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Gauging the Return on Investment of Corporate Sponsorship at the Mid-Major Collegiate Level

4776 words (19 pages) Essay in Finance

08/02/20 Finance Reference this

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Abstract

With the escalating costs of collegiate athletics, many colleges and universities athletic departments accelerate their efforts to increase corporate sponsorships of their programs. For the Mid-Major Division I Institutions, lacking in a national following or national promenence, the attractiveness of sponsorship by large national or international corporations dimenishes. Thus, these institutions must create sponsorship opportunities on the local and regional levels with smaller corporations. These corporations often lack the mega-financial resources that international corporations utilize in their marketing and sponsorship programs. Therefore, gauging the return on investment of the sponsorship by these smaller corporate partners becomes critical to maximizing the relationship between the athletic department and the partner. This study seeks to evaluate the sponsorship of mid-major collegiate level athletic department at NCAA Division I institutions by surveying and measuring the attitude of fans toward the sponsor, the goodwill of the sponsor, and the fan gngagement with the sponsor on the fans’ intentions to purchase the services or products of the sponsor. A similar study measured the sponsorship effectiveness with a Power 5 Football Program (Dees et al.) with national sponsors and previous studies explored brand awareness in sponsorship, but limited research has dealt with the issue of measuring the impact of corporate sponsorship of sports at the local/regional level. The previous research sugests if the proper alignment with sponsor and athletic program occurs and a strong sponsorship program is constructed that local and regional corporate sponsors will enjoy a high return on investment in the smaller but less competative regional sponsorship market.
 

Table of Contents

Abstract

Chapter 1

Background of the Study

Problem Statement

Purpose of the Study

Significance of the Study

Definition of Terms

Limitations

Delimitations

Chapter 2

Literature Review

Chapter 3

Sample (Participants)

Methods of Data Collection

Instrumentation and Data Collection Procedure

Data Analysis

Ethical Considerations

Validity, Reliability, and Trustworthiness

Research Timeline

References

Chapter 1

Background of the Study

Mid-Major NCAA Division I athletic departments strive to produce winning teams and operate within their annual budgets. Unfortunately, the ever-increasing demand for improvement in facilities, upgrades in training requirements and treatment capabilities, and competition for top-flight athlete prospects leaves many of these programs to seek additional revenue through corporate sponsorships. Good relationships with sponsors lead to consistent revenue streams for the institutions’ athletic departments and provides the sponsors with loyal and captive fan bases with whom the sponsors draw potential new consumers.

Meenaghan describes sponsorship as investing in an activity or event in return for access to the attendees or viewers of the activity or event. Sponsorship can be financial or in-kind goods or services. Sports sponsorship remains attractive with companies because sporting events are often highly publicized, popular and widely attended. Sponsorship at the mid-major collegiate level differs from NCAA Division I Power Five conference level. Corporate sponsorship of an athletic program at a Power Five institution provides national exposure, larger population exposure, and likely requires more national based companies, where at a mid-major the sponsorship opportunities attract smaller more regional/local companies and gains attention of a smaller crowd.

Two studies: One by Dees et al. in 2008 on “Measuring the Effectiveness of Sponsorship of an Elite Intercollegiate Football Program in Sports Marketing Quarterly and the second by Weight et al. in 2010 on the “Corporate Motives for Sports Sponsorship at Mid-Major Collegiate Athletic Departments” in the Journal of Issues in Intercollegiate Athletics formed the basis for this research study.Dees et al. explored the value of sponsorship at Power Five collegiate sporting events and determined that the effects of the sponsorship for the sponsoring company. Weight et al. describe sponsorship serving an integral purpose in revenue generation for collegiate athletic programs pushing athletic administrations to seek new sponsorship avenues.

Problem Statement

Extensive research has been completed on sponsorship and brand awareness, but little research has been conducted on measuring how effective the sponsorship of collegiate athletic departments and programs is to the sponsor in generating customers and customers buying product. One study explored the effectiveness of sponsorship at one of the Power 5 conference institutions, but the void exists at the mid-major level of Division I athletics (Dees et al.). This research explored the issue through three independent variables: fan attitude toward the sponsor, goodwill of the sponsor, and fan engagement with the sponsorship and the effect of these three independent variables on the dependent variable of purchase intentions of the fans. Dees et al. utilized purchase intentions as the dependent variable since the researches felt purchase intentions demonstrated good results in future product purchases as demonstrated by Hartley. The research by Covell and by Chen et al. identifies the link between the fan’s attitude and purchasing intentions or brand awareness theory. Sutton and McDonald’s research demonstrated that fan involvement with the sponsor (social theory) is a construct that can measure effectiveness of the sponsorship because the view of the sponsor toward the event or team if good causes the fan to extend goodwill toward the sponsor.

Purpose of the Study

The study will measure the benefit to the corporate sponsor a mid-major collegiate athletic department. The purpose of this research involves gauging the return on investment a company makes with sponsoring a Mid-Major collegiate athletic department.

Significance of the Study

This research study in evaluating the potential return on investment for companies sponsoring Mid-Major athletic departments may demonstrate the positives for local and regional companies to sponsor Mid-Major athletic departments or for companies to demand more benefits in their sponsorship benefits to increase their return on investment in the sponsorship. The research may show that even though the crowds at mid-major collegiate athletic competitions maybe smaller, with the lesser regional/local competition for sponsorship the return on investment could be higher. If Mid-Major athletic department developing their sponsorship proposals know the research is available, they may find improvements for their sponsorship packages or solicit larger sponsorship payments. The results of the research may revolutionize sponsorship programs for Mid-Major collegiate athletic departments.

Definition of Terms

A common financial term Return on Investment (ROI) indicates the ratio of profitability measuring the profit amount generated by an investment relative to the cost of the investment. ROI, expressed as a percentage, serves as an extremely useful tool for evaluation of investments or comparing investment opportunities (Brown, et al.).

The NCAA labels the Atlantic Coast Conference (ACC), The Big 12 Conference, the Big Ten Conference, the Pac-12 Conference, and the Southeastern Conference (SEC) that compete in the Football Bowl Subdivision, FBS, for football as the Power Five Conferences. The industry and the NCAA utilize the descriptor of Mid-Major Institutions to indicate collegiate institutional teams that complete in the Football Championship Subdivision, FCS, for football or do not offer men’s football. The conferences include the America East, Atlantic 10, Atlantic Sun, Big Sky, Big South, Big West, Colonial, Conference USA, Horizon, Ivy League, MAAC, MAC, MEAC, Missouri Valley, Northeast, Ohio Valley, Patriot, Southern, Southland, SWAC, Summit, Sun Belt, West Coast, and WAC.

Limitations

Several limitations potential exists in a research study of this fashion. Since the quantitative study involves the survey of fans attending a sporting event, the number of usable responses provided from the fans at a sporting events maybe reduced or the fans attending the event may not generalize to all mid-major athletic programs due to the type of fans, either gender, age, etc. who attend Mid-Major collegiate athletic events. Extemporaneous variables, such as sport played, gender of sport played, and other sports offered by the institution could affect a fan’s response on purchasing intent because the impact these extemporaneous variables have on the dependent variable. Different sports offered by the institution solicit different fans. Field hockey and football have distinct followers that may or may not overlap. Fan attendance at men’s soccer or basketball usually exceeds the attendance numbers at women’s soccer or basketball. The lack of a football program at an institution may elevate another sport, men’s hockey or basketball, to more elite status or extensive viewer status potentially effecting the ROI. The timeframe for the research data collection may hinder the findings if the timeframe is too short or occurs when the team is experiencing a losing streak or riding the popularity of a winning streak. Geographic location and proximity of the institution to a large metropolitan area likely alters the findings of the research.

Delimitations

In choosing to study the effects of sponsorship at a Mid-Major collegiate institution in the Northeast away from a large metropolitan area without a football program but with a strong hockey program, the research limits the potential returns on investment but hopefully will show a strong return. Thus, demonstrating that ROI for sponsorship of Mid-Major institutions by local/regional corporations can be profitable and beneficial to these companies and to the institutions. In choosing the University of Vermont for the institution, the research will hopefully utilize the lowest common denominator and thus, demonstrate a strong ROI for future investors even at a isolated, non-football institution. The survey and statistical analysis approach appears to be the proper methodology choice for this research, but other different measurement designs, such as structural equation modeling or path modeling (Dees et al.), may provide a better evaluation of the relationship between the independent variables and the dependent variable. A larger sample size and a more diverse sampling population with minority participation would likely enhance the results of the study.

Chapter 2

Literature Review

For collegiate athletic departments corporate sponsorship serves as one of the most effective and popular means of revenue generation, even though limited statistical analysis exists on the effectiveness of sponsorship programs for collegiate athletic departments. Meenaghan identifies that advertising often is extremely expensive and not effective in growing the consumer base, while sport sponsorship provides a direct and relatively inexpensive approach to targeting specific consumer groups. Many research studies have identified the benefits to sport sponsorship to the sponsors and even to sponsorship on college campuses (Covell, 2001; Dees et al. 2008; Gray, 1996; McElrath, 2002; Sutton et al., 2001; Wear et al., 2016; and Weight et al., 2010). The research indicated that sponsors desire on-site presence and exclusivity in their agreements and a necessity that the sponsorship program provides a measurement aspect to gauge the effectiveness of the sponsorship.

In Sutton and McDonald’s research, the authors describe the changing landscape in corporate sponsorship of collegiate athletic programs as sponsorships become more sophisticated with unique benefits, targeted selling, and strategic approaches. Corporations want to partner with athletic programs to ensure deeper and more substantial connections with potential and existing customers (Sutton & McDonald, 2001 and Gray, 1996). The authors identify the importance of community outreach programs launching the corporate sponsorships because these programs allow the corporation to engage in community related event, which coincides with the sponsor’s outreach programs/strategies. The corporations link their products and brand name with the popular college team and capture a “feel good” moment in the community with an outreach community event (Sutton & McDonald). The outreach programs provide significant benefit to the sponsor because the outreach programs cause a lasting profound effect on the potential purchaser (Sutton & McDonald). With a viable and profitable approach to target consumers, sports sponsorship requires study to measure the effectiveness of the phenomenon of the sponsorship’s impact on the consumers to purchase the sponsor’s services or goods.

Armed with the need to study the effectiveness of sports spnosorship of college athletic departments and programs, the constructs of the argument must be established. Chen and Zhang established a link between attitude and intention about naming rights, attitude toward commercialization, stadium identification, and perception of financial state of the athletic department on perceptions and purchase intentions toward the sponsor and the sponsor’s product, on feelings toward the team and the stadium, and on the willingness of students to attend sporting events. Hartley determined that awareness, perceptions, and engagement serve as important tenets in measuring the performance and impact of a sports sponsorship. Dees et al. applied Hartley’s areas of focus in their research of the effectiveness of corporate sponsorship at a Power Five Conference football game. From the research performed by Dees et al., the three independent variables of the fan’s attitude toward the sponsor, the fan’s perceivingness toward the goodwill of the sponsor, and the fan engagement with the sponsor (Dees et al.) and the dependent variable of the fan’s purchase intentions of the sponsors’ product or services. The research performed by Wear et al. studied the return on investment for apparel sponsorships on college campuses. The research study performed by Covell provided additional insights or issues in correctly measuring the potential purchasing intent of spectators attending an athletic event (Covell).

In evaluating the effectiveness of a sponsorship program on a college campus, it is important to understand the benefits provided by the college to the sponsor and what elements of the sponsorship program remain critical to the sponsor. Significant research exists which describles benefits to sponsoring companies and McElrath’s research identified the needs of the corporate sponsor regarding the sponsorship opportunity. This study involved identifying a corporate profile for potential sponsors at NCAA D1 institutions and describing the tenets of successful sponsorship programs (McElrath). The research surveyed corporate sponsors and categorized the responses into increasing long-term sales, reaching a demographic target market, and enhancing company image as the leading requirements of a successful sponsorship program (McElrath). Name sponsor of a sporting event, VIP hospitality, and media coverage were identified in the research as the more beneficial and worthwhile opportunities presented by sponsorships (McElrath). Further research involved exploring what benefits and criteria allows local companies to engage in a sponsorship program with mid-major institutions (Weight et al.). Results indicated that sponsors desire on-site presence and exclusivity in their agreements and a necessity that the sponsorship program provides a measurement aspect to gauge the effectiveness of the sponsorship (Weight et al.). Castiglione author discusses the strategy marketing or sponsorship managers in the athletic departments of institutions not recognized on the national level must develop to achieve the results of a potential sponsor, which involves demonstrating a strong return on the sponsor’s investment in the local community. In providing a strong investment and identification in the community, the institution creates the incentive for local companies to sponsor (Castligone).

Meenaghan postulates that a fan’s favorable feelings toward the sponsor greatly influence the consumer’s intentions to purchase the sponsor’s product or services. Furthermore, higher involved fans provide greater engagement with the sponsor and exhibit a higher propensity toward purchasing the sponsor’s product or services because of the connection drawn between the sponsor and the sporting event (Meenaghan).

Chapter 3

The research purpose involves gauging the return on investment a company receives with sponsoring a Mid-Major collegiate athletic department in the hopes of demonstrating that by fostering fans’ positive attitude, goodwill, and involvement with a sponsor the purchasing intent of those fans will increase. According to Johnson and Christensen, the quantitative research method provides statistical data that will either support or deny the hypotheses of the research. The data collected in this research study will permit the generalization of sponsorship benefits for all Mid-Major institutions or help those institutions craft better sponsorship packages that will generate more corporate support in their local regions.

Sample (Participants)

Participants in the study will be selected at random by choosing the second, seventh and tenth person through the gate of every ten individuals that passed through the gate. This randomization method of sampling hopefully provides a diverse representation of the population. The subjects will be fans attending paid sporting events (men’s and women’s soccer, men’s and women’s basketball, men’s and women’s hockey and men’s and women’s lacrosse, whichever sports are available at the time of the data collection) at a northeast mid-major institution during a season. The different sports will normalize the generalization by creating a more fully demographic representation of the fan population. Limiting the study to a season will allow the researchers to focus the results but may skew the findings with some statistical anomalies. The intent of the sampling is to capture between 100 and 250 participants per sporting event.

Methods of Data Collection

The method of data collection for this research study involves a questionnaire survey distributed to a randomly selected sample of fans attending various sporting events at the selected mid-major collegiate institution. The survey will include demographical information on the fan participants and responses to five questions involving each of the three independent variables and the dependent variable. Demographic information and contact information will be collected at the event site and then the survey sent to the fan participants via email with a link to the web-based online survey. The online surveys offer a higher response rate according to Wright’s research than paper surveys. The online survey reduces time spent performing the survey and collecting the data (Wright) and cost savings because storage of paper surveys are eliminated (Wright). Disadvantages from Wright’s article include sampling issues with the population and their demographic responses and low response rates due to participant’s neglect.

Instrumentation and Data Collection Procedure

The questions on the online survey will measure the fan’s attitude toward the sponsor, the fan’s awareness of the goodwill of the sponsor, the fan’s engagement with the sponsor, and the fan’s purchase intentions of the sponsor’s products or services. Through working with quantitative research professors to develop the questionnaire and utilizing other studies to help prepare questions the survey questions can be vetted. Further refinement of the questions can occur through the use of small sample groups on whom to tryout the questionnaire. The survey questions should be written to avoid bias and avoid leading the responder’s answers in a common direction. The ratings for the responses will utilized a fully anchored five-point scale (Johnson and Christensen) with ratings from 1 to 5 corresponding to strongly disagree to strongly agree, respectively. SurveyCrafter will serve as the tool to create and administer the survey, which enables the online survey to track respondent’s email, email response notification, real-time tracking of responses, and export data collected into statistical software.

Data Analysis

A correlational analysis (Johnson and Christensen) will be conducted on the three independent variables and the dependent variable to determine significance of the variables and whether the variables possess a positive corelation with each other. Further regression analysis of the results will hopefully indicate whether the three independent variables are adequate predictors of sonsumer purchase intentions of the sponsor’s product or services.

Ethical Considerations

To ensure the safety of human subjects in this research, all participants will be granted voluntary participation and informed consent to participate in the study along with access to the findings and conclusions of the study. The research study, and specifically the data collection, handling, and analysis will follow the AERA standards (Johnson and Christensen) guaranteeing that all human subjects choose to participate of their own free will and each has been fully informed regarding the procedures of the research project and any potential risks. These standards will protect the confidentiality and anonymity of the subjects.

Validity, Reliability, and Trustworthiness

The fan’s attitude toward the sponsor, goodwill or positive attitude toward the sponsor, and fan involvement and engagement serve as the independent variables and the purchase of the sponsor’s product serves as the dependent variable. Numerous studies have indicated that a fan’s positive attitude toward a sponsor indicates a potential for the fan to purchase of the product, thus a relationship between fan’s positive attitude and potential purchase exists. The fans positive feeling toward the sponsor occurs before the purchase of the sponsors product. Though conditions exist that may cause a fan not to purchase a sponsor’s product, those conditions do not affect the fans good feeling toward the sponsor.  Causation exists since the three conditions are established, the relationship exists, temporal ordering is correct, and the lack of alternative explanations occur, thus causation exists, and internal validity is established.

External validity will be established through the systematic measurement of the fans’ positive response to the sponsor, goodwill or positive attitude toward the sponsor, fan involvement and engagement, and the purchase of the sponsor’s product across all specters of age, race, and genders. The quantitative assessment can be arranged to measure multiple groups of different participants. The fans selected to participate are to be solicited by random means but of significant quantity to ensure that population validity can be established for the target population of fans. The survey will include demographic information about each fan participant.

The measurement of the variables will be performed through fully anchored five-point scale response to the questions in the surveys, which would gauge the fan’s attitude toward the sponsor goodwill or positive attitude toward the sponsor, fan involvement and engagement, and record the likelihood of the fan to purchase the sponsor’s product. The surveys will be reviewed by quantitative research experts and a focus group to assure relevance of the survey questions to the study, representativeness of the study questions and the available responses to the questions to the scope of the study, and the clarity of the questions and responses. Once the survey has been reviewed, then it should be sampled by a small group and frequency measures calculated and reliability analysis conducted on the constructs.

The survey measures the attitude of the fan toward the sponsor goodwill or positive attitude toward the sponsor, fan involvement and engagement, and the intent to purchase the sponsor’s product through five different questions for each resulting in twenty questions and five questions regarding demographics of the respondent. Each survey will be coded, and the response data tabulated for data analysis, which will determine frequencies, means, and standard deviation of the data measured. From the data analysis statistical conclusions will be drawn regarding the relationship between goodwill or positive attitude toward the sponsor, fan involvement and engagement, and the fans purchasing demand of the sponsor’s product. From the statistical conclusions the research should be able to determine the magnitude of the connection between the fans’ positive feelings toward the sponsor and the fans’ intention to purchase product from the sponsor.

Reliability in the data occurs if the surveys are conducted over different years and at least three different Mid-Major Institutions. However, the scope of that scale of research exceeds the bounds of this work and thus must be left to other researchers to replicate this research at one mid-major collegiate institution with isolated geography during one season of events. Further study should demonstrate the findings can be replicated at other geographically located institutions near or in large metropolitan areas and different regions of the United States and in different economic situations.

Research Timeline

Completion of the data collection and analysis within an eight week session may prove to be daunting. Realistically, the preperation of the survey may take two weeks with the review by quanitative researchers and the assembly and review from the focus group. This two-step review is inherently necessary to eliminate bias and capture the correct data in the survey. The survey work will likely involve four to six weeks of time, given the availablity of enough home sporting events of a variety of sports to build a diverse sample pool. The data assembly and analysis will involve a two week period even though assembly will overlap with collection and cateloguing of the data. The write-up of the research will then involve another two week period for consultation with my professor and subsequent editing. In all, the research should involve a ten to twelve week project timeline.

References

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  • Castiglione, J. (1989). Good Neighbors. College Athletic Management, pp. 31-33. Momentum Media Sports Publishing, Ithaca, New York.
  • Chen, K. K. and Zhang, J. J. (2012). To Name it or not Name it: Consumer Perspectives on Facility Naming Rights Sponsorship in Collegiate Athletics. Journal of Issues in Intercollegiate Athletics, Vol 5, pp. 119-148. College Sport Research Institute. Columbia, South Carolina.
  • Covell, D. (2001). The Role of Corporate Sponsorships in Intercollegiate Athletics. Sport Marketing Quarterly, 10(4), pp. 245-247. Fitness Information Technology. Morgantown West Virginia.
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  • McElrath, M. B. (2002). An Assessment of Sponsorship Objectives and Successful Mechanisms as Perceived by Corporate Sponsors of NCAA Division I-A Athletic Departments. Kinesiology Publications. University of Oregon. Eugene, Oregon.
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  • Sutton, W. A. and McDonald, M. A. (2001). A triple play: many athletic departments are enticing new corporate sponsors through “cause-related” programs, which connect the company, athletic department, and community in a triple-win situation. Athletic Management, 13(3), pp 18 and 21. Momentum Media Sports Publishing, Ithaca, New York.
  • Wear, H., Heere, B., and Clopton, A. (2016). Are the Wearing Their Pride on Their Sleeve? Examining the Impact of Team and University Identification Upon Brand Equity. Sports Marketing Quarterly, 25(2), pp. 79-90. Fitness Information Technology. Morgantown West Virginia.
  • Weight, E., Taylor, K., and Cuneen, J. (2010). Corporate Motives for Sports Sponsorship at Mid-Major Collegiate Athletic Departments. Journal of Issues in Intercollegiate Athletics, pp. 119-131.  College Sport Research Institute. Columbia, South Carolina.
  • Wright, K. B. (2017). Research Internet – Based Populations: Advantages and Disadvantages of Online Survey Research, Online Questionnaire Authoring Software Packages, and Web Survey Services. Journal of Computer-Mediated Communication 10 (3). Retrieved from the academic.oup.com website: https://academic.oup.com/jcmc/article/10/3/JCMC1034/4614509#100173090
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