In the mighty world of sports sponsorship there is no such thing as a small deal. But there are only two properly gigantic opportunities that dwarf all others: the Olympic Games and the FIFA World Cup. There is simply no comparison in terms of gigantic cost, global reach and the potential brand impact of being associated with one of the ‘big two’.
And yet, for all its glory, things are not looking too perky over at FIFA for next year’s World Cup. With the draw for the tournament due on Friday and the kick-off in Moscow’s Luzhniki Stadium now just over six months away, many of the sponsorship deals remain undone.
FIFA is offering three tiers of sponsorship for the World Cup in Russia next summer. The eight top-tier ‘partners’ are granted global rights to promote their brand alongside the tournament for what is widely thought to be an annual fee of around £100m. Beneath them are the six ‘sponsors’, each thought to be paying around £50m a year for the association. Finally, in a new development for Russia 2018, there are also 32 regional ‘supporter’ deals available for an asking price of around £8m each.
The problem for FIFA is that many of these sponsorship deals look unlikely to be signed. In stark contrast to earlier tournaments there are embarrassing gaps in the sponsorship roster for 2018. FIFA is still searching for a final partner, it is short of two sponsors and, with only one regional supporter so far signed up, a local Russian bank, there are still 31 spots available at the third tier.
It takes at least a year for a big brand to prepare to execute a major sponsorship like a World Cup association, so while it might appear inconceivable, it seems increasingly likely that the World Cup will kick off with an incomplete sponsorship roster. Perhaps more likely, a series of last-minute discount deals will be done to sell the remaining sponsorship opportunities to brands at knock down prices.
But with existing sponsors already paying agreed rates, even this solution could also cause significant trouble. Either way FIFA – which needs around £1.5bn to run the World Cup, managed to lose £300m in 2016 and is on schedule to lose £400 million this year – really needs the revenue.
It would be easy to suggest in today’s digital age the appeal of big sports sponsorship is starting to dissipate for many brand managers and CMOs. But the evidence from Premier League football deals suggests football sponsorship is in rude health. Rio’s recent Olympics were the richest in history with a record number of sponsors contributing to £7bn in marketing income.
World Cup is a brand risk
So, if it’s not sport sponsorship that’s to blame, what is going on?
Clearly the long and painful exit of Sepp Blatter as president hurt FIFA’s reputation. A series of investigations and arrests have merely added to the organisational intrigue swirling around FIFA’s Swiss headquarters. Things got so bad that several FIFA sponsors went to the extraordinary lengths of releasing press statements denouncing FIFA and demanding it fixed things fast or face their withdrawal.
Several different national police forces are still investigating FIFA executives and if you Google ‘FIFA’ you are as likely to read something about money laundering, fraud or international crime as you are to see the words ‘football’ or ‘tournament’.
FIFA and Russia are not going to be trusted by brands, with a price tag that runs into nine figures and a global event with a billion eyeballs.
That’s a problem for big brands because brand safety has become an enormous issue in marketing. There are very few things that keep the average global CMO up at night, but one of them is the horrific thought that his or her brand might appear alongside inappropriate content or become associated with anything untoward. Even worse, that improper association is then highlighted by the media to all and sundry including – gasp – the CEO.
YouTube’s newest troubles – with ads appearing alongside videos of children that feature predatory comments – merely serve to underline the jitters that senior marketers currently feel for brand safety at any level. You cannot spend millions protecting your image, trademark and reputation and then do anything other than go bananas when your brand is presented in a compromising position by a company you are paying to promote it.
FIFA and Russia are simply not going to be trusted by many big brands, especially with a price tag that runs into nine figures and a global event with a billion eyeballs.
To some degree, FIFA has also scored an own-goal with its decision making. While Russia, with all its links to anti-democratic activities and secret St Petersburg-based social media scandal farms, is hardly the ideal location for safety conscious brands in 2018, it looks heavenly compared to the next venue on the horizon for the World Cup.
How exactly FIFA executives managed to decide that Qatar – a country with a population of less than three million and an average summer temperature of more than 40 degrees celsius – would make a better host for the 2022 World Cup than America, Japan, Korea or Australia boggles the mind. But one thing is certain: if Russia has proven problematic for sponsor money, just wait for Qatar 2022.
That’s an issue now because FIFA relies on long term partners such as Coca-Cola and Visa to continue their sponsorships across many World Cup tournaments. But even these stalwarts must surely be thinking hard about the potential pitfalls of paying to be associated with a tournament that already appears to be compromised by rumours of financial skullduggery, and by the sheer impracticality of running the world’s biggest football event in a country that has no football heritage or infrastructure to support it.
It’s ironic that a tournament that has proven so successful in the past in building brand equity for a multitude of companies is now struggling because, beyond the issues of probity, financial transparency and ethics, it completely forgot about its own reputation.
Professor Mark Ritson will be teaching the next Marketing Week Mini MBA course from 24 April 2018. To book your place, sign up at marketingweek.com/mini-mba.