World Cup 2010 Sponsorship Issues by mbilinsky

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									2010 FIFA Worldcup: Official Sponsors and Related Issues
By Sebastien Oddos The preparation of the 2010 South Africa soccer World Cup is under way. This week’s preliminary draw brought a lot of media attention to FIFA. Last month a FIFA delegation started a three-day inspection tour of South Africa's World Cup soccer stadiums in Johannesburg. It is understood that FIFA raised €1.9 billion in marketing revenue and €700 million from sponsorship for the previous German World Cup (2006). Germany itself seems to have benefited greatly from the event. Since the World Cup the country now holds the second most valuable country brand in the Nation Brand Index (NBI), tourism bookings have increased by nearly 30%, unemployment has dropped by more than 20%, and investor confidence seem to have surged to an all-time high. It is therefore no surprise that the decision of FIFA’s executive committee to choose host countries for its next competitions is a highly political issue. FIFA's governing body decided in 2000 that it would rotate the world cup around its six continental confederations. This choice has been widely criticised by European football federations who argue that their continent invented football and that it should therefore be able to host the world cup more than once every 24 years. FIFA’s executive committee is likely to announce this week that Brazil will host the 2014 world cup. The October meeting should also allow the executive committee to consider approving or rejecting the new Players’ Agents regulations drafted by the English Football Association (see our previous newsletter winter 2007 on this issue). To go back to the South African World Cup is concerned, it has been recently rumoured that FIFA would hold the rights to free billboard advertising on all public billboards within five kilometres of the stadiums in host cities across South Africa, for at least six months prior to the World Cup. Official sponsors and international brands are the most likely to benefit from the World Cup, being able to advertise on billboards or on TV. This week FIFA announced the appointment of New York-listed Indian IT Company Satyem Computer Services as one of six official World Cup sponsors. The value of the sponsorship is believed to be in the region of £32 million including contributions in kind. Sponsorship is the second level of FIFA’s three-tier commercial hierarchy, which consists of six “partners” at the top end, six “sponsors” and six “national supporters”. The six partners, who have a greater range of rights to FIFA events are Adidas, Hyundai, Sony, Coca-Cola, Visa and Emirates Airline.


It is understood that two years ahead of 2010, FIFA has already generated its highest revenue in World Cup history — £1.6 billion…this leaves very little room for smaller businesses (and in particular for local South African businesses). Brands which do not become official sponsors try to attract attention by using alternative marketing strategies. Trying to catch up with official multinational brands encourages creativity. In 2002, Nike decided to spend as much on television advertising as their competitor Adidas had spent on sponsorship rights from FIFA. By doing so Nike tried to match Adidas’ official brand exposure. In the German World Cup, Puma’s alternative strategy proved successful. Despite not being an official FIFA brand, twelve football teams (including the winners, Italy) were seen playing in Puma. South Africa has a reputation for having some of the tightest trademark and copyright laws in the world, making it an attractive destination for sponsored international events such as the Football World Cup. However, this will also trigger risks for businesses who intend to leverage themselves off FIFA's, or any of its official sponsors' brands. As an example, the use of "2010" will not be allowed in connection with any football imagery. All marks conceptually relating to FIFA, official sponsors or the host cities will be outlawed. The South African Department of Trade and Industry (DTI) is currently trying to put pressure on the international football body to encourage it to relax its tight grip on the event. FIFA’s behaviour in managing exclusive rights to the World Cups has recently been submitted to the scrutiny of a US judge in a multi-million dollar law suit involving Master Card. In December 2006 a New York judge ruled that FIFA had repeatedly acted dishonestly by lying and deceiving two companies bidding for the rights to sponsor the next two World Cups for $US180 million. At stake was the right granted to Master Card to renew its exclusivity rights by preference to any third party. The judge granted MasterCard an injunction to prevent FIFA switching its contract to Visa from January 2007 until 2014. In the judgment, the judge stated that “FIFA’s negotiators lied repeatedly to MasterCard, including when they assured MasterCard that, consistently with MasterCard’s first right to acquire (the sponsorship rights), FIFA would not sign a deal with anyone else unless it could not reach agreement with MasterCard.” The judge also concluded FIFA had lied to Visa when it asked on several occasions whether MasterCard had any contractual right to prevent FIFA from negotiating with a competitor. The American judge concuded that FIFA slogan was “fair play”, but that FIFA’s behaviour in dealing with MasterCard (its sponsorship partner for over 15 years) “constituted the opposite of fair play”…


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