Friday, May 29, 2015

If Blatter won't be voted out, perhaps FIFA's sponsors will vote with their cash

(C) Getty Images
And so the cesspool of shame that is FIFA's corporate governance rumbles on like a leaking solid waste pipe spewing excrement into the street, with Sepp Blatter, its embattled president, stubbornly defiant that he could have prevented any of the alleged corruption that happened on his watch.

Today, FIFA's annual Congress will make a vote that could see Blatter installed for a fifth term. Blatter himself maintains that, while he doesn't have eyes everywhere, only he can bring about change in the culture at FIFA.

This, we all seem to agree, is ridiculous. The US Department of Justice's indictment stretches back over 24 years of corrupt behaviour in, mostly, CONCACAF, the Americas football body; Blatter has been FIFA president for 17 years. It strikes me that, either those who were up to no good within CONCACAF and elsewhere must have been extremely brilliant at disguising the swimming pools and cash that came their way, or that Blatter was extremely useless at noticing any wrongdoing, or showing the leadership to ensure that FIFA's ethical reputation was spotless from top to bottom.

Blatter's defiant proclamation last night that he has no intention of resigning flies so blatantly in the face of even common sense, let alone executive accountability, that it is almost laughable. And, yet, there is nothing to laugh about. The reputation of football - not just its governing body - is at risk of being ruined by one arrogant, puffed-up individual and his Mugabe-esque hubris.

Perhaps, then, those who hold the real power at FIFA - the corporate sponsors and partners - might be more successful in affecting much-needed regime change within sport's biggest governing body, which is currently experiencing sport's biggest reputational crisis.

Money talks, clearly (as, obviously, that's how FIFA found itself in this mess to begin with). Last year's World Cup in Brazil generated almost $5 billion in revenue for FIFA, of which $2.4 billion came from television rights, $1.6 billion from sponsorship ("marketing rights"), and just $527 million from ticket sales alone. Given that it cost FIFA $2.2 billion to stage the tournament, FIFA earned a profit of $2.6 billion from the tournament as a whole.

FIFA could stage a World Cup in your local park and people would pay money to pass through the turnstiles. But would big-name corporate sponsors like adidas, Coca-Cola, Visa, McDonalds, Budweiser and Hyundai still be interested? And would broadcasters fork over another $2.4 billion to screen it? I doubt it.

Now, however, these same companies need to think long and hard about their association with an organisation branded by the US Department of Justice as being infested by "corruption that is rampant, systemic and deep-rooted". Actually, these companies shouldn't do any more thinking at all: they should act.

Not unexpectedly, all of FIFA's corporate "partners" have issued statements expressing varying degrees of concern: Visa said they would might "reassess its sponsorship" unless FIFA took "swift and immediate steps" to address the allegations. Coca-Cola said more strongly: "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".

Adidas said that they were "...fully committed to creating a culture that promotes the highest standards of ethics and compliance and we expect the same from our partners" while Budweiser, Hyundai and McDonald's issued somewhat less committed statements confirming that "they were monitoring the situation closely".

Branding expert Anastasia Kourovskaia of the agency Millward Brown says that the scandal is "disastrous" for the core group of FIFA sponsors. "For them, this is a major issue. The idea of sponsorship is to transfer the goodwill that supporters feel for the sport, to the benefit of a brand's equity."

The World Cup, in particular, is a much-coveted "property" for marketing. Last summer's tournament in Brazil attracted almost three and a half million fans to the stadia hosting matches, while TV figures broke new records - the final itself drew close to a billion people worldwide. These are numbers that marketing departments can only dream of, which is why they spent $1,6 billion making their dreams become reality in 2014.

For any of the main FIFA sponsors to walk away would be a brave decision. But in times of reputational crisis like this, the damage from being associated with as toxic an entity as FIFA could be felt for years to come. And while it's true that if adidas or Visa, or Coca-Cola walked away, there's no doubt that Puma or MasterCard or Pepsi would be keen to fill the gap.

But for any corporate interest considering or currently sponsoring FIFA, until a new leadership can take over that organisation and clean it up from the top down, the association is really not worth it.