The corruption scandal engulfing FIFA is stoking long-festering
concerns among corporate sponsors about soccer's top governing
body, but the marketing power of the world's most popular game is
so great that severing ties wouldn't be easy.
World soccer offers an unrivaled platform for brands to get
their messages out in emerging markets that are vital sources of
growth. Even as many FIFA sponsors have advertised their concerns
since U.S. prosecutors this week released an indictment detailing
broad corruption charges against 14 people linked to the
organization, none so far have said they are pulling out of their
deals.
Credit card giant Visa Inc. said it wants sweeping changes at
FIFA and could otherwise end its agreement, which runs until 2022.
Other top sponsors such as Adidas AG and McDonald's Corp. expressed
deep concerns, while Coca-Cola Co., which has been a FIFA sponsor
for more than three decades, said in a statement the controversy
"has tarnished the mission and ideals of the FIFA World Cup."
"Companies get squeamish [about doing business with FIFA], but
it's all about the business," said Rob Prazmark, who has negotiated
FIFA contracts with companies through his Greenwich, Conn.-based
sports-marketing agency 21 Sports & Entertainment Marketing
Group, Inc. "Does the upside potential outweigh the downside risk?
The answer is yes."
FIFA didn't respond to a request for comment on the effect of
the indictments on its sponsorship agreements.
Many sponsors have stuck by FIFA for years—decades in
some cases—despite persistent allegations of corruption
and misconduct inside the organization. This year alone, FIFA has
faced controversy over everything from alleged abuse of migrant
laborers building soccer stadiums in Qatar to bribery in the
bidding to choose hosts of the quadrennial World Cup.
In 2011, the organization began investigating two of its own
members on bribery accusations. A handful of sponsors including
Adidas and Coca-Cola issued statements of concern after the
incidents, but didn't end their agreements.
FIFA collected $1.6 billion in sponsorship money in the four
years leading up to the 2014 World Cup, nearly half of which came
from its six top "partners," according to research firm IEG, a unit
of ad giant WPP.
Those figures don't include the hundreds of millions of dollars
the six companies—Coke, Adidas, Hyundai, Emirates, Visa,
and Sony—spend to advertise on telecasts of soccer
matches. Overall, FIFA took in $5.72 billion in the 2014 cycle.
The complaints from corporate partners add to the pressures
facing FIFA's embattled president, Sepp Blatter, as he prepares for
a vote on Friday to secure his re-election. Officials including
U.K. Prime Minister David Cameron and Michel Platini, the president
of Europe's top soccer body, have called on him to resign.
For the companies, there are obvious perils to continuing to
associate with an organization that is involved in such sustained
controversy. Big brands routinely have had to make such
calculations, and they don't always end with the same conclusion.
Many sponsors distanced themselves from Tiger Woods after
revelations of his marital infidelities. Last year, sponsors stuck
by the National Football League when it was in the cross hairs for
the Ray Rice domestic abuse scandal.
Some sports marketing experts said that companies have likely
been willing to turn a blind eye to FIFA's problems because the
World Cup is so important for companies needing to reach global
audiences.
"It's like the NFL with the Ray Rice situation," said Bob
Williams, chief executive of Burns Entertainment and Sports
Marketing. "The NFL sponsors walked the tight rope and stuck with
the NFL because the benefit of the NFL is so large. The World Cup
is also so important and they [sponsors] don't want to see that
go."
A former Coca-Cola executive familiar with FIFA dealings said
the beverage giant should team up with other sponsors to take a
hard line and demand action, including Mr. Blatter's removal.
"They should be immediately convening with other sponsors and
deliver a very firm, unified message to FIFA that enough is
enough,'' said the former executive. "You need total change.''
Mr. Blatter said Thursday that he was committed to rebuilding
the image of the organization.
FIFA didn't immediately respond to requests for further
comment.
Visa said FIFA needed to rebuild "a culture with strong ethical
practices in order to restore the reputation of the games for fans
everywhere."
"Should FIFA fail to do so, we have informed them that we will
reassess our sponsorship," the company added.
Even before this week's developments, sponsors' concerns with
FIFA were building as allegations of improper conduct inside the
organization surfaced over the years.
Johnson & Johnson was so concerned that it tried to insert a
"morals" clause in its contract for the 2014 World
Cup—language that essentially would let the company pull
out of a sponsorship arrangement if FIFA's reputation were badly
damaged, according to people familiar with the matter. FIFA
refused.
A J&J spokesman said the company reviewed its contract
following the World Cup and opted not to renew it for business
reasons.
Marketing executives at Coca-Cola have had numerous
conversations with FIFA officials on controversies that have
emerged over the years, including allegations of irregularities in
the bidding process to select hosts for the 2018 and 2022 World Cup
tournaments, according to a person familiar with the matter.
Coke "pressed them to restore the trust in the FIFA brand
because their brand was hurting Coca-Cola's brand," the person
said.
Some FIFA sponsors have discussed how each was handling the
fallout of FIFA-related controversies and to plot how to respond,
said Maarten L. Albarda, a former Anheuser-Busch InBev marketing
executive.
"We had plenty of conversations around World Cup and FIFA that
we didn't like," he said.
Last year, Sony decided not to renew its FIFA sponsorship, an
eight-year deal valued at over $300 million, partly because of the
controversy around 2018 and 2022 World Cup events, The Wall Street
Journal reported. Emirates had ended its contract shortly before
Sony.
In 2006, longtime FIFA sponsor MasterCard sued FIFA for
disregarding the company's right-of-first-refusal to renew its
sponsorship and instead negotiating a deal with Visa.
A U.S. district court in New York found that "FIFA's negotiators
lied repeatedly to MasterCard" and used the company to get Visa to
increase "its cash bid by $30 million," according to Judge Loretta
Preska's ruling.
"While the FIFA witnesses at trial boldly characterized their
breaches as 'white lies,' 'commercial lies,' 'bluffs," and,
ironically, 'the game,'" Judge Preska wrote, "their internal emails
discuss the 'different excuses to give to MasterCard as to why the
deal wasn't done with them,' [and] 'how we (as FIFA) can still be
seen as having at least some business ethics.'"
MasterCard and FIFA reached a $90 million settlement. FIFA
denied wrongdoing.
The World Cup and Olympics are seen as the premier events to
help global marketers win favor with consumers around the globe.
And soccer is especially powerful because of its reach in
fast-growing developing markets in Latin America, Africa and Asia.
FIFA is also viewed as more friendly to advertisers than the
Olympics, some marketing experts said.
FIFA deals are among the most costly sponsorships. Coke has a
multiyear deal worth about $25 million annually, according to a
person familiar with the matter.
"There are very few marquee global properties that a marketer
can activate across all the markets they operate in," said Kevin
Adler, chief engagement officer at sports-marketing firm Engage
Marketing.
Marketing experts don't expect many brands to end their
association with FIFA, despite the harsh words from the Justice
Department, whose indictment of FIFA officials describes the
alleged corruption at the organization as "rampant, systemic, and
deep-rooted."
"I doubt any of the companies will pull out," said Maarten L.
Albarda, a former Anheuser-Busch InBev marketing executive, who has
had dealings with FIFA.
Mike Esterl in Atlanta contributed to this article.
Write to Suzanne Vranica at suzanne.vranica@wsj.com, Tripp
Mickle at Tripp.Mickle@wsj.com and Joshua Robinson at
joshua.robinson@wsj.com
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