World Cup sponsors put pressure on Fifa to resolve scandal

Coca-Cola Co, McDonald's Corp and other World Cup sponsors are putting pressure on FIFA to resolve a corruption scandal after officials at the sport's governing body were indicted Wednesday morning. 

PHOTO: EPA

MAY 28, 201511:17 AM

[FRANKFURT] Coca-Cola Co, McDonald's Corp and other World Cup sponsors are putting pressure on Fifa to resolve a corruption scandal after officials at the sport's governing body were indicted Wednesday morning.

While no major sponsors indicated they would cut ties to Fifa, several of the companies voiced concerns about the long- simmering controversy. According to the US Justice Department, Fifa officials received bribes and kickbacks that were meant to influence the awarding of media and marketing rights, along with the choice of the host country for the 2010 World Cup.

"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," Coca-Cola said in a statement. "We expect Fifa to continue to address these issues thoroughly. Fifa has stated that it is responding to all requests for information, and we are confident it will continue to cooperate fully with the authorities."

Still, it's unclear whether the scandal will prompt World Cup backers to pull out of such a high-profile event. The sponsors, which also include Adidas AG and Visa Inc, may conclude that the Justice Department allegations of "systemic and deep-rooted corruption" don't undermine the game's integrity in the way performance-enhancing drugs or match-fixing do, said Kevin Alavy, a managing director at sports media analysis firm Futures Sport & Entertainment.

Better than steroids?

"Corruption can take different forms, and some forms of corruption can matter more to fans, particularly when the integrity of the match is threatened as in doping or match- fixing," Mr Alavy said. "That form of corruption can be the most damaging."

Large sponsors can't risk tarnishing their reputations with even a whiff of wrongdoing, so they're likely to examine their ties with Fifa.

The US indictment Wednesday outlined two decades of fraud, and Swiss officials said they're investigating alleged money laundering related to the selection of the host countries for the next two World Cups, in Russia and Qatar.

The website of Zurich-based Fifa lists five marketing partners for the 2018 World Cup in Russia: adidas, Coca-Cola, Visa, OAO Gazprom, and Hyundai Motor Co and its Kia Motors Corp affiliate. Anheuser-Busch InBev NV's Budweiser and McDonald's are also sponsors of the tournament.

Adidas "is fully committed to creating a culture that promotes the highest standards of ethics," a spokeswoman said in a statement, and it's urging Fifa "to establish and follow transparent compliance standards in everything they do." The German sportswear maker plans to continue its support of soccer "on all levels," she said.

A Gazprom spokesman in Moscow said Wednesday's development "doesn't influence" the Russian gas producer's sponsorship agreement in place through the end of the World Cup in 2018.

AB InBev, the world's biggest brewer, will "closely monitor" the situation through its talks with Fifa and expects its partners to be transparent and ethical, a spokeswoman said.

McDonald's, which has been in contact with Fifa, said it "takes matters of ethics and corruption very seriously and the news from the U.S. Department of Justice is extremely concerning."

Hyundai Motor Co and affiliate Kia Motors Corp said that they are "extremely concerned", place the highest priority on ethical standards and transparency, and will monitor the situation closely. An official at Visa wasn't immediately able to comment.

Companies pay tens of millions of dollars a year for the right to associate their names with soccer's quadrennial tournament, the world's most popular sporting event. Getting in front of all those fans may be too good to pass up.

"Football is far and away the world's most popular sport and the World Cup is its most important event," Mr Alavy said.

The balance between wanting a squeaky-clean image and getting access to soccer's huge global fan base presents a quandary for international brands. The best solution may be for Fifa to deal with the charges strictly and decisively to protect sponsors, said one European executive whose company works with Fifa and didn't want to be quoted talking about internal matters.

Even when sponsors do yank support from athletes and events, it can take years to play out. Allegations of blood- doping followed cyclist Lance Armstrong for more than a decade before Nike Inc. and others dropped him in 2012. The Olympic Winter Games survived allegations of bribery in the run-up to the 2002 Salt Lake City games.

Showing restraint?

"Certainly this tarnishes the Fifa brand," said Matt Powell, an analyst at NPD Group, a market research company. "I expect that sponsors will show restraint until the story plays out a bit more. Once they know that convictions are in and understand the extent of the crimes, then sponsors will act."

Fifa's problems span at least two continents and date back more than 20 years, according to authorities. Fourteen people were indicted on US charges of racketeering, wire fraud and money laundering conspiracies. Swiss authorities arrested executives at a hotel and searched the organization's headquarters in a series of dawn raids in Zurich.

Soccer officials had gathered in Zurich's Baur au Lac hotel ahead of Fifa President Sepp Blatter's re-election bid on Friday. The governing body has been dogged by corruption charges repeatedly during Mr Blatter's 17-year tenure atop global soccer.

Concerted pressure from the sponsors would ensure that Fifa cleans up its act, said Nigel Currie, a sponsorship consultant at NC Partnership.

"If just individual brands start breaking ranks, that's one thing," he said in an interview on Bloomberg Television's Market Makers. "But if they all pull together, they could have a real impact and really damage Fifa very badly, and I think then you'll start to see some changes and see them taking some notice."

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