Sponsorship Revenue Forecasting for Sport Organizations: A Survival Analysis Approach

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Abstract: Despite considerable advances in the application of data analytics across the sport industry, sponsorship revenue forecasting still largely relies on a decades-old methodology, the renewal rate. This paper marks the first application of survival analysis approaches to analyze the duration of sponsorships, utilizing a dataset of 69 global sponsorships of the Olympic Games and FIFA World Cup. Past and present sponsors of these two global events include some of the world’s most valuable brands, including Adidas, Coca-Cola, FedEx, IBM, McDonald’s, Panasonic, Samsung, Sony, Visa, and Xerox. The utilization of methods other than standard measures of central tendency (i.e., the renewal rate) allows sport organizations who depend on revenue from sponsorship for their survival to determine not just the aggregated percentage of sponsors who historically renew, but when sponsorships are most likely to continue, when the probability of a sponsorship ending is highest, and the sponsorship’s historical median lifetime. Further, these more advanced methods properly account for censored observations, or sponsorships that are currently ongoing. Consistent with prior applications of exchange theory to the sponsorship business-to-business relationship, results found sponsorships were most susceptible to dissolution within the first two renewal periods, and sponsorship durations differ significantly based on which methodology is applied. For example, sponsorship revenue projections varied by as much as $100 million depending on the approach, demonstrating the importance of providing sport managers with advanced data analysis tools to assist in the organization’s sponsorship revenue forecasting activities.

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