There's an old saying in the business world during times of financial crisis - the first thing that gets cut is the advertising budget.
Well, the coronavirus pandemic is a financial crisis for U.S. airlines.
And one of the things - if not the first thing - getting cut is their respective marketing plans.
According to a story by CNBC, citing information provided by international data analytics firm GlobalData, American Airlines, United and Delta will cut back on sponsorship spending with U.S. sports leagues such as Major League Baseball, the National Basketball Association and the National Football League.
In fact, GlobalData estimates airlines will cut more than $300 million in sponsorships spending on sports and "will likely see a wide withdrawal of the airline sector from its sponsorship commitments."
"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."
And that will have a domino effect. Not only do airlines make big commitments on television during sporting events, The Big Three, especially, invest heavily on individual venues and teams.
American Airlines for instance has naming rights to the American Airlines Arena in Miami and the American Airlines Center in Dallas. United has the United Center in Chicago and Delta not only has sponsorship deals with six different Major League Baseball teams, but it has also taken a $400 million stake in the 2028 Summer Olympics in Los Angeles.
Then, of course, there are the television and digital networks that air professional and college games who will have to cover the difference of less advertising by the airlines.
"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," Kinch said.
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