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COMMENT

3/11/2011
The fact that Boutros Boutros, divisional senior vice president of corporate communications at Emirates has stated that the airline is unlikely to renew its FIFA partnership in 2014 is arguably the biggest sponsorship story of the year.

It is not just the possible withdrawal – sponsors obviously decide not to renew contracts regularly – it is the nature of the announcement that is surprising. Generally when sponsors decide that they are no longer happy with a rights holder, there tends to be little more than a bland press statement stating that the deal will not be renewed, possibly a ‘we wish them well for the future’ type statement and no further comment is made.

Boutros Boutros, however, made the following statement to an Australian business magazine:

“We don’t get into politics but we believe the situation with FIFA went beyond an internal problem and became much bigger.

“As a sponsor you expect they will come and write to you in the middle of the issue or at the end of it. To them they act as if it’s nothing for sponsors. For us, in our history of sponsorship, it is the only event that when it happened our clients started writing to us saying ‘why do you support this organisation?’

“You’d expect at certain times that FIFA would send you some assurances so that we don’t read about it in the newspapers or press conferences when you are one of the main partners. We are considered a partner, but if you are a partner in the business I think once a year you owe him a report. And that’s why we felt we were overlooked by FIFA. At the end of the day they were probably too busy, but at the end of the day we haven’t seen any changes. There is nothing telling you these things will not happen again.”

The statement raises several serious points for the sponsorship industry and questions about the Emirates / FIFA relationship. First, it highlights that sponsors are very conscious of their corporate reputation and that they are not prepared to risk it no matter how big nor how high profile the deal. FIFA is as big as it gets in the sports world, and this obviously makes sponsors more nervous when it comes to bad publicity because the potential damage is that much greater. This was seen when Tiger Woods was dropped by several high profile sponsors following revelations about his personal life.

Second, it shows that rights holders need to have a clear plan of action when it comes to bad publicity. There is currently no actual proof that there has been any wrongdoing at FIFA although allegations have been thrown around left, right and centre. An organisation of FIFA’s size, however, needs to be clean of corruption and to be seen as clean of corruption. While the former is unproven, the latter is certainly not. FIFA would have benefitted from launching its investigations earlier and with a greater demonstration that it was taking the matter seriously. If one of the major corporate partners is not convinced that this is the case, it really can’t be expected that the public will be.

The statement from Emirates, however, suggests that the issue for them is as much about communication with FIFA as it is about publicity. For such a significant partnership, it would be expected that contact would be on a daily basis and it almost beggars belief that Emirates is claiming that there has been no communication for a significant period. The company has invested nearly $200 million in FIFA and yet its statement seems to suggest that it has been waiting for a ‘report’, with the implication that ‘once a year’ is enough.

Personally, if I ran a global airline and had invested that kind of money to build my reputation, I would have got on the first plane to Zurich (which should be quite easy for an employee of Emirates) when the story first broke to find out what was going on and how it was going to be resolved.

Sponsors are stakeholders in sport, and major sponsors are major stakeholders. There clearly has to be a strict limit to the influence that they can justifiably bring to bear, but it is not unreasonable for them to ask questions when allegations of corruption are rife. The sponsor’s reputation is on the line and there will almost certainly be a clause in Emirates’ contract to allow it to withdraw at any point should it be able to demonstrate that its brand is being damaged. The fact that Emirates has not terminated its deal with immediate effect suggests that it doesn’t feel that serious damage is being done and that the partnership might still be beneficial. Three more years is a long time to stick with a deal that is damaging.

The allegations and Emirates’ statement have, however, harmed FIFA and in particular the large amount of good work that it does around the world. We must not forget that FIFA employs a lot of people who are scrupulously honest and very professional and the bad publicity has made their job that much harder.

This whole issue, however, raises questions about transparency and communication. Going forward, rights holders will have to become more transparent if they are to retain credibility and appeal to sponsors. The IOC learned this lesson after the Salt Lake City scandal and it is now both more open and better regulated. Major sponsors know that they are more vulnerable than ever to bad publicity as boycotts can spread across the planet in hours through social media. As such they are becoming more careful about who they work with and how the relationships are structured. They want to work in partnership with rights holders and that demands good communication. In this instance that communication would appear to have broken down and both parties need to examine how that can be remedied for the future.

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