FIFA's Sponsors Concerned About "Serious Allegations"
Top tier sponsors Coca-Cola, McDonald's, Visa, Budweiser and Adidas expect the World Cup governing body to clean up its act.
Sponsors of the FIFA World Cup tournament are closely watching the Department of Justice investigation into alleged corruption, conspiracy and racketeering committed by several high-ranking FIFA officials, but so far none has signaled that they would remove millions in marketing dollars from the marquee sporting event.
A spokesperson for Adidas, which has long partnered with FIFA, said the company will continue to support soccer, including the upcoming men's World Cup tournaments.
"The Adidas Group is fully committed to creating a culture that promotes the highest standards of ethics and compliance, and we expect the same from our partners," said Adidas spokesman Michael Ehrlich. "Following today's news, we can therefore only encourage FIFA to continue to establish and follow transparent compliance standards in everything they do."
Multiple other sponsors, including Coca-Cola, McDonald's and Budweiser, released similar statements.
"McDonald's takes matters of ethics and corruption very seriously and the news from the U.S. Department of Justice is extremely concerning," Jeff Mochal, senior director of global communications at McDonald's, said in a statement. "We are in contact with FIFA on this matter. We will continue to monitor the situation very closely."
Coca-Cola spokesperson Kate Hartman released a statement that called up the long-simmering controversy over the bidding process for the 2018 and 2022 tournaments: "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. We expect FIFA to continue to address these issues thoroughly. FIFA has stated that it is responding to all requests for information and we are confident it will continue to cooperate fully with the authorities."
Added Budweiser spokesperson Karen Couck: "We expect all of our partners to maintain strong ethical standards and operate with transparency. We continue to closely monitor the situation through our ongoing communications with FIFA."
In a strongly worded statement, Visa said it's disappointment in today's news was "profound" and it expected FIFA "to take swift and immediate steps" to address the allegations and systemic problems within the organization. Visa said it expected FIFA to rebuild "a culture with strong ethical practices in order to restore the reputation of the games for fans everywhere." Ominously, Visa added that should FIFA fail to clean up its act they will be forced to "reassess" their sponsorship of the organization.
For its part, FIFA — which has long endured allegations of rampant and systemic corruption — has said it welcomes the opportunity to root out bad actors in its midst. And marketing experts say that sponsors can have a significant impact on cleaning up a sport.
"They can play a huge role," Patrick Rishe, director of the sports business program at Washington University in St. Louis, tells The Hollywood Reporter.
Sponsors of the NFL and NBA spoke out during those leagues' recent brushes with domestic abuse and racial scandals, respectively. Neither league lost sponsors, and the World Cup is not likely to see advertiser defection, either. "I don't think any of [FIFA's] sponsors will pull because the sport is too popular and they would be losing too many eyeballs and impressions," adds Rishe.
Indeed, the 2014 World Cup tournament in Brazil broke U.S. and international TV viewership records. The final between Germany and Argentina was watched by 17.3 million viewers on ABC and 9.2 million on Univision for a combined U.S. viewership of 26.5 million, the most ever for a soccer game. In the U.K., 21 million tuned in, while an estimated 12 million Germans watched their team prevail over Argentina.
"I don't see a scenario where top brands like Coca-Cola are disassociating themselves with FIFA," says Michael Dub, partner at digital marketing firm DXagency, which represents brands including Comcast, Viacom and MasterCard.
Money follows eyeballs, and like the NFL and NBA, sponsors have played a key role in increasing the value of the World Cup. In 2011, Fox Sports and NBCUniversal-owned Telemundo won the U.S. broadcast rights to the 2018 and 2022 tournaments in Qatar and Russia, respectively. Fox agreed to pay more than $400 million, with Telemundo shelling out $600 million. Those amounts represent substantial increases from the $100 million and $325 million ESPN and Univision paid, respectively, in the previous deal for the 2010 and 2014 World Cups. And there is little evidence to suggest that fans will become disillusioned with the sport because a series of nameless international executives were hauled off by authorities.
"These officials who were arrested — their names don't resonate," continues Dub. "To the average fan, this is just noise. Sports still represents an escape. And I do think one of the sad things about sports in the 21st century is that the integrity has disappeared, and it's become part entertainment and part blind faith in your team."
With Switzerland on Wednesday announcing the launch of criminal proceedings against unspecified parties related to the decisions to award the 2018 soccer World Cup to Russia and the 2022 Cup to Qatar, questions also resurfaced on whether those events would go ahead as planned.
Experts said Wednesday they didn't expect any immediate major fallout from the day's events on the TV rights deals for the next two World Cup tournaments. "I suppose there would be loud demands for some renegotiation" if improprieties in the handling of TV deals were found, says Claudio Aspesi, analyst at Sanford C. Bernstein. "The key is who paid whom to start with — it is difficult to believe than any one contract could change substantially."
Wunderlich Securities analyst Matthew Harrigan similarly predicts "nothing material" in terms of fallout from Wednesday's developments on U.S. rights deals. Liberum Capital analyst Ian Whittaker in London also says he expected no immediate impact. "The question is whether the charges lead to a more fundamental review of how contracts are awarded," he says.
However, if it is found that the process that led to the awarding of the 2018 and 2022 World Cups to Russia and Qatar was less than above board, as many suspect, sponsors could play a role in demanding a new bidding process.
The tiny, oil-rich country of Qatar won the 2022 tournament despite its inhospitable summer climate. After initially planning to hold the event in its tradition June-July corridor, FIFA decided to move the tournament to November and December. For U.S. rights holders, new venues could be a happy byproduct of the investigation.
"They might actually be encouraged, because I think people would rather see a World Cup in the U.S.," notes Rishe. "Fox paid a price thinking that [the 2022 World Cup] was going to be in the summer when they're not up against the NFL or college football. If Qatar is dismissed as the host, then rebidding will take place and whoever gets it will probably host it in the summer."
Representatives for Fox and Telemundo declined comment. And a FIFA spokesperson on Wednesday said the bidding would not be reopened. But if the investigation leads to convictions FIFA may have little choice.
"It's going to take time to clean up the sport because it just has so many tentacles," concluded Rishe. "I'd like to think this will ultimately make the tournament cleaner, but it won't happen overnight."