Anyone jarred by the sight of uniformed flight attendants distributing the hardware to the World Cup-winning Germans probably never realized how central sports has become to the marketing strategy of Emirates Airline. From horse racing to cricket to pro tennis, Emirates has spent lavishly on becoming one of the world’s biggest sponsors of sports.
Spending on soccer—with the global spectacle that is the FIFA World Cup every four years—dwarfs all other sports. The Dubai-based airline sponsors a half-dozen European clubs, including Arsenal, AC Milan, and Real Madrid. “Emirates has arguably become one of the most prominent brands within football,” the company says. The airline flies to all but 10 of the 32 countries in the World Cup.
Emirates spent about $100 million over the past four years to be one of FIFA’s six top “partners,” a well-heeled group that included Adidas (ADS:GR), Coca-Cola (KO), Hyundai Motor (005380:KS) / Kia Motors (000270:KS), Sony (SNE), and Visa (V), according to an estimate from London-based Brand Finance, which works with corporate marketers. “They have made a very strategic investment, and they are kind of ingrained in the games,” says Dave Chattaway, a sports valuation analyst with Brand Finance. “And seeing them last night … you can truly say they are a global brand name.”
The other aspect of such heavy spending by an airline speaks directly to its central goal: continued international expansion, particularly in Europe and North America. Emirates’ explosive growth has siphoned passengers and profits from a bevy of European carriers, led by Germany’s Lufthansa (LHA:GR), and has drawn sharp complaints from airlines on both sides of the Atlantic that it is subsidized by its home government in Dubai. Emirates’ large orders of Boeing (BA) jumbo jets has also been an issue in the current debate over whether Congress should reauthorize the U.S. Export-Import Bank.
Four years from now, when Russia hosts the World Cup, Emirates is likely to retain its premier sponsorship role, predicts Eric Smallwood, senior vice president of Philadelphia-based Front Row Marketing Services, a unit of Comcast (CMCSA), noting the dearth of major Russian companies as sponsors in the recent Sochi Olympic Games.
And the airline is far from alone in putting ever-bigger dollars behind marquee sports events. Adidas on Monday said it would pay at least $1.3 billion over 10 years to replace Nike (NKE) as the uniform supplier for Manchester United (MANU). Nike said last week that the economics of a future contract did not work for its shareholders.
The size of the deal for one club “just shows you the growth of football worldwide,” Smallwood says. “And I don’t see it slowing down in any capacity.”