World Cup Sponsors Take Cautious Approach to FIFA Scandal

Should Brands Take Stand in Wake of Sweeping Corruption Allegations?

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The men's Wold Cup will take place in Russia in 2018.
The men's Wold Cup will take place in Russia in 2018.

Corporate sponsors of the World Cup have long lived with allegations of corruption against FIFA, with media reports routinely portraying the organization in a bad light. But now that the U.S. government has lowered the boom in the form of a sweeping federal indictment, marketers affiliated with FIFA could face more pressure to take a stand.

"This is now at the point where the sponsors have to take action or their image is going to get tarnished," said Darren Marshall, exec VP of consulting and research at Revolution, a Chicago-based sports marketing agency. "This is massive illegality at the highest levels of the organization and the sponsors have to vote with their feet," he added. "What they need to do is say, 'Unless there is regime change at FIFA, we are going to leave.' "

But so far, sponsors have stopped short of publicly calling for the ouster of longtime FIFA president Sepp Blatter. Rather, sponsors have issued fairly cautious statements suggesting they are monitoring the situation.

"We expect all of our partners to maintain strong ethical standards and operate with transparency," Anheuser-Busch InBev-owned Budweiser said in a statement. "We continue to closely monitor the situation through our ongoing communications with FIFA."

Adidas, another big FIFA sponsor, said it is "fully committed to creating a culture that promotes the highest standards of ethics and compliance, and we expect the same from our partners. Following today's news, we can therefore only encourage FIFA to continue to establish and follow transparent compliance standards in everything they do."

McDonald's stated that it takes "matters of ethics and corruption very seriously and the news from the U.S. Department of Justice is extremely concerning. We are in contact with FIFA on this matter. We will continue to monitor the situation very closely."

Meanwhile, Coca-Cola stated that "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."

Mr. Blatter is not named in the 47-count federal indictment, but the charges cast a large shadow over the organization he has lead since 1998. Among the allegations are that sports marketing companies bribed FIFA officials in return for the rights to sell broadcast and sponsorship rights to various FIFA tournaments, including the CONCACAF Gold Cup that is played in the U.S. The bribes and kickbacks totaled well over $150 million, according to the U.S. Department of Justice.

The indictment also involves schemes related to the "payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF (a Brazilian national soccer federation) by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election," according to the Department of Justice.

While officials did not name the sportswear company, Bloomberg reported that the deal "seems to mirror one obtained by Nike."

"The indictment refers to a U.S. company that signed a partnership with the Brazilian federation in 1996. Nike, based in Beaverton, Oregon, announced its decadelong pact with Brazil that year," Bloomberg reported.

Nike issued the following statement Wednesday: "Like fans everywhere we care passionately about the game and are concerned by the very serious allegations. Nike believes in ethical and fair play in both business and sport and strongly opposes any form of manipulation or bribery. We have been cooperating, and will continue to cooperate, with the authorities."

The sports marketing company named in the indictment is the Traffic Group of Brazil, which is owned by Jose Hawilla. Mr. Hawilla waived indictment and pleaded guilty to racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice, according to information released Wednesday by the U.S. Department of Justice.

Traffic's U.S. arm, Traffic Sports USA, also pleaded guilty to wire fraud conspiracy. The organization has struck deals with large U.S. brands on soccer sponsorship deals in recent years. One key property is the Gold Cup, which is scheduled to be played this summer in stadiums across the U.S. Sponsors of the event include Allstate, Nike and Sprint, according to the Gold Cup web site.

Lisa Cochrane, Allstate's senior VP-marketing, said in an email that "we're aware of the current situation with FIFA and will monitor closely. At this time, we have no changes to our sponsorship. We take a deliberate and thoughtful approach to all of our marketing relationships and expect our partners to adhere to the highest standards of ethics and integrity."

Sprint declined comment.

Brands are wise to take a wait-and-see approach, suggested Rita Battocchio, VP of sponsorship and event Marketing at Intersport, a Chicago-based sports and entertainment marketing company.

Because brands have significant sums of money invested in the soccer deals, "making any big decisions quickly is the wrong way to go," she said. For World Cup sponsors, "time is on their side," she said, noting that the next cup is still a couple years away.

The next World Cup is scheduled to be played in 2018 in Russia, followed by the 2022 World Cup in Qatar. The Qatar cup has come under intense scrutiny, including for the country's treatment of migrant laborers.

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