At this point in our research we are still continuously gathering data needed to measure the financial effect created when an athlete with major endorsements endures a public relations scandal. Our focus has been on a top-down secondary research approach collecting quantitative data. At the beginning of the project we decided we were going to collect and analyze the data for a minimum of 35 athletes. The initial list of athletes compiled had 43 subjects. For each subject, we must determine who their biggest endorsement deal is with, as well as the date they acquired that endorsement. The data variables we are analyzing for each subject include the intensity of the athlete’s scandal, the company’s revenue and stock price (at the date of the scandal, one week after, one month after, and three months after), and the S&P 500 (at the date of hire, at the date of the scandal, and one month after). The intensity of the athlete’s scandal represents how harsh or vivid the scandal is to the public. What is the difference in economic shock created by an athlete with abundant endorsements who gets caught using performance enhancing drugs versus that of an athlete with the same degree of endorsement acclaim who is alleged to have abused his spouse? By assigning a number that represents intensity to the scandal, we are able to account for this concept of severity of the scandal. Currently we have a good amount of data we still need to unfold. Thus far along in the data collection, it is obvious that measuring the impact a player has on a company he endorses is very complex and intricate.
The data we have collected has not raised any puzzling questions so far. Collecting the revenue and stock price numbers has been straightforward. The biggest challenge we have faced in the data collection process is determining when two key dates occurred: when the athlete acquired the endorsement, and when the athlete created the scandal. These dates are important in determining the trends of stock prices and revenues that occur after the addition of the athlete to the company all the way up to the day the scandal breaks out, and then from the day the scandal breaks out to the day the fall out tapers off. Another issue is that some of the subjects we planned to use in the research did not have prominent enough endorsements to include them in the study. For example, an ex-Cowboy named Greg Hardy was at the front of a domestic violence case that was a popular sports’ story last year. After hearing more and more about Greg Hardy’s case all throughout last football season, we figured he’d be an excellent subject to consider for our study. It took one search to find out he had no worthy endorsements to evaluate. That rules out Greg Hardy’s case.
On the other hand, we have experienced success. In our opinion, our biggest success thus far is coming to the realization of how detailed we can make this study. There are many microscopic variables that affect the economic relationship between an athlete and the company they endorse. This project is a conglomerate that we will continuously add different elements and variable topics to. Although this is a quantitative-heavy study, we have learned that the relationship that exists between athletes and their endorsements can also be analyzed qualitatively. What I mean is that when a scandal occurs it ultimately affects people, and these people perceive the scandal in a multitude of different ways. Companies that are sponsoring these athletes can argue that they had no clue about the athletes’ decadent behaviors prior to the endorsement deal. If the rest of the public perceives the situation the same way, then the economic impact created from the scandals’ occurrence could be slim to none.
The opportunity to complete this research has been advantageous to our academic careers. The final material we produce will truly be an asset to us. Currently, our immediate plans include continuing to add data to our set, and continuing to add detailed ideas about how scandals economically affect an athlete’s endorsement company. Our future goals include presenting it to an economics panel for potential publication.