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Virgin Australia collapse could cost Australian sport more than A$7m per year

(Photo by Dylan Burns/AFL Photos via Getty Images)

Sponsorship deals worth more than A$7m (€4.1m/$4.4m) ) per year are under threat from the collapse of Virgin Australia into voluntary administration, SportBusiness can reveal.

The future of Australia’s second-largest carrier after Qantas is in jeopardy as a result of the Covid-19 pandemic’s impact on air travel. The airline is now seeking new buyers after the Australian government ruled out a loan.

According to industry sources, Virgin Australia’s deals with the Australian Football League (AFL), five AFL clubs, and the Supercars Championship are worth about A$7.2m per year, even before activation spend is taken into account.

SportBusiness understands the AFL’s basic rights fee is worth about A$1.6m per year, from 2019 to 2023, in a deal that includes the Gold Coast Suns AFL team. Value-in-kind is not part of the deal. Flights are supplied separately at a corporate rate but paid for by the AFL.

Club deals with Carlton and Greater Western Sydney Giants are thought to be worth A$1.5m per year and A$1m per year, respectively.

The airline is a co-major partner of Carlton in a five-year deal, from 2017 to 2021, which gives it front-of-shirt branding rights for away matches.

Virgin Australia is a major partner of the Giants in the tier below principal partner Toyo Tyres. The Giants wear the airline’s logo on the backs of their shirts.

Lesser deals in the mid-six-figure-Australian dollars per year are also live with the AFL’s West Coast Eagles and Fremantle Dockers.

The five-year title sponsorship of Supercars, from 2016 to 2020, is worth about A$2m per year, according to industry sources.

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The fate of the brand’s sponsorships will be determined by the administrator and the contractual obligations under each sponsorship deal.

The Brisbane-based carrier was A$5bn in debt before the pandemic struck. Administrators at accountancy firm Deloitte now aim to restructure the business and find new owners within months. More than 10 expressions of interest have been logged, Deloitte said.

So far, the AFL, Supercars, Carlton, GWS and Gold Coast have all come out in support of the airline.

Kylie Rogers, general manager of commercial at the AFL, said. “We will continue to work and support them through this challenging and unprecedented time.

“The team at Virgin Australia have taken our clubs, players, officials and fans to all parts of the world, and we can’t thank them enough for their continued dedication to our game.”

Cain Liddle, chief executive at Carlton, said:  “As a club, we will continue to offer our full support to Virgin Australia and their people, who have stood by our side for the past five years and through some very difficult periods for our football club.

“Our partnership has been one of enormous mutual benefit. In 2019 alone, our Carlton IN Business network delivered more than A$5m worth of business to Virgin Australia.

“Like our club, Virgin Australia will likely look quite different post-Covid-19, but whilst they continue to fly Australian skies, they will always have the unequivocal support of our club.”

According to Australian press reports, the AFL expects to lose up to 30 per cent in sponsorship revenue across the clubs and competition this year. AFL matches are likely to resume after July.