Thursday 28 May 2015

Why aren't sponsors tougher on Fifa? An economist answers

"Why aren't sponsors tougher on Fifa?" is the title of a short, topical item on the BBC website by highly respected Economics Editor Robert Peston. He writes:
Maybe it's not so bad for
a sponsoring brand's image
"The Fifa scandal is an "absolute disaster" for the multinationals who sponsor it - because they cannot escape taint from the perceived lapses of football's supreme governing body. That is the view of a range of very senior business people and marketing gurus to whom I have spoken. One said: "This is a nightmare for them - the reputational damage is huge".

So why aren't these huge and powerful global companies doing what the UK culture secretary John Whittingdale has asked, and following the lead of Visa - which said it would review its sponsorship deal if Fifa does not clean up its act?

Well, part of the answer is implicit even in the less mild sabre-rattling of Visa. Because it is striking that even Visa only said it might review its commercial relationship with Fifa, not that it was doing so. The point, according to well-placed executives, is that Coca Cola, Hyundai, Budweiser, McDonald's, Gazprom and Visa (among others) have signed legally binding contracts. So they may not be able to get out of the contracts without paying spectacular damages - given that they are each believed to be paying Fifa up to $200m (£130m) over four years for the marketing opportunities associated with the World Cup.

"They are all asking their lawyers to examine whether they have 'moral' clauses in their contracts, which would allow them to get out because of Fifa's behaviour," said a businessman with links to the sponsors [this blogger finds it surprising, if not astonishing, that sponsoring and endorsing organisations do not insist on 'moral' clauses. The dangers of lending one's brand name to a subsequently toxic prospect have been known since at least as long as Ben Johnson's fall from grace back in the 1980s and are routinely mentioned in literature on the subject].

There is another point, though - put to me by a member of one of the sponsor's boards - which is that the World Cup is "the best sponsorship opportunity on the planet". How so?

Well, association football is arguably the world's most global sport - though the Olympics and Formula One also have serious worldwide reach. And the World Cup allows the sponsors to get their names in front of hundreds of millions of consumers, both in the rich West and in the faster-growing economies of Asia and South America.

What I am told makes World Cup sponsorship particularly special is that Fifa is far less prescriptive about how the sponsoring companies promote their brands and conduct their marketing than the Olympic Organising Committee.

"Fifa is the least anal and controlling of its sponsors," said a marketing executive. "And that is highly prized." [if this is so, it's not good news for those seeking to promote their brands elsewhere ...]

Or to put it another way, although all the sponsors want to be seen to be doing the "right thing" by putting pressure on Fifa to reform, they are fearful that if they completely incinerate their relationships with the World Cup, they may simply be providing a precious and rare marketing opportunity to their bitterest rivals".
This blogger wonders if there is another issue: the nature of the toxicity of the sponsored or endorsed body itself.  If Fifa was engaged with something viewed as damaging to the environment (pollution, reckless use of scarce resources etc) or something socially corrosive (eg child labour, exploitation of women, prejudice against ethnic or minority groups), public pressure on brand owners to divest and shareholder pressure to re-invest marketing resources elsewhere would be much stronger.  However, the allegations here seem to point to more 'acceptable' forms of toxicity such as bribery and the 'victimlesss' crime of money laundering -- with few tangible outcomes other than the disappointment of those whose attitudes and aspirations are more honest (or less dishonest) and the inconvenience inflicted on a small number of overpaid athletes who will have to play World Cup football in Qatar in 2022. Where there is less outrage there is inevitably less pressure.

1 comment:

Anonymous said...

If enough consumers have the spine to boycott the World Cup and the products of its sponsors, then they would be singing a different tune. I, for one, do not intend to watch the 2018 and 2022 World Cups if they are maintained in their current locations, just as I did not watch a single minute of the 2008 Beijing Olympics. I know that one person´s actions have no impact but at least it makes ME feel good.