FIFA and alleged corruption: what’s a sponsor to do? 03 Jun 15
It’s been a crazy week in the world of FIFA. In the space of a week, soccer’s international governing body has been rocked by the arrest of senior executives over the alleged use of bribery, fraud and money laundering to corrupt the issuing of media and marketing rights for FIFA games, with the fallout leading to yesterday’s announcement by long-term (and newly re-elected) president Sepp Blatter that he will step aside within the next year. It’s also left FIFA sponsors in a difficult spot in terms of reputation management.
While sponsorship money is not FIFA’s largest revenue stream (television rights sales taking top spot), brands pump significant sums into the organisation’s coffers, for which they derive significant commercial benefit. Therefore the key questions they face when events such as this occur are: (1) Is my brand tarnished by association? (2) Should we withdraw support for the beleaguered organisation or is there more benefit in encouraging change and positioning our brand as a force for good, acting in the interests of fans worldwide? (3) Do we weather the storm if the benefits of association outweigh the negatives (and ensure that competitors don’t have an opportunity to replace us)?
When the wave of arrests was conducted last week, sponsors such as adidas, Coca-Cola, McDonald’s and Hyundai Motors were quick to issue statements noting that they were closely monitoring developments. Visa went a step further, stating that it “will reassess its sponsorship” if FIFA fails to rebuild “a culture with strong ethical practices to restore the reputation of the games for fans everywhere”.
As a first step - expressing concern while not laying out concrete demands - Gail S Bower, president of Philadelphia-based corporate sponsorship specialists Bower & Co Consulting, argues that the right approach was taken: “Because ethics stem from an organisation’s own values and because this scandal is still unfolding, laying out concrete expectations at this stage in a public way is premature. FIFA needs new leadership, and the first order of business is to clean house and establish a new foundation for its operations and as a global exemplar for athletes, partners, fans and the entire infrastructure.”
While giving FIFA time to lay out its plans, such an approach also allows time for sponsors to undertake a full analysis of the possible impact of their association, with Mary O’Connor, senior vice-president, sports at international marketing and promotions agency The Marketing Arm, observing: “It shows that sponsors are rightly concerned, but waiting to gather information in order to make an informed decision regarding the path forward.”
Do I stay or do I go?
As to what factors play into the decision-making process, O’Connor notes: “For starters, sponsors need to pay close attention to the impact this situation has had on the global soccer fan. Will fans' affinity for the teams and athletes that compete be impacted at all? And if so, what does that do to the value of the FIFA partnerships?”
In terms of metrics that can be adopted to allow such analysis, while Bower notes that “the measurement that counts the most is product sales because sales, after all, are why any company markets and sponsors”, because brand trustworthiness is also critical there are additional metrics to consider, including:
- how positive or negative media stories are;
- public response to the scandal, media stories, and the company’s own messages;
- how proactive and believable (human, remorseful, honest, etc) the company’s message is, including in response to the media and public;
- how trustworthy the brand was before the scandal; and
- the quality of its relationships with stakeholders, customers, influencers, supply chain, etc.
A related consideration for FIFA sponsors is whether, alongside the danger of reputational damage by association, there is also an opportunity to turn the narrative into a positive one for their brands. Bower notes that “addressing organisational governance issues is not the role of sponsors, which want to be involved with successful partners that deliver a significant return on investment - dealing with scandal, creating culture change in their partners’ organisation, and cleaning up after scandal are way more than any sponsor bargains for”.
However, O’Connor argues that “while a crisis is never a good thing, it provides sponsors with an opportunity to take the lead in driving change for good”. She expands: “Playing an active role in preserving or restoring the integrity of FIFA can have a positive effect on a sponsor’s brand. Sponsors should demand to know what exactly happened and how it happened, what FIFA is doing right now to correct the situation, what concrete steps FIFA is taking to prevent this from happening again and what FIFA is going to do to make things right for those parties who’ve been affected or wronged. Additionally, words are one thing; actions are more powerful - and more credible. Sponsors should therefore call for an independent audit of business practices and, in the spirit of transparency, make the findings of that audit public. It’s about changing the culture inside FIFA. This is a difficult task, but one that sponsors should work together on to force over the coming months.”
Other opportunities abound
That said, the flip-side is that brands which feel that the cons outweigh the pros of sponsorship should not be hesitant to act. O’Connor notes: “Sponsors must make sure to align themselves with properties that create a positive connection in the mind of the consumer. And while football remains the most watched game in the world, if something doesn’t change quickly, the negative impact of a connection to FIFA may not be worth the access to hundreds of millions of fans. But this decision needs to be a thoughtful one – not one that is purely reactionary.”
For those that decide to redirect their sponsorship dollars, Bower adds: “It’s worth noting that there are other sponsorship opportunities around the world - FIFA is not the only way for brands to connect with consumers. Non-profit organisations, charitable causes, arts organisations, cultural festivals, music and entertainment experiences - and countless others - offer tremendous opportunities for corporations. In fact, just last week Cone Inc released data from its new study, finding that "90% of global consumers would switch brands to one supporting a cause”. If that’s the case and consumers are eager to buy brands that support causes, why do 70% of sponsorship dollars go to sports?
It’s worth noting that, in January, a number of sponsors did indeed announce that they were ending their sponsorship deals with FIFA, with media speculation linking their decisions to concern about negativity surrounding the FIFA brand. That said, FIFA sponsors clearly derive strong benefit from their relationship with FIFA - hence, despite the turmoil, a brand such as Qatar Airways is keen to join FIFA’s roster of sponsors, a spokesperson telling the media this week: "We want to be a sponsor (and) this is under advanced negotiations now.” And while companies such as Nike have proved adept at ensuring that non-sponsorship does not hinder its marketing efforts around events such as the World Cup, being inside the FIFA camp offers unique advantages.
The story is developing at a rapid pace. No sooner had work begun on this blog yesterday that a press conference was called at which Blatter outlined his exit plans. Over the last 24 hours, sponsors including Coca-Cola and McDonald's have welcomed his announcement, with VISA noting that “more work lies ahead” and Coca-Cola adding that the organisation needs to "act with urgency" and "win back the trust of all who love the sport of football".
While sponsor dissatisfaction is unlikely to have been the driving force behind Blatter’s decision to resign, there is no doubt that the possible loss of sponsorship revenue has added to the pressure that built up over the past week. For the sponsors themselves, it seems that they have taken the right approach - encouraging change and buying time to properly consider their relationship with the football body. What is crucial, though, is that they continue to monitor the fallout and possible impact on their brand. More revelations are likely, as investigations continue, so a change at the top of FIFA is unlikely to be the end of this particular story.
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