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Marketing and Sponsorship

FIFA Sponsors Have Yet To Pull Out Of Deals In Wake Of Corruption Indictments

While many FIFA sponsors have "advertised their concerns" amid the scandal that broke this week, none of them so far "have said they are pulling out of their deals," according to a front-page piece by Vranica, Mickle & Robinson of the WALL STREET JOURNAL. 21 Sports & Entertainment Marketing Group Founder & CEO Rob Prazmark, who has negotiated FIFA contracts with companies, said, "Companies get squeamish (about doing business with FIFA), but it’s all about the business. Does the upside potential outweigh the downside risk? The answer is yes." Data from research firm IEG shows that FIFA collected $1.6B in sponsorship money in the four years leading up to the '14 World Cup, "nearly half of which came from its six top 'partners.'" Those figures "don’t include the hundreds of millions of dollars the six companies -- Coke, Adidas, Hyundai, Emirates, Visa, and Sony -- spend to advertise on telecasts of soccer matches." There are "obvious perils to continuing to associate with an organization that is involved in such sustained controversy." But some sports marketing experts said that companies have likely been "willing to turn a blind eye to FIFA’s problems because the World Cup is so important for companies needing to reach global audiences." Even before this week’s developments, sponsors’ concerns with FIFA "were building as allegations of improper conduct inside the organization surfaced over the years." Johnson & Johnson was "so concerned that it tried to insert a 'morals' clause in its contract" for the '14 World Cup, but FIFA "refused." A J&J spokesperson said that the company "reviewed its contract following the World Cup and opted not to renew it for business reasons" (WALL STREET JOURNAL, 5/29).

NOTHING EXPECTED TO CHANGE: ESPN’s Shaka Hislop said the sponsors “are making the right noises, but ultimately nothing will change.” Hislop: “The sponsors have to say the things that they are right now. Their only interest is in raw, hard numbers. And let’s be honest, despite … whatever comes of all of this, people are still going to play the game and people are still going to go to World Cups in their numbers. People are still going to watch World Cups and the coverage on television in strong numbers as ever. That's all that the sponsors are concerned about” (“ESPN FC,” ESPNews, 5/28). The FINANCIAL TIMES' Moore & Scannell wrote FIFA's status as a "moneymaking machine seems assured" regardless of the "outcome of the investigations." Sports marketing firm West Nally Founder & CEO Patrick Nally said, "Broadcasters and sponsors are not going to be dissuaded from supporting the World Cup, a massive global event, which will go on and on" (FT.com, 5/28). IEG Senior VP/Content Strategy Jim Andrews said that FIFA sponsors who were "otherwise satisfied with their association with the World Cup" will be "under pressure to dissociate themselves from FIFA, which has been the subject of corruption allegations for years." Andrews: "A lot of groups will demand that they take a stance against the type of corruption that's charged here." But Andrews added that the World Cup is "such a potent asset that companies would have to think carefully about exercising any possible option to escape their contracts." He said, "If you walk away from this incredibly valuable marketing opportunity, you’re allowing your competitor to take it" (N.Y. TIMES, 5/29).

SEPP RIGHT DOWN
: In L.A., Kevin Baxter writes the pressure that will "ultimately bring down" FIFA President Sepp Blatter "will come from the same people who built him up: corporate stakeholders who have helped FIFA's revenue grow" to more than $5.7B over the last four years. Intellectual property management firm Consor Chair Weston Anson said, "This is the inflection point. The balance of power has shifted to the sponsors." He added Blatter has "damaged" the FIFA brand in "ways that can be measured in billions of dollars" (L.A. TIMES, 5/29). 

WHO KNEW? ESPN.com's Darren Rovell noted Nike on Thursday "issued a second statement in as many days, hoping to separate itself from the others listed in the FIFA indictment." Nike said in the statement, "The charging documents ... do not allege that Nike engaged in criminal conduct. There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme." While Nike "wasn't specifically named," the brand was "hinted at in the indictment brought against current and former soccer officials and sports marketers as a major U.S. sportswear company" that signed a 10-year, $160M deal with the Brazil national team in '96 (ESPN.com, 5/28).

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