Do FIFA's Sponsors Care About Corruption, and Are They Partly to Blame?

Ed Hawkins@@cricketbetting Special to Bleacher ReportJune 30, 2015

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With FIFA seemingly mortally wounded following the latest and most tawdry corruption scandal of its 111-year existence, its president, Sepp Blatter, announced his resignation, only to reportedly reconsider his decision, according to Schweiz am Sonntag (via ESPN FC).

With Blatter apparently wavering, there have been strong calls for FIFA's World Cup sponsors to do the decent thing: deliver a fatal blow to the organization he has ruled over for 17 years.

However, instead of massive corporations like McDonald's, Budweiser, Adidas, Visa, Coca-Cola, Gazprom and Hyundai severing their multimillion-dollar agreements with football's world governing body, they released platitudinous statements expressing "concern."

Coca-Cola did call for action, and Visa was closest to a stern rebuke with a warning it would rip up its contract if FIFA did not change its ways. Gazprom, the Russian energy giant, said the revelations made no difference to their sponsorship, per CNN.com.

The punishment many—including Richard Branson, founder of Virgin, and John Oliver, the influential host of Last Week Tonightwould liked to have seen was not forthcoming: Hit Blatter and his FIFA cronies where it really hurts—in the pocket.

But how likely was that ever to happen? Andrew Woodward, the former head of communications for Visa's global sponsorship, said sponsors would be mad to dump their deals. "The FIFA World Cup is the most popular sporting event in the world," he wrote in a blog post. "People love it. They don't care about the corruption."

They might care, however, if sponsors were also implicated in that corruption. When the U.S. Department of Justice indicted 14 people—including seven FIFA officials—for racketeering, wire fraud and money laundering in relation to the World Cup bids for Russia 2018 and Qatar 2022, investigators left no doubt where much of that cash came from: FIFA's corporate deals.

"The revenue generated by the commercialization of the media and marketing rights associated with soccer constituted an essential source of revenue for the enterprise," the indictment stated.

That raises a much more uncomfortable question for FIFA's backers than just the moral dilemma about continuing partnerships: Are they partly culpable for the corruption continuing to undermine the organization?

According to one sports industry professional, who has campaigned to reform FIFA, it was about time the role of sponsors came under the scanner.

"They've had years to get their house in order on this but have done nothing," the source told Bleacher Report, asking to remain anonymous for fear of prejudicing his future career. "We speak to various stakeholders about trying to prevent these types of scandals, and the only group we hit a brick wall with were the sponsors. They weren't interested. And it's so shortsighted because eventually you will rile enough people for politicians to take note, and then big decisions go against you."

Early Start @EarlyStart

#FIFA risks having large portions of its assets seized and scaring off sponsors: http://t.co/O4ONQPat0i http://t.co/tb7lFo4Lao

Politicians are interested. They have been salivating at the prospect of vote-winning sound bites railing against FIFA and its backers. It is more than just lip service. Jesse Norman, the chairman of the Culture, Media and Sport select committee, wrote to the Serious Fraud Office asking whether sponsors were in breach of the 2010 Bribery Act. Norman tweeted that they are "actively reviewing material around allegations against FIFA," focused on the law's Section 7: failure of commercial interests to prevent bribery.

"The question has to be asked," Norman said. "The Bribery Act reaches far and wide and, as I understand it, doesn't matter where offenses, if any, took place or if they were committed by non-British citizens on British companies. You only have to be trading in this country to be covered by the provisions of the Bribery Act, and if you took inadequate measures to prevent the use of funds for some of these purposes, then you could be held to account."

Crucial to any investigation or inquiry will be whether sponsors handed over millions without any clause or stipulation on how it was spent. It is standard procedure for sponsors when negotiating with sports tournaments or organisations to have rules stated in the contract about what their money can be used for.

If, in the example of FIFA, there were no caveats, then the Bribery Act, according to Norman, "may take a view that this was an obligation which could be waived as part of a commercial contract."

Charlie Delaney, a commercial lawyer with the sports arm of London legal powerhouse Mishcon de Reya, told Bleacher Report that FIFA was "so powerful" he suspected it would have insisted on spending the money how it wanted. Despite that, he thought any defence would be straightforward: "The sponsors will probably point to their anti-bribery policies and say that, to the extent that any of this sort of activity was going on, the relevant individuals were acting outside their authority with no mandate. The sponsors will claim that they have done everything possible to prevent the actions of these individuals."

Considering the rhetoric from the Justice Department, it still seems more likely that it is the U.S. where sponsors will feel the most pressure. There is a precedent, too. This past May, the U.S. Securities and Exchange Commission "charged global resources company BHP Billiton with violating the Foreign Corrupt Practices Act when it sponsored the attendance of foreign government officials at the Summer Olympics. BHP Billiton agreed to pay a $25 million penalty to settle the SEC's charges."

An investigation into the relationships between FIFA and its sponsors could be the next port of call, particularly focussing on whether individuals were too close to the organization. At least four executives have close ties with FIFA.

  • Amber Steele, Coca-Cola's director of football management—who wilted under a grilling from journalists about her employer's role—previously worked for FIFA as a marketing director. 
  • ISL, a long-standing partner of FIFA, was set up by Horst Dassler, the son of Adolf Dassler, who founded Adidas. Frank A. Dassler, the Adidas general counsel and grandson of Rudolf, Adolf's brother, is known within sporting circles for showing a lack of concern for the corruption charges levied at FIFA.
  • Eelco van der Noll, vice president, experiential at Anheuser-Busch InBev, Budweiser's parent company, is a former world marketing director at FIFA.
  • Ricardo Fort, Visa's head of global brand, product and marketing, has had a relationship with FIFA since 2006, when he was influential in Coca-Cola's sponsorship of the World Cup in his job as football director. He posed in this unfortunate photo when Visa renewed its deal with FIFA in 2014.

In the meantime, sponsors are expected to keep their heads down to wait and see how the future unfolds. Don't be surprised if over the next few months you begin to hear more about altruistic funding at the grassroots level of football.

"They might try to turn up the volume on things they don't normally talk about," said Tony Joyce, associate dean of marketing and communications at London Business School. "The grassroots stuff becomes a powerful asset at times like this. It might be the time to say, 'Look at all this we do, we're partnering a sport, not an organisation.' It comes back to the fundamental principle of sponsorship: It's a much greater risk to sponsor an individual than a team, less so a tournament, and even less to partner with a sport."

That is because of the money that can be made from the agreements that Coca-Cola, Visa, et al., have with FIFA. Joyce has heard sponsorship executives claim that they get a return of "four dollars for every one spent" at that kind of level. According to FIFA's annual report, sponsors splurged a combined $404 million on last year's World Cup.

It is the pursuit of profit that ensures corporations are likely to see corruption—and other immoral behaviour—as a "bump in the road," according to Joyce. As Neil Hopkins—a director at M&C Saatchi Sport and Entertainment, whose clients include Adidas and Coca-Cola—says, there is yet to be an example of a corporation ditching a major tournament or sport partnership because of what could be prosaically labelled "bad press."

"Do these companies have the power to change FIFA?" Hopkins asked. "The interesting thing is that sponsors are picked out as the ones to spark change, but broadcasters, who are signing deals many, many times greater, aren't. Why? Possibly for the fact that they do the reporting and don't shine a light on themselves.

"It's all very well to focus on sponsors and how pressure can be brought to bear, but for each of these sponsors there will be another two or three competitors lined up to take on the sponsorship. You have a huge commercial decision to make to step away from the most coveted sponsorship opportunity in the world."

But is Qatar 2022 really so coveted? The bribery scandal apart, the country has anti-gay legislation, hundreds of "slaves" dying while working to build the stadia and appalling human rights abuses. Why would any brand want to be associated with such toxicity?

Ed Hawkins is an award-winning sports writer based in London. All quotes were gathered firsthand unless otherwise stated.