitney U test for the consumer services and financial sectors confirm no significant difference in EPS growth for companies utilising consistent sports sponsorship as part of their marketing mix to those that do not. The consumer services sector has seen above-average revenue growth from sports sponsorship compared with its sector peers; however, the sector was unable to convert this increased revenue growth into increased profits, suggesting that the cost of sponsoring, as well as the operating costs associated with sports sponsorship, counteract any growth in revenue. Social implications The sample of sports-sponsoring companies experienced a larger annual mean EPS growth rate of 30.6 per cent compared to the remaining JSE Main Board companies which grew EPS annually at 27.4 per cent. The results of the Mann-Whitney U test confirm a significant difference in EPS growth for companies utilising consistent sports sponsorship as part of their marketing mix. From a practical interpretive perspective, this result reveals that those companies in South Africa involved in sports sponsorship consistently attain greater than market-related profit growth. This poses some interesting points for discussion, given that revenue growth was not statistically different, which suggests that many sponsors are utilising the sponsorships for purposes other than sales growths that result in a profitable outcome. The potential range of options is large but would likely comprise the creation of stronger supplier relationships, resulting in optimised business inputs. Sponsors might be utilising sponsorships to improve corporate social status, which assists them in creating regulatory compliance, in some instances. Additionally, these sponsorships may be utilised to maintain key client relationships that provide the highest levels of profitability, and whilst this might not grow revenue through new business acquisition, it may result in higher profitability as a result of a loyal and stable customer base. Originality/value Much of the available research focusses on the sponsorship of specific sporting events and the share price impact thereof at specific occasions like the announcement, renewal and termination. Where research is conducted across a multitude of sporting events and codes, this predominantly focusses on share price performance only, with varying and somewhat inconclusive results. There is little research focussing on wider, more comprehensive sets of sponsored events and sporting codes, and that seeks to provide an understanding of financial returns for sponsoring properties. In a study of more than 50 US-based corporations it was found that, as a group, corporations which consistently invested in sports sponsorships outperformed market averages, and that those with higher sponsorship spend achieved higher returns (Jensen and Hsu, 2011). The study utilised descriptive statistics. More analysis, utilising detailed statistical analysis, is required to better understand the effects of sponsorship on the wider set of variables analysed. In this case, a five-year compound annual growth rate was calculated for stock price appreciation, total revenue, net income and EPS, and analysed descriptively with only means and standard deviation. Measurement of such variables assists with an understanding of the materialized results of sponsorship as opposed to much of the work in this field, which analyses market reactions to sponsorship announcements

The Langley 2,000-horsepower Propeller Dynamometer and Tests at High Speed of an NACA 10-(3)(08)-03 Two-blade Propeller

This paper contains a detailed description of a 2,000-horsepower propeller dynamometer used to make wind-tunnel tests of a two-blade NACA 10-(3)(08)-03 propeller for a range of blade angles from 20 degrees to 55 degrees at airspeeds up to 500 miles per hour. The results of these tests and comparisons with results obtained from a theoretical analysis and from previous tests made in other wind tunnels are presented

Genome sequence and description of the anaerobic lignin-degrading bacterium Tolumonas lignolytica sp. nov.

Tolumonas lignolytica BRL6-1T sp. nov. is the type strain of T. lignolytica sp. nov., a proposed novel species of the Tolumonas genus. This strain was isolated from tropical rainforest soils based on its ability to utilize lignin as a sole carbon source. Cells of Tolumonas lignolytica BRL6-1T are mesophilic, non-spore forming, Gram-negative rods that are oxidase and catalase negative. The genome for this isolate was sequenced and returned in seven unique contigs totaling 3.6Mbp, enabling the characterization of several putative pathways for lignin breakdown. Particularly, we found an extracellular peroxidase involved in lignin depolymerization, as well as several enzymes involved in β-aryl ether bond cleavage, which is the most abundant linkage between lignin monomers. We also found genes for enzymes involved in ferulic acid metabolism, which is a common product of lignin breakdown. By characterizing pathways and enzymes employed in the bacterial breakdown of lignin in anaerobic environments, this work should assist in the efficient engineering of biofuel production from lignocellulosic material

Neurology and the histiocytoses: a case of Rosai-Dorfman-Destombes disease

The histiocytoses are a group of rare disorders characterised by the accumulation of neoplastic or non-neoplastic activated histiocytes in various tissues. Phenotypes vary widely from cutaneous lesions or lymphadenopathy that regress spontaneously to disseminated disease with poor prognosis. Neurological symptoms can be a presenting feature or appear during the course of disease. We present a challenging diagnostic and management case of Rosai-Dorfman-Destombes disease in a 48-year-old woman with a relapsing, partially steroid-responsive syndrome comprising patchy, non-length-dependent radiculoneuropathy with diffuse pachymeningitis and widespread systemic disease, and recent dramatic response to novel mitogen-activated kinase pathway inhibition. We discuss the clinical characteristics, diagnosis, recent breakthroughs in pathogenesis and emerging treatment options for Rosai-Dorfman disease and for the histiocytoses with neurological sequelae, including Langerhans cell histiocytosis and Erdheim-Chester disease

GAA repeat expansion mutation mouse models of Friedreich ataxia exhibit oxidative stress leading to progressive neuronal and cardiac pathology

Friedreich ataxia (FRDA) is a neurodegenerative disorder caused by an unstable GAA repeat expansion mutation within intron 1 of the FXN gene. However, the origins of the GAA repeat expansion, its unstable dynamics within different cells and tissues, and its effects on frataxin expression are not yet completely understood. Therefore, we have chosen to generate representative FRDA mouse models by using the human FXN GAA repeat expansion itself as the genetically modified mutation. We have previously reported the establishment of two lines of human FXN YAC transgenic mice that contain unstable GAA repeat expansions within the appropriate genomic context. We now describe the generation of FRDA mouse models by crossbreeding of both lines of human FXN YAC transgenic mice with heterozygous Fxn knockout mice. The resultant FRDA mice that express only human-derived frataxin show comparatively reduced levels of frataxin mRNA and protein expression, decreased aconitase activity, and oxidative stress, leading to progressive neurodegenerative and cardiac pathological phenotypes. Coordination deficits are present, as measured by accelerating rotarod analysis, together with a progressive decrease in locomotor activity and increase in weight. Large vacuoles are detected within neurons of the dorsal root ganglia (DRG), predominantly within the lumbar regions in 6-month-old mice, but spreading to the cervical regions after 1 year of age. Secondary demyelination of large axons is also detected within the lumbar roots of older mice. Lipofuscin deposition is increased in both DRG neurons and cardiomyocytes, and iron deposition is detected in cardiomyocytes after 1 year of age. These mice represent the first GAA repeat expansion-based FRDA mouse models that exhibit progressive FRDA-like pathology and thus will be of use in testing potential therapeutic strategies, particularly GAA repeat-based strategies. © 2006 Elsevier Inc. All rights reserved