Cost-benefit analysis as the most appropriate method for estimation of corporate financial support to sports clubs
GEA College, Slovenia
As in the business world where practically every large investment project decision is supposed to undergo a preliminary economic justification procedure, other fields’ investment decisions must also be taken into consideration. The sponsoring of sport events or sports clubs all through the year by companies in the private sector is one of such investment decisions. It would be reasonable and justifiable for such investments (financial support to sports clubs) to be assessed from an economic perspective as well. For assessing and measuring such benefits, an appropriate method called the cost-benefit analysis can be used. The purpose of this paper is firstly, to briefly present the theoretical frame of this technique based on a literature review, especially in the field of organizing and funding sports events, and secondly, to apply this cost-benefit analysis empirically to a particular case. A company X and its sports club (they wish to remain anonymous) have been chosen. The data applied in this case is real. For this particular case, the author states two research hypotheses, one regarding the economic justification of investments like sponsoring sports club, and one regarding the usefulness of the cost-benefit analysis as an appropriate tool for such decision making. In the end, the major findings from the empirical case are summarized and some new starting-points for further research in this field are given as well.
Keywords: cost benefit analysis; opportunity cost; net present value; social responsibility; sponsoring sports club