Paul Martin's Business News February 25th, 2014

Paul Martin's Business News February 25th, 2014

Now that the winter Olympics are over we can look past the sports side of this global extravaganza and explore the business side of staging a set of games pitting national teams against each other in friendly rivalry.

This is, of course, big business. Just look at the sponsors who shell out mega-money in exchange for exclusive rights to place their name adjacent to the events.

The key word here is ‘rights’ as sponsors license the use of the Olympic logo ..they don’t own a venue like we see in professional sports.

But a study in the US says sponsorships may actually cost companies more than they dish out for rights. Investors, especially in the US where sports sponsorship and naming rights is more visible than anywhere else, are pushing back. The study showed that stock prices fall after a company announces a sponsorship as investors sell in protest.

About the only gains are to be seen when companies invest in charities or philanthropic spending which tends to be viewed as a positive by investors.

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