Advances in Sport Sponsorship Revenue Forecasting: An Event History Analysis Approach

Abstract

Despite considerable advances in the application of advanced analytics across the sport industry, sponsorship revenue forecasting still largely relies on a decades-old methodology, the renewal rate. This paper performs the first application of event history analysis (EHA) approaches to quantitatively analyze the duration of Olympic and World Cup sponsorships, to determine not only the percentage of sponsors who renew, but when sponsorships are most likely to continue, when the probability of a sponsorship ending is highest, and their median lifetimes. 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 differed significantly based on which methodology was applied. Sponsorship revenue projections varied by as much as $100 million depending on the approach, demonstrating the importance of providing sport managers with advanced analytics to assist in the organization's sponsorship revenue forecasting activities.