Jun 8, 2015
Could FIFA Lose the World Cup?
The news of alleged corruption at FIFA, soccer’s world governing body, has lead to speculation about the future of the organization and its signature event, the World Cup. The resignation of Sepp Blatter, FIFA’s newly reelected president, and the indictment of FIFA officials for bribery, money laundering, fraud, and racketeering have shaken the group to its core.
In the wake of the scandal, media attention has turned to the corporations whose sponsorship dollars have helped enrich FIFA for decades. How will they react?
“It puts the sponsors in a terribly awkward position,” says Tim Calkins, a professor of marketing at the Kellogg School. “Obviously they don’t want to be associated with an organization that is full of corruption and wrongdoing. By the same token, FIFA is very important as an international sports platform. There’s nothing quite like it.” For companies like Adidas, Coca-Cola, Visa, and Budweiser, the chance to promote their brands at a global spectacle like the World Cup is one they would pass up only in the most extreme circumstances.
“A lot of it is scale,” Calkins says. “The World Cup is such a huge, captivating event. Sponsors will only walk away when people get upset enough at FIFA that they are no longer interested in the tournament itself.”
For brands, sponsoring events and causes always requires a delicate balance. On the one hand, it is a powerful way to establish credentials and built equity. On the other hand, once a company signs an agreement with an organization, its ability to impact the course of events is very limited. “The thing about sponsorships is that they are totally optional,” Calkins says. “So if you’re going to do one, you’ve really got to believe that it’s a good fit for your brand and that the association is really going to benefit you long term. If there’s not a good fit, then it’s much less likely you’re going to get a great return.”
Past decisions to end sponsorship deals often depended on the broader context of the transgressions. Calkins points to the case of Donald Sterling, the disgraced owner of the L.A. Clippers, as a contrasting example. “In that case, the sponsors ran—and they ran immediately.” State Farm announced within a matter of hours that they would pull their support. Sponsoring FIFA, however, is a different order of magnitude than a single NBA club, and graft within a global bureaucracy may be less clear to the casual observer than overtly racist comments like Sterling’s.
“It hasn’t gotten bad enough yet,” Calkins says. “You can tell by the early responses.”
As details of the allegations came out, Visa issued a statement claiming that unless FIFA takes “swift and immediate” steps to address its corruption problem, the company would “reassess” its sponsorship. Adidas announced it is “deeply concerned” and called for greater transparency. But while there is a precedent for companies ending their partnerships with FIFA—Sony and Emirates both did so in late 2014—none of the current top-tier sponsors have felt the need to walk away. “There’s no indication yet that they’re cutting the cord,” Calkins says. “But there is definitely a conversation going on within these companies.”
So far, it does not seem as if the brands will suffer widespread damage as a result of their links with FIFA. The Women’s World Cup opened June 6 on the heels of the scandal. No major sponsors fled before the tournament and U.S. TV ad sales have outpaced the 2011 tournament.
But the controversy surrounding the selection of the next two Men’s World Cup hosts—Russia in 2018 and Qatar in 2022—is not likely to disappear anytime soon. If there is a perception that this global marketing platform will be tainted by scandal—that might impact sponsorship deals.
So is there a possibility that sponsors may flee an event as globally important for brands as the World Cup? And if so, where would they go? One dramatic scenario might see corporate sponsors throw their support behind a rival event.
“It’s not impossible,” Calkins says. “If you could get a number of big players to commit to another event, that would open up new opportunities for sponsors. To walk way from FIFA would be a big deal. To move from FIFA to sponsoring something else has a different ring to it. If sponsors get nervous enough, then you might see an openness to new ideas. Maybe that’s what will lead to change.”