The U.S. Justice Department on Wednesday charged nine-current and former FIFA officials and five others with corruption carried out over a 24-year timeframe.
IEG, a Chicago research firm owned by WPP, estimates that FIFA’s six official marketing “partners” spent nearly $190 million for sponsorship rights in 2014. Those companies included Adidas, Coca-Cola Co., Emirates, Hyundai-Kia Motors, Sony Corp. and Visa. A second tier of World Cup-specific sponsors spent $171 million on the 2014 event. On top of those sums, marketers collectively shell out hundreds of millions of dollars for TV ads. Overall, FIFA took in $5.72 billion in the four years leading up to the 2014 World Cup, including media rights deals and sponsorships.
Adidas AG, official supplier of the FIFA soccer World Cup for more than 40 years, said in a statement Wednesday that it expects “the highest standards of ethics and compliance” from its partners. Therefore, it added, it “can only encourage” FIFA to follow these standards “in everything they do.”
Another long-time FIFA partner, Coca-Cola said in a statement "this lengthy controversy has tarnished the mission and ideals of the FIFA World Cup and we have repeatedly expressed our concerns about these serious allegations." The beverage giant added that it is "confident" FIFA "will continue to cooperate fully with the authorities."
Other big marketers say they are monitoring the situation. Anheuser-Busch InBev NV said it expects “our partners to maintain strong ethical standards and operate with transparency.” McDonald’s said in a statement it “takes matters of ethics and corruption very seriously and the news from the U.S. Department of Justice is extremely concerning.”
Sponsors are wary of tarnishing their reputations by linking with properties that are involved in controversies, and many are likely going to re-examine their ties with FIFA, marketing experts said. FIFA’s woes could give marketers leverage when it comes to pricing future marketing agreements, just as some companies pressured the International Olympic Committee for better deals after its scandal surrounding Salt Lake City’s bid to host the 2002 Winter Games, the experts said.
Corporate sponsors have been on a roller-coaster ride over the past few years as the Switzerland-based organization behind the World Cup has faced an avalanche of criticism over some of its business practices. FIFA faced criticism, for example, for its controversial selections of Russia and Qatar as hosts of the 2018 and 2022 World Cups, respectively. (Swiss authorities said they opened a separate criminal probe related specifically to the selections of those countries.)
Such flare-ups have caused some sponsors to end their deals with FIFA. Last year Sony said it would not renew its FIFA sponsorship partly because of the controversy around the investigation into the bidding for the 2018 and 2022 World Cup tournaments, The Wall Street Journal reported.
Brands often have some protection when it comes to sponsorship agreements. Deals can include “morals” clauses that allow sponsors to pull out if the goodwill associated with intellectual property – be it an athlete or a sports organization – has been hurt or damaged, according to sports marketing experts.
“Morals clauses are negotiated in all sponsorship and celebrity marketing agreements,” said David Schwab, founded Octagon First Call, a firm that helps brands negotiate celebrity partnerships.
However, experts and marketers do not expect many brands to pull out of their FIFA deals, despite the harsh words from the Justice Department, whose indictment describes the alleged corruption scheme as “rampant, systemic, and deep-rooted.”
The World Cup remains one of the few events that affords marketers a way to reach global audiences, said Kevin Adler, chief engagement officer at sports marketing firm Engage Marketing. “There are very few marquee global properties that a marketer can activate across all the markets they operate in,” Mr. Adler said.
FIFA sponsorships are among the most costly in international sports, rivaled only by deals with the IOC. FIFA partners such as Coca-Cola have multi-year sponsorships agreements with the soccer organization and spend roughly $25 million annually to be an official FIFA partner, according to a person familiar with the matter. That figure doesn’t include the hundreds of millions of dollars the companies spend to buy TV ad time around the world.
Some say that FIFA and the World Cup are a bigger draw for marketers than the Olympics because soccer allows for more branding at the events. “FIFA and soccer is more commercially friendly than the Olympics are,” said Bryce Townsend, chief executive officer of ESP Brands, a sports marketing firm owned by WPP.
Source : https://blogs.wsj.com/cmo/2015/05/27/sponsors-weigh-in-on-fifa-corruption-scandal/Thanks for visit my website