Are sporting organisations in touch with their fans and sponsors? Or is it time for sponsors to stand up for fundamental reform in sport? With the recent resignation of Sepp Blatter, what will that mean for sport, sponsors and rights holders asks John Trainor
Visa, Coca Cola, Adidas, Budweiser and Mc Donald’s have openly welcomed the recent decision by Sepp Blatter to step down as president of FIFA, the governing body for global soccer. For years now, there has been widespread allegations of corruption and match fixing at FIFA, and yet sponsors have remained relatively quiet. Following the recent arrests and extradition of 14 people: nine soccer officials and five sports marketing executives who are now under investigation worldwide for allegedly accepting bribes and kickbacks estimated at more than $150m over a 24 year period, World Cup Sponsors have finally weighed in with a heightened offensive to FIFA for reform.
Size of the Prize
Sponsors clearly have leverage over FIFA when it comes to maintaining and renewing sponsorships and it relies heavily on such income to fund its activities. It is estimated that FIFA’s six official marketing “partners” invested nearly $190 million for sponsorship rights in 2014. Those companies included Adidas, Coca-Cola, Emirates, Hyundai-Kia Motors and Visa, with Sony and Emirates letting their contracts expire last year.
A second tier of World Cup-specific sponsors, including McDonald’s and Budweiser, spent $171 million on the 2014 event. On top of those sums, marketers collectively shell out hundreds of millions of dollars for TV ads that help to not only build their own brands but also that of FIFA and football. Overall, FIFA took in $5.72 billion in the four years leading up to the 2014 World Cup, including media rights deals and sponsorships.
These brands rightly make great efforts to ensure their own high net worth organisations are run correctly and they have a responsibility to their shareholders to ensure that their company’s spend is not going towards sporting events sullied with allegations of corruption and bribery. So one by one brands stood up. Visa said that if FIFA's ethical problems weren't addressed it may reconsider its sponsorship. Mc Donald’s, Adidas and Budweiser also in turn voiced concerns and a need for their ‘associates in sport’ to maintain strong ethical standards and to operate with transparency.
Collective Power of Sponsors
If just individual brands start changing their position, that’s one thing, but the real game changing power lay in them all speaking out. Collective sponsor power drives change and has real impact, and this is proving true in many sponsorship landscapes. Sponsor groups are increasingly evident where they seek to find, in a positive way, opportunities to collaborate towards uncovering shared commercial opportunities under the umbrella of their link to the rights holder they sponsor. This can translate into wins such as cross-activation programmes that unlock efficiencies and wins for fans.
In a more defensive play, sponsors also have power if they all pull together. Sponsors showing a greater sense of urgency and being more outspoken helped put pressure on other sponsors to follow suit in the FIFA case. Often companies may give properties they sponsor time to resolve issues, but the unprecedented scale and depth of the FIFA issues made this situation different and therefore more pressing.
Pulling a sponsorship may not be easy given contractual constraints yet sponsors such as VISA were defiant in their stance. As a result others joined forces and fast. Such a position can also bring a welcome PR boost for Sponsors who need to be seen as an earnest force of integrity for fans of the sport. McDonald’s, Coca-Cola and Visa have just been ranked as among the 10 most valuable brands in the world. The world is watching. They take care of that reputation and they took action to show that business can be a force for good and be of sound ethical mind. This is a time for profound transparency and consumers will judge organisations by the company they keep.
The reason why a corporation sponsors sport is not to support bribery and corruption, it is there to connect with the hearts and minds of their consumer and to add value and credibility to their brand and its health. One of the most compelling pieces of research used by Onside to underpin the business case for sponsorship revolves around the degree to which consumers trust sponsorship as a communications platform. This is a primary driver of sponsorship’s double digit growth this decade in Ireland and if this is removed from one side of the equation i.e. sports organisations – the whole premise of consumers liking for sponsorship is halved.
There are millions of football fans around the world who want to know that the governing organisation is clean and who simply want to enjoy the beautiful game. The 1 in 2 Irish adult soccer fans in Ireland are undoubtedly frustrated with the latest allegations and with how international football is run at FIFA. FIFA must start with rebuilding a culture with strong ethical practices in order to restore the reputation of the games for fans everywhere. Sports fans want to believe their sport is the best game in town, and are personally exposed by question marks over the governing body that sets the rules and standards of their game.
Sponsors want their sponsorship to transfer the goodwill that fans of the beautiful game feel for the sport, to the benefit of their brand's equity. It is a major issue for the main core group of big FIFA sponsors. A way out has been to emphasise that they are supporting football for the benefit of the game itself, and the pleasure and challenge of winning and playing football, rather than FIFA as an organisation. Through speaking out, sponsors are differentiating themselves from FIFA’s management. Through welcoming Blatter’s resignation they show where their principles lie and have taken a proper moral stand to put the fans and their game at the centre of the sponsors’ positioning.
Governance and Responsibility Questions
Lots of questions are now opened up. If sporting institutions are suspected of being corrupt, does it expose a failure in the sponsors’ own compliance and vetting procedures? Where does the responsibility actually lie? Are corporate sponsors partly accountable for sporting organisation failures? Are sponsors more concerned about potential damage to their brand than the people in sports organisations potentially lining their pockets? A need for greater governance and transparency exists and the highest professional standards needs to be applied across the sponsorship and wider marketing mix. Sponsors and rights holders need to foster a culture of integrity and good business practice.
Bodies like the European Sponsorship Association has called for this high standard and highlights the critical importance of transparency and high ethical standards in sport and in business. Sponsors don’t want to be associated with shady practices and are increasingly asking rights owners tough questions on a range of compliance and CSR issues. ESA strongly supported the stance taken by sponsors in challenging FIFA to “put its house in order.”
Rights holders United?
The sponsors called for change and through group power they got it. Blatter realised he had lost the battle of sponsor opinion and leverage. Fixing FIFA will not be an easy goal. He himself said it needed a ‘profound overhaul’, ‘deep rooted structural change’. A complete overhaul in its leadership is definitely a step in the right direction but that is all it is…a step…in a very long journey.
So what’s next? The power of the sponsor doesn’t end there – this FIFA scandal can now be seen as an opportunity for sponsors to take the lead in driving change for good. Sponsors need to continue fighting for positive change and they can play an active role in addressing the needs of the millions of consumers and football fans around the globe. Through playing an active role in restoring the integrity of FIFA they can ensure they align themselves with sponsorships that create a positive consumer connection and enjoy how that translates to positive equity for their brands.
Perhaps in parallel there is an opportunity for rights holders to now unite and as a collective press for an independent body to lead an ethics and governance committee with the shared goal to insist on the adoption of new rules and procedures designed to ensure nothing like this ever happens again within the world of sports rights holders.