Visa extending World Cup deal for eight years
Visa has reached an eight-year sponsorship extension for the World Cup valued at more than $170 million, allowing it to continue as the official payment services partner for the world’s biggest soccer tournament and its governing body, FIFA, through 2022.
The deal ensures Visa will have the rights to the two premiere global sports properties — the Olympics and World Cup — for the rest of the decade. Over the last six years, it has used both properties to raise its brand awareness in passionate Olympic markets such as China and Japan, and passionate soccer markets such as South America and Africa. It will be able to continue to do that now through at least 2020, when its sponsorship with the International Olympic Committee ends, and 2022, when its FIFA deal ends.
|Visa’s name has been linked to the World Cup since the brand became a FIFA sponsor in 2007.
Visa has placed more emphasis on soccer in recent years. The company was aggressive in securing its first World Cup sponsorship, which took effect in 2007, outmaneuvering longtime FIFA sponsor MasterCard to become the official payment services sponsor of the 2010 and 2014 World Cups. That deal, which was valued at $170 million, wound up in court when MasterCard, which sponsored FIFA from 1990 to 2006, sued FIFA, claiming it had a right of first refusal for the category and charging that FIFA violated that agreement. The parties ultimately settled the lawsuit.
Sources familiar with the terms of Visa’s extension said FIFA clawed back some of the rights that Visa has in its current deal. That existing deal, which runs through 2014, gives Visa the rights to both the payment services category and the retail banking category. The company has been able to take the retail banking rights and sell them in many markets around the world, recouping some of its sponsorship cost by auctioning those rights in targeted countries, such as in Japan, to Japan Post Bank. FIFA retained the local retail banking rights for the two countries hosting the World Cup during the span of the deal: South Africa in 2010, and Brazil in 2014.
“It was a really innovative deal,” said Tom Shepard, a former Visa sponsorship executive and current partner at sports marketing agency 21 Marketing, whose client roster includes Ernst & Young and Liberty Mutual. “Visa could have been far more aggressive in liquidating its rights outside the host country.”
But under terms of Visa’s extension, which covers the 2018 World Cup in Russia and the 2022 World Cup in Qatar, FIFA will keep control of the retail banking rights. Visa’s rights will be limited to the payment services category. That change gives FIFA the chance to boost its total haul from the retail banking category by selling rights in Europe during the coming World Cups.
The change also means Visa will be spending more for less and will not be able to offset its costs in the same way it has under its current agreement. It’s unclear whether Visa will be able to pass through, but not sell, rights to use the World Cup and FIFA logos to banks worldwide. It does that with its worldwide IOC sponsorship.
Visa’s business has changed considerably since it signed its current deal and became one of FIFA’s six worldwide sponsors. When that deal was struck, Visa was still owned by member banks. Today, it is a public company operating in more than 70 markets around the world, and it reportedly is considering a more than $3 billion acquisition of its sister company, Visa Europe, that would bring more than 25 additional countries.
Its approach to sports marketing evolved as its structure changed. When it was owned by member banks, its sports marketing was split between a U.S. sports marketing group (led by Michael Lynch) and a global group (led by Shepard). Now it has a single group, and its approach to both the Olympics and the World Cup has shifted from developing independent marketing programs in countries around the world to developing a central marketing platform and tag line that’s adopted by more than 70 territories.
FIFA divides its sponsorships into three tiers: worldwide partners, World Cup sponsors and national supporters. In addition to Visa, the organization’s other worldwide partners are Kia, Adidas, Coca-Cola, Sony and Emirates.
Though Visa snatched the World Cup rights from MasterCard, its biggest competitor has tried to retain a stake in soccer worldwide. MasterCard last year signed a sponsorship with the Brazilian national team that will run through 2020. The deal gives MasterCard worldwide rights to a squad that is known for stylish play and considered by soccer fans worldwide to be their second favorite team, behind only their own national team.