Are FIFA sponsors issuing ‘empty threats’?
Despite the likes of Visa threatening to pull sponsorship amid the FIFA corruption scandal, brands are unlikely to cut ties to the World Cup due to the massive awareness opportunity that comes with being linked to the game.
Several key FIFA sponsors have expressed serious concerns following the arrests of top FIFA officials yesterday (27 May) amid an ongoing corruption investigation. Visa threatened to pull its sponsorship and Coca-Cola claimed the controversy has “tarnished” the World Cup brand.
Paddy Power is even offering odds on which sponsor will pull out first.
Emirates and Sony had already announced they would not renew their sponsorship contracts prior to this week’s arrests.
However, the latest brand statements are likely to be empty threats according to sponsorship experts. While brands will be exerting huge pressure on FIFA for change, most are unlikely to end their deals.
Rupert Pratt, managing partner of sports entertainment agency Generate Sponsorship, says that moves by longstanding sponsors to come out publicly are indications that they “can’t be seen to be tolerating this any longer”.
Marketing Week columnist Mark Ritson agrees that the sponsors are in a “tricky spot” as they “love the global brand awareness and elite associations that the World Cup confers on their brands, but abhor the reputational risk of being associated with FIFA and its current rotten regime”.
However, he says: “The criticisms from Coke and others are strongly worded, but empty threats aimed to protect corporate reputations that certainly won’t lead to any sponsor withdrawal from the World Cup.”
“The criticisms from Coke and others are strongly worded, but empty threats aimed to protect corporate reputations that certainly won’t lead to any sponsor withdrawal from the World Cup.”
A risk to revenue
It is thought that FIFA’s revenues are about £5bn, with major sponsors making up around £700m of that. The majority come from its TV partners, such as the BBC and ITV.
While no mention has been made of the relationships between the broadcasters and FIFA, if they began to question their relationship with FIFA the potential damage would be greater than moves by any of its major sponsors.
Tim Crow, CEO of Synergy Sponsorship, says: “If you wanted to put pressure on FIFA, where you would start is with [its] TV partners. If they pulled out, that would destroy FIFA’s balance sheets.
He adds: “Funnily enough, when the media, particularly BBC and ITV, cover the story, they never mention that.”
Nevertheless the threat of the big-tier sponsors pulling out could impact FIFA. Both Coca-Cola and Adidas have long-term deals worth tens of millions of dollars to FIFA.
Replacing some of these top-tier brands could also be difficult. FIFA needs to attract big brands with huge sponsorship budgets. Would a brand like Nike, Pepsi or MasterCard want to take over a tarnished sponsorship?
The declining value of the FIFA brand
Allegations of corruption have beset FIFA since the vote to decide the hosts of the 2018 and 2022 World Cup’s took place in 2010.
The current charges by the US Department of Justice involve over $150m in bribes, while Swiss authorities have opened an investigation into the election of Russia and Qatar as future World Cup hosts.
FIFA is also facing pressure to improve the working conditions at the Qatar building sites for the 2022 World Cup, where many migrant workers have died.
Speaking at a press conference yesterday, FIFA’s director of communications and public affairs Walter De Gregorio said that FIFA intimated at the process in November last year when it lodged a complaint with a federal attorney.
“This for FIFA is good,” he said. “It’s not good in terms of image and reputation, but in terms of cleaning up. It confirms we’re on the right track.”
He added that FIFA is the “damaged party”.
However, despite its hurt image, it is the attraction of the World Cup and not the FIFA brand that draws sponsors in.
Pratt believes football is still a “hugely commercial sponsorship marketplace”, adding: “This is a story about FIFA. People aren’t going to suddenly stop buying Coke because they sponsor the World Cup.”
While Visa claims it will “reassess” its sponsorship should FIFA fail to make changes, it also states: “Visa became a sponsor of FIFA because the World Cup is one of the few truly global sporting events with the power to unite people from around the world through a common love of football”.
Adidas says that it encourages FIFA to “continue to establish and follow transparent compliance standards in everything they do,” adding that it will “continue to support football on all levels.”
“While Visa claims it will “reassess” its sponsorship”
For reassess read: re-negotiate. As you point out, it is the event the sponsors want to be part of not FIFA. Most football fans don’t give a hoot who’s running the show as long as the teams turn up on time. The sponsors have them (FIFA) over a barrel now.
As an aside I must confess that, because some of the sponsorships have been so long-running, they have become like wallpaper to the event ayway.