As U.S. sports leagues continue to welcome back fans to stadiums, the impacts of Covid-19 are still lingering and may interfere with airline sponsorship revenue.
Data analytics firm GlobalData projects sports leagues worldwide will face more than $300 million in sponsorship losses and “will likely see a wide withdrawal of the airline sector from its sponsorship commitments” as the travel sector recovers from Covid-19.
“Given the damage done to the industry following government-enforced lockdowns around the world, and the subsequent fall in international travel, airlines, even those able to rely on sovereign wealth funds, have seen drastic losses and job cuts,” wrote Patrick Kinch, a sports analyst at GlobalData. “As a result, in an effort to recoup costs, it is likely the airline sector will withdraw from its current sporting commitments.”
Added Kinch: “Rights holders will be facing the challenge of having to either find an industry that has been less troubled by the pandemic or accepting a reduced value for their sponsorship assets.”
GlobalData released its findings on Thursday and estimates global airlines will spend roughly $737 million for sponsorships in 2021. And of that figure, U.S. sports leagues will receive approximately $197 million in fees for deals with American Airlines, United and Delta.
In an interview with CNBC, Conrad Wiacek, head of sports analysis at GlobalData, estimates United Airlines will spend $29 million in 2021 on sports sponsorships, of which $13 million in deals will expire this year.
American Airlines is projected to spend $23.3 million this year, with approximately $11 million in agreements set to expire. And Delta will spend about $70 million, with $14 million in deals set to expire.
GlobalData also projects those airlines spend about $60 million on the National Football League, combined, while the National Basketball Association has sponsorship agreements totaling $25.86 million for 2021.
Asked if the deals will see renewals, Wiacek said: “It depends on many factors; mainly on how things are opening up as lockdowns ease and vaccinations continue.” He added “government support to keep airlines afloat” will also play a factor.
As part of the $1.9 trillion Covid-19 relief package, $14 billion is earmarked for U.S. airlines, the third round of federal aid for the industry. Airline contractors were set aside $1 billion. U.S. and international airlines serving the United States carried 398 million people last year, a 62% decline from 2019, according to the Department of Transportation.
In addition to general travel declines, the pandemic upended airlines’ sports charter businesses as seasons were postponed or shortened. Before Covid-19 struck, airlines had added service for big sports events such as college football playoffs.
Wiacek added airlines could be helped if consumers start to travel, especially to see sports teams play. If demand improves, airlines could retain some of their sponsorship deals.
“People will want to travel; they’ll want to fly, and things like sports are the drivers of that,” Wiacek said. “That’s the positive and the thing that the airlines can look for — the eagerness to return to normality.”
Source: Business - cnbc.com
