The decision to raise firm value through a sports-business exchange: How much are Real Madrids goals worth to its presidents companys goals?
Global brands emerging from the world of sports are becoming commonplace, and firms invest in the realm of sports, usually through sponsorship initiatives, to get a link with these global brands. Over and above just a mere business link, what if a company makes a personal commitment to get into the core of a renowned, celebrated sports team? This article provides managers with a procedure to analyze, in a weekly basis, how valuable this type of decision is. A conceptual model shows that the personal involvement of a firms figurehead in a first-class sports club can impact positively on firm value if the person is doing well in the task s/he is entrusted with by the club. The empirical application to the soccer club Real Madrid, over 1,409days and 215 matches, finds that the clubs performance on the field has a significant impact on the economic returns of its presidents company, with asymmetrical effects on firm value in a loss aversion pattern, that is, lost matches have a greater effect on firm value than games won.
firm value sports-business exchange loss aversion decision analysis brand equity