Delta (DAL) recently announced that it had become an "official sponsor" of the Los Angeles Lakers. Though terms weren't disclosed, it's safe to assume that it wasn't cheap. Over the years, sports sponsorships have become a staple in the airline industry -- and despite the cost, companies that value deep emotional ties with their potential customers find it worth the price of admission.
There are few things people love more than their sports teams. In the U.S., for instance, the NFL has become its own religion. (There are probably more Americans watching football on Sunday than going to church.) People are happy to pay more for a ticket to see a game than they would for a ticket to fly somewhere on vacation. And there is no greater joy for fans than when their team wins the championship. OK, maybe getting married or having a kid comes close.
Sports = life
The point is that people have very tight connections with their sports teams, and this isn't just a U.S. phenomenon. Just look at the soccer (or "football") leagues in Europe, baseball in Japan, cricket in India, or rugby in South Africa. It's a global phenomenon.
So it's natural for an airline, or any business, to want to tap into that relationship in one way or another. There are a few ways that they've successfully done so in the past, but the most popular is to become the official airline sponsor. United (UAL), for example, has long been an official Olympic sponsor in the US. In Europe, we see all sorts of sports sponsorships, many from growing Middle Eastern airlines like Emirates. These airlines are allowed to use their name alongside the sport team to try to create goodwill.
Airlines can also sponsor an arena, a stadium, or even an entire league. Southwest has done the latter with multiple leagues in the past, and it then bombards viewers with commercials all game long. It even painted an airplane in an NBA paint scheme when it sponsored the league. Others sponsor individual players, like Turkish and Kobe Bryant. But does any of this work?
Sponsorship: Tool of the underdog
We could assume there's value in it since airlines continue to be willing to pay the steep price to play, but that could be ego as well. What might be even more telling, however, is the actual airlines that are doing this. You would expect the legacy airlines with deeper pockets to be some of the most likely sponsors, but that's not always the case.
Southwest is probably the biggest sports sponsor, but JetBlue (JBLU) has really built up its portfolio as well. JetBlue now sponsors teams like the Boston Red Sox, the LA Dodgers, and the Orlando Magic. What do these have in common? They're all located in cities where JetBlue has a large and growing presence.
In Boston, for example, JetBlue has spent the last couple years building an enormous operation. While many people around the US still think of JetBlue as a New York airline, Boston has grown to be two-thirds the size of the JFK operation. Airlines can try to just roll into a city with new flights and hope people show up, but both Southwest and JetBlue have done great jobs of showing that becoming a part of the community is key.
JetBlue has decided to put a significant chunk of its marketing budget into this because it has a longer, more lasting impact than buying TV commercials. For a smaller airline like JetBlue, that's important when it's not the first airline people think of when it enters a city. That can make this cost effective.
Delta's LA Story
Delta's move to sponsor the Lakers may very well be a huge exclamation point that Delta is gunning for the LA market. After all, the Lakers are one of the biggest sports brands in the world. And as the World Champion Los Angeles Lakers, they're one of the most successful as well. This is a team with 1.7 million Twitter followers (the Yankees have only 315,000) and an iconic brand. Only an airline that's serious about developing that market would be willing to pay what the Lakers are likely asking.
Delta has flirted with the LA market time and time again, only to pull back every time. When it acquired Western Airlines 25 years ago, that was its first real entry into LA. Since then, it has grown and contracted on multiple occasions. Most recently, it has added a new flight to Japan, beefed up flights to San Francisco, and announced flights to Sacramento. This could be a sign that Delta is looking to give LA a run once again, and what better way to do it than sponsor one of the city's most beloved sports teams?
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