There was some big news this week in the sport sponsorship world with Major League Baseball (MLB) linking a deal with Coca Cola to be the official soft drink partner of the MLB. The current partner is Pepsi, which means that Coca Cola would be displacing Pepsi as the official partner. What does this mean to the shareholders of both organizations? MLB is a large partner with lots of potential for direct revenue from sales at stadiums in addition to advertising potential and downstream revenue from increased branding awareness.
To determine the acute effects of this news I looked at the stock prices for both Coca Cola (KO) and Pepsi Co (PEP) to analyze company performance over the course of the week. Compounding the results are the introduction of ads for both companies that would presumably have an effect on stock price. The daily stock prices are listed below, as well as the day to day fluctuation in stock price and weekly change.
Interestingly enough, there was no real change in stock price; KO showed a mild increase over the week while PEP showed a mild decline over the week. In addition to the news of MLB, Pepsi also came under fire for their latest advertisement. Even with the negative publicity of both news items, the company’s share price did not change much.
For investors looking to capitalize on sponsorship news in the sport industry, this particular news did not seem to offer a chance at higher returns. These companies may be large, well regarded business that are resilient to short term news articles. Time will tell if either company gains or loses over the long term.
4/3/17 News is reported that MLB is partnering with Coca Cola to be the official soft drink of the MLB, displacing Pepsi as the Official partner
4/3/17 Coca Cola launches Cherry Coke in china featuring cans with the likeness of Warren Buffet
4/4/17 Pepsi releases video
4/5/17 backlash ensues over the sensitivity of the ad
*All news items and data pulled from CNBC
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