As Sponsors Shy Away, FIFA Faces World Cup Shortfall

TTOC
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

User Rating: 0 / 5

Star InactiveStar InactiveStar InactiveStar InactiveStar Inactive
 

FIFA, the global governing body for soccer, ordinarily enjoys huge revenue streams — in the hundreds of millions of dollars — from sponsorship deals attached to the world’s most-watched sporting event, the World Cup. But less than a year before the next edition of the tournament, the organization is having trouble finding companies willing to be a partner.

The sport is more popular than ever. What is different this time is FIFA’s reputation.

While the field of 32 nations is set for the 2018 tournament in Russia, the tournament’s roster of sponsors remains noticeably undersubscribed — a reflection of how much the reputational damage from a much-publicized 2015 corruption crisis continues to hurt FIFA’s bottom line. Days before Friday’s World Cup draw at the Kremlin, along with a trial in a New York courtroom further battering its reputation, FIFA could be facing a significant financial shortfall.

Six months before the final draw for the 2014 World Cup in Brazil, FIFA declared its sponsorship program — which after television rights is the organization’s most important revenue generator — “sold out.” This year, while FIFA has refilled its ranks of top-tier partners with firms in Russia, Qatar and China, only one of the 20 slots available to regional tournament sponsors has been claimed.

In fact, one has to go back to 2011 to find the last new partner based in either Europe or the United States — a one-tournament deal signed by Johnson & Johnson. And since Gianni Infantino swept to power in 2016 in the wake of the corruption crisis, FIFA has managed to secure marquee deals only with companies in countries set to host the World Cup (Russia and Qatar) and another (China) that hopes to do so.

That geographic spread tells its own story, according to Patrick Nally, a sports sponsorship executive who helped set up FIFA’s first international marketing program four decades ago.

“It’s not surprising it’s been and still is a toxic brand,” Nally said. “Unless you are from China or somewhere like that, where the fact FIFA is in court in New York and associated with corruption doesn’t matter, no corporation is going to consider it safe to get involved with FIFA.”

FIFA did not respond to questions about its sponsorship program. Its chief commercial officer, Philippe Le Floc’h, a former colleague of Infantino in his previous role with European soccer’s governing body, has not been made available to discuss the sponsorship concerns since his appointment in 2016.

In fact, Nally said, FIFA’s association with corrupt behavior now runs so deep that he suggested the 113-year-old Fédération Internationale de Football Association should consider a name change.

“Why not?” Nally said. “They need to get bright thinkers to repackage the whole thing. There’s just too much baggage to carry. It’s just an absolute mass of information about corruption wherever you look. The word FIFA globally has got just the worst image in the world: If you are trying to sell the FIFA brand, if anything those four letters stand for absolute total corruption and it’s so unattractive.”

It is an uncomfortable topic. In the aftermath of the arrests of key FIFA officials in May 2015, a handful of companies allowed their partnership agreements to end and several of the organization’s longest-serving sponsors — including Visa, Coca-Cola, McDonald’s and Anheuser-Busch InBev — took the rare step of speaking out against soccer’s governing body and its leadership. None, however, withdrew from a sponsorship agreement.

In the meantime, deals with Chinese companies like the Wanda Group, Hisense and Vivo, as well as an agreement with Qatar Airways announced earlier this year, have helped cover for the loss of partners like Sony and the Emirates airline.

But an apparent lack of interest among Russian businesses is hurting FIFA. Currently there are only two sponsors from the 2018 host country: the energy giant Gazprom is a top-tier partner, and Alfa Bank is FIFA’s only regional partner, the lowest designation of three categories of sponsorship. Local partners are crucial not just in financing the event but also in building excitement among fans in the host country, something that has been distinctly absent in Russia so far.

By the time the 2014 tournament in Brazil kicked off, no fewer than eight local companies had signed on. Global sponsorship income from the 2014 event was $650 million higher than the $1 billion generated at the 2010 World Cup in South Africa. In 2018, the result for Russia will be flat at best, according to FIFA’s own estimates.

FIFA’s challenges appear even more pointed compared with the amount sponsors have been willing to pay for the best soccer properties. The Premier League teams Manchester United and Chelsea, for example, both doubled the amount they receive for jersey sponsorship with their most recent deals.

And with just over six months until the World Cup’s opening game, time is also against FIFA. In 2016, Wanda paid $150 million in 2016 to sign up as one of FIFA’s eight top-tier “partners,” but the last of those places — not to mention two of the six places for second-level “sponsors” — remains open.

“If you are going to do a big deal and want to activate, it’s really late,” said Tim Crow, who recently stepped down as the chief executive of Synergy, a firm that has advised Olympic and World Cup sponsors. “You normally want your campaign in the market now, or by January and February; what’s more, it can take anywhere from six months to a year to plan it all.”

Thus convincing a company to make a $150 million bet on FIFA at this point is a tough sell. Further complicating matters is the protracted and unprecedented standoff with Russian broadcasters who continue to balk at FIFA’s $100 million price tag for the domestic rights to next year’s tournament, as well as international financial sanctions against prominent Russian businessmen and companies that can complicate doing business in the country. FIFA has hired external consultants to ensure those rules are not broken.

The financial headache comes at a critical time for FIFA, and for its president. Infantino’s election victory was built in part on his promise of almost $1 billion in financial handouts for the organization’s 211 member associations. Those promises, and the continued legal costs linked to the corruption scandal, make the success of the 2018 tournament vital to Infantino’s plan to win re-election in 2019.

Source

Team TTO RT @briaclew: @khadine868 @koonztara @TTOlympic @Youngy_6 @RRDG09 @RNTrini2DeBONE We look forward to meeting so we can share information et…
Less than a minute ago
Less than a minute ago
Less than a minute ago
Team TTO RT @PanamSports: The Finance Commission led by the Paraguay NOC President And ODESUR president, Camilo Perez, visited the Miami office. E…
Less than a minute ago

There is no friend in list