ABSTRACT
Sponsorship is the second-largest source of income for elite sports bodies and events. The basis of sponsorship is exchange theory in which the parties involved exchange resources for their mutual benefit. However, sponsorship is neither permanent nor reliable. It is also subject to ethical considerations in relation to involvement by alcohol and gambling interests. Many sports stadiums are built by or heavily subsidised by local authorities in the hope that the benefits accruing from spending by fans and clubs will outweigh the costs. Yet generally such expenditure does not yield a positive return. Reasons for this include the small scale of most sports businesses, the substitution effect within local spending, leakages from the local economy, the creation of budgetary gaps, and the relative lack of use of the facilities. Another argument to justify public subsidies for stadiums is that they will improve the quality of life in the local community via consumer surpluses and positive externalities.
