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COMMENT

06/01/2011

FIFA is now embroiled in what is undoubtedly the most high profile series of accusations in sport since the Salt Lake City Winter Olympic Games bribery scandal of 2002 and it's arguable that only the sponsors have the power to do anything about it.

That four of FIFA’s biggest partners - Coca-Cola, Adidas, Visa and Emirates - have registered their concern is highly significant for several reasons.

First, sponsors have an enormous stake in FIFA, providing it with around $250 million a year, approximately 40% of its income. An even bigger slice comes from TV rights, but this is one area where there is unlikely to be a problem. Quite simply, no channel wants to lose the World Cup and with the next event being three years away, the TV companies aren’t being put in the spotlight – sponsors are a much more obvious target for the public and the media.

But does their huge investment give sponsors any clout with FIFA and if so how could they use it?
Would, for example, any actually walk away from one of sport’s two (the other being the Olympics) giant global events?

What is certain from the recent past is that sponsors don’t tend to get involved in controversy, at least publicly, unless they are either feeling the heat or believe that the situation will deteriorate.  Two of the sponsors mentioned have a recent history of withdrawing from high profile contracts as a result of scandal. Coca-Cola dropped Wayne Rooney following the footballer’s reported liaisons with prostitutes and Adidas withdrew from the Tour de France in 2008 because of the event’s continued association with performance enhancing drugs. These are not isolated incidents among the corporate community; ING terminated its Renault partnership following the F1 team’s race-fixing allegations and Tiger Woods lost several major sponsors very quickly when his extra-marital affairs became public.

The lesson is that no matter how big you may be – you’re not immune from a sponsor backlash. Morality clauses in contracts make it quite easy for a sponsor to withdraw if it feels that there are strong enough grounds. So if FIFA can’t show that its act is clean and is going to remain so, then there is a serious possibility that one or more of the clauses might be invoked.

So what would happen if one or two sponsors pulled out? The big question here is would the domino effect lead to a stampede for the exit door? If one sponsor found the whiff of corruption overwhelming, would others follow on the grounds that the public might consider that their ethical stance was somewhat lower? This was certainly a possible factor in the withdrawals from the Tour de France, especially among German brands, when T-Mobile, Audi and Adidas all quit the sport at roughly the same point. FIFA should take note that Continental, one of its sponsors, is also a major German brand.

So what would happen if a whole raft of sponsors quit? What options would be left to FIFA?

Many of the key FIFA sponsors are clearly number one in their sectors: Coca-Cola is bigger than Pepsi, Visa is bigger that MasterCard, McDonald’s is bigger than Burger King, Budweiser is bigger than Heineken, Adidas is rivalled only by Nike (which has traditionally been reluctant to take rights to mega events, preferring to use individuals and teams rather than official event rights).

In most of FIFA’s sponsorship categories there are only two big global players, so if FIFA loses the number one, it has to approach number two and there are several reasons why number two is likely to offer less, even if it is interested. First, if a series of sponsors pull out, the property is effectively tainted goods and so has a lesser value. Second, the law of supply and demand says that if you have only one bidder, you get a lower price, and finally, despite their size, they are smaller companies with smaller marketing budgets.

What's worse is that FIFA had a very public and costly falling out with MasterCard, one of the number twos, so it is unlikely to return unless the current FIFA hierarchy is removed.

It is also important to bear in mind that just as sponsors seek to align themselves with the biggest sports events on the planet, the equation also works the other way round. An organization of FIFA’s stature doesn’t want to be seen as partner to a series of second ranked global companies – it strives to be first and to rub shoulders with the best.

The loss of any of its big sponsors is therefore almost unthinkable for FIFA in terms of both money and prestige. At this stage, with no allegations, especially those directed at Sepp Blatter, being proved, it is still unlikely that this will happen for two reasons.

First, the sponsors plan their global marketing programmes well in advance and commit large budgets to the sponsorship activation through promotions, social media campaigns and other marketing activities. To stop now, even three years before the next World Cup, would be difficult. Second, there are no quick and easy equivalents to switch to. The likelihood, therefore, is that the sponsors will hold fire for the moment in the hope that FIFA will sort the mess out. What is certain, however, is that the pressure being exerted in private will be much stronger than that shown in public. And that pressure will grow if consumers successfully use social media to call for sponsor boycotts.

One of the big ironies in this is, of course, that whenever people complain about the bad influence of commercialism in sport, they often point the finger at sponsors. Whatever else anyone thinks of sponsors, they are possibly the only body that has the power to effect change and they have consistently shown that they set higher standards of ethical behaviour than many of the sports properties in which they invest.

The question is, when they have to confront such a huge challenge as the current position at FIFA, will they flex their collective muscles? They are paying the piper, but will they call the tune?

Related content

Report: Sports Sponsorship & the Law - includes analysis of 'morality clauses' and sponsorship termination
International Journal of Sports Marketing & Sponsorship - Scandal & Corruption special edition

 

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