Perhaps the best way to determine this is to look at previous high profile sporting events and see how they affected the companies providing sponsorship. In this case we will look at Jonny Wilkinson at the 2003 Rugby World Cup and Cathy Freeman at the 2000 Sydney Olympics.
Going into the 2003 tournament, the closest England had come to glory was losing the final in 1991. However, in the 2003 games, Australia took the decider to extra time at 14-14 and the momentum appeared to be in their favour – making Wilkinson’s last-minute drop goal winner all the more memorable. This had a major impact on Forex markets, with the pound enjoying a 700-point rise against the dollar. One reason for this may be that the global audience for England’s win sparked an equivalent interest in companies based there – especially those directly associated with the team. Furthermore, a surge in patriotic pride among English speculators, as a result of Wilkinson’s kick, may also have been a factor.
The +9.8% rise in the shares of Diageo, the makers of Guinness, was another effect. This shows the direct impact of sponsorship, but also shows how the effect will be greater if the product is naturally geared to the target consumer. Many people wanted to have a drink while watching the games, with the sponsorship putting Guinness in their minds as the ideal choice.
The street party that followed the win, with thousands of fans hitting the streets of London to join in the celebrations, would also have seen nearby businesses score direct financial benefits – showing that victory can bring local rewards even though the tournament was not held in England.
Australian Cathy Freeman’s 400 metres win at the Sydney Olympics – which followed similar triumphs at the Commonwealth Games and World Championships – had a comparable impact. The AUD rose sharply by 68 points against the USD – which could have been partly caused by sudden investor interest and confidence in Australian companies. Research into the effect on World Cup wins on stock markets shows clear evidence of an instant knock-on boost, and it seems safe to assume that other major sporting successes would have the same effect.
The company responsible for the body suit Freeman was wearing during her winning race, Nike, also enjoyed a rise of 7.5% in their shares afterwards. This is understandable as potential investors want to put their money into companies that are connected with winners, while they would also be aware that Nike products would be instantly more attractive to consumers following the result – making it a smart investment.
The big upcoming sports events include the 2015 Rugby World Cup, which may bring similar benefits to sponsors such as DHL and Heineken. What this shows, is that sport is now a huge financial influence around the world.
