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COMMENT

11/05/2014
Emirates has declared that it will not renew its sponsorship contract with FIFA and there are rumours that Sony, whose deal runs until the end of December, will follow suit.

The significance of these moves for FIFA are huge. It is very rare that such a major rights holders lose a first tier sponsor. For example, of the other Tier One partners, Adidas and Coca-Cola have been with FIFA since the 1970s, Hyundai since 1999 and Visa since 2007 after it fought hard to replace MasterCard. The same picture is true of Olympic TOP sponsors where the majority of brands have a long association with the Games.

Although neither Emirates nor Sony are giving specific reasons for their actions, it is quite clear that the allegations of corruption at FIFA are not helping. Emirates voiced concern back in 2011 when senior vice president of corporate communications Boutros Boutros said:

“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.”

In June this year Sony was among a number of FIFA sponsors to express concern about the effect of negative publicity saying that corruption claims should 'be investigated appropriately' and called on FIFA to observe 'its principles of integrity, ethics and fair play'.

Adidas, whose current deal lasts until 2030, stated: 'The negative tenor of the public debate around FIFA at the moment is neither good for football nor for FIFA and its partners.'

FIFA’s current stance on the corruption allegations is that the investigation report, produced by US attorney Michael Garcia, is being studied by FIFA’s ethics adjudicatory chamber led by judge Hans-Joachim Eckert. However, he has said that he will not publish the findings in full.

This of course leaves FIFA open to allegations that it has something to hide and is likely to lead to further criticism. There will be many arguments concerning the validity of corruption claims over the coming months and IMR is in no better position to comment on them than anyone else.

What is clear, however, is that FIFA’s major sponsors are paying in the region of $40 million per year for their rights and a similar amount on top to activate those rights.

It is a huge commitment and where they feel that bad publicity is affecting their brand, then it is inevitable that they will act. Until this week, there had been no withdrawals. The danger for FIFA is that two of its biggest sponsors will pull out by the end of the year. Can they be replaced easily? There are hints that Qatar Airways will step in, a logical move for the airline given that its home country will host the 2022 World Cup, and that Samsung is eyeing Sony’s spot.

But will FIFA be in a position to demand the same level of fees? This is rapidly becoming a buyer’s market given that there simply aren’t a large number of global brands in a financial position to take a $40 million per year investment. No other airline on the planet has a sponsorship budget that comes anywhere near that of Emirates, and of the large consumer electronics companies, there are arguably only Sony and Samsung in a position to take on such a commitment.

In other categories, MasterCard is the only alternative to Visa, and it had a very public and legal falling out with FIFA and Pepsi is the only soft drinks option other that Coca-Cola. FIFA is, therefore, in danger of losing a very considerable chunk of its income along with a damaged commercial reputation. Quite simply, it doesn't look good for the World's biggest sporting event to lose commercial partners and then end up partnering a series of brands that aren't leaders in their field.

The growth of ambush marketing through social media is also making brands consider the value of taking major rights. At the 2014 World Cup, for example, Nike and Beats were among a handful of brands that gained significant exposure despite having no rights with FIFA. Although ambushing was not a major problem in this instance, there is a growing sense in the sponsorship community that brands are looking hard at the cost of rights and what else they could do with that level of investment. Creating content and distributing it via social media is becoming an increasingly attractive option and an awful lot of marketing can be achieved for $40 million per year.

It is therefore imperative that FIFA is seen to act decisively over corruption allegations. If it wishes to retain public trust and sponsorship revenue, it has to be seen to be completely clean and transparent in its dealings. Whether or not there is any merit in the corruption alleagations is unproven, but what is without question is that FIFA has failed to give the impression that it is acting decisively and transparently. Until that changes, there is a serious risk to the whole business model upon which the organisation is based.


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