Business

Fifa scandal 'a disaster' for sponsors

Lionel Messi takes a shot for Argentina v Germany in the 2014 World Cup final Image copyright AP
Image caption Pitch-side advertising for Budweiser can be seen at the 2014 World Cup final

It has not been an easy week for the big multinational corporations that sponsor football's world governing body Fifa.

When Adidas, Gazprom, Hyundai-Kia, McDonald's, Budweiser, Coca-Cola and Visa signed their deals, they would have envisaged seeing their brands beamed into millions of households around the world.

Pitch-side exposure at World Cup matches, accompanied by high-profile advertising campaigns, means that backing the World Cup guarantees getting your company promoted in all parts of the globe.

However, having spent tens of millions of pounds to be associated with sporting excellence, those famous brands now find their name and products associated with the increasingly tarnished Fifa brand, arrests and allegations of "rampant, systemic, and deep-rooted corruption".

A number of the sponsors - Coca-Cola, Kia, Adidas and Visa - have made known their concerns about what is happening at Fifa, with the latter particularly vociferous, warning that unless the global governing body makes "changes now", it would "reassess our sponsorship".

And McDonald's said it "takes matters of ethics and corruption very seriously and the news from the US Department of Justice is extremely concerning. We are in contact with FIFA on this matter. We will continue to monitor the situation very closely".

For the four years of the last "World Cup cycle", from 2011 to 2014, Fifa's six top tier Global Partners (as was - it is now five) paid a total of $177m (£116m) annually, which would mean each partner paid roughly $30m a year for this status.

Tier one sponsor Sony decided not to renew its contract last year - it had been a Fifa partner since 2007, after signing a contract in 2005 worth $38m annually.

'Goodwill'

One publicity-savvy bookmaker has offered odds on which sponsor will be the first to pull out of its association with football's Swiss-based powerbrokers.

It has Visa as the favourites, followed by Hyundai-Kia, although none of Fifa's backers have said yet they are ending their deals. Russian gas firm Gazprom is bottom of the betting to leave, and indeed it has put out a statement saying the current situation will have "no influence" on its agreement.

Image copyright Getty Images
Image caption Adidas has been supplying World Cup match balls since 1970

But as the scandal is not likely to go away any time soon, what damage is being done to these well-known companies, some of whom have associations with Fifa stretching back decades?

"This is disastrous for the main core group of big Fifa sponsors. For them, this is a major issue," says Anastasia Kourovskaia, a brands expert at agency Millward Brown.

"The idea of sponsorship is to transfer the goodwill that supporters feel for the sport, to the benefit of a brand's equity."

She suggests that the big seven corporations may have to position themselves at arms-length from Fifa, if they do not want to be hit by the fall-out from the sensational developments.

"The solution is to emphasise that they are supporting football for the benefit of the game itself, and the pleasure and challenge of winning and playing football, rather than Fifa as an organisation," she says. "They have to differentiate themselves from Fifa's management."

Image copyright Getty Images
Image caption Hyundai renewed its deal with Fifa before the 2010 World Cup

In addition, she points out that as this is not the first scandal to hit Fifa, it might be a good time for the sponsors to form a committee of their own "to ensure the ethical running of big global football events".

One other unforeseen outcome of the furore may be that in future, potential sports sponsors may look to back smaller, grass-roots, events - which traditionally have been more complex and costly to back - rather than global blockbusters such as World Cups, which have a greater potential for scandal.

"This might be the tipping point that sees sponsors move away from events which are 'uniform' across the world, and towards more local events," she says.


Image copyright Getty Images

Who are Fifa's five top tier partners and two World Cup sponsors?

Adidas - the German sportswear firm has been supplying the official match ball for all Fifa World Cup tournament matches since 1970. Also involved in all other Fifa events, such as the Confederations Cup Brazil 2013, and the Fifa U-20 World Cups for women and men.

Coca-Cola - the US soft drinks firm is one of the longest-standing corporate partners of Fifa, with a formal association since 1974 and an official sponsorship of the Fifa World Cup that began in 1978. Coca-Cola has had stadium advertising at every Fifa World Cup since 1950.

Gazprom - the Russian energy giant signed up with Fifa in 2013 as a partner for all competitions in the period of 2015 to 2018, including the 2018 Fifa World Cup, which is due to take place in Russia for the first time. (The firm is also an official partner of the Uefa Champions League 2012 to 2015).

Hyundai/Kia - the South Korean carmaker began its Fifa alliance in 1999, in a deal to sponsor 13 Fifa competitions including the 2002 World Cup, an agreement extended to the 2006 event. It again backed the 2010 World Cup and is now the official Automotive Partner of Fifa until 2022.

Visa - the credit card company became a top-tier Fifa partner in 2007, taking over from rivals Mastercard in controversial circumstances, and recently extended its relationship until 2022. It is a sponsor of five Fifa events this year, including the Women's World Cup in Canada.

Budweiser - the US beverage has been a World Cup sponsor since the 1986 event in Mexico, and is the Official Beer of the tournament, with its product on sale in all stadiums at the finals, and it also sponsors the Man of the Match award at each game.

McDonald's - the American fast food chain has been a sponsor since the 1994 World Cup in the US. Its products are available at all matches in the finals tournament, and it also sponsors the World Cup Player Escort programme, in which children accompany the teams onto the pitch.


'Tough questions'

Meanwhile, it appears that Nike, which is not an official Fifa sponsor (but does come up with clever marketing campaigns around the World Cup) has also been dragged into the furore, with the US Department of Justice questioning its deal with the Brazilian Football Association.

The American indictments state that an unidentified "major US sportswear company" is alleged to have been involved in the payment and receipt of bribes.

Image copyright Getty Images
Image caption Nike's kit deal with Brazil stretches back nearly two decades

The Department of Justice did not name the firm, but Nike and the Brazilian football federation have been partners since a $400m sponsorship deal was signed back in 1996.

Nike did not confirm it was the company alluded to, but said it "believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery. We have been co-operating, and will continue to co-operate, with the authorities."

Meanwhile, the editor-in-chief of Dutch newspaper Nederlands Dagblad says he does not want to see any adverts from Fifa sponsors in his paper until they have "converted".

And the sponsorship industry's trade body in Europe is taking a dim view of the arrests and indictments.

The European Sponsorship Association says that the developments "underline the critical importance of transparency and high ethical standards in sport and in business".

They said that sponsors did not want to be associated with alleged "shady practices" and were "increasingly asking rights-owners tough questions on a range of compliance and corporate social responsibility (CSR) issues".

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