Over the last few weeks there has been plenty of press coverage regarding FIFA’s corruption scandal surrounding the selection of Russia and Qatar to host the 2018 and 2022 World Cup Finals. With the subsequent resignation of Sepp Blatter it begs the question of whether this will be FIFA’s ‘IOC Salt Lake City’ moment when the organisation transforms itself ethically. Whatever the outcome it is a very interesting time for brands sponsoring football from both within and outside the FIFA family, particularly in how this will impact long term football sponsorship.
It is first worth highlighting that the FIFA scandal is on a different scale to the IOC. Whilst totally unethical the IOC’s problems did not draw any criminal proceedings. Therefore the challenge facing FIFA to reform itself will be infinitely more difficult and painful however the principles needed for the required revolution will be the same. Whether the legal charges against FIFA officials stand up or not there is little doubt that ethically there are serious issues, so irrespective of the outcome of the FBI investigation FIFA needs to reinvent itself in order to remain a respected global rights holder.
Whilst there is significant coverage in the UK press reporting this scandal, there has been disproportionate interest in most other parts of the world, particularly outside of Europe. The UK press led the charge against FIFA, particularly since England’s embarrassing defeat in its bid to host the 2018 World Cup. Up until recently most countries haven’t paid too much attention however momentum is building and FIFA’s commercial partners are under increasing pressure to react to this issue. Recently there have been statements released by some sponsors communicating that they are ‘concerned’ and ‘monitoring the situation closely’ however we hope, and expect, that behind closed doors these sponsors are taking a hard line against FIFA and would be willing to take the tough decisions if they don’t clean their house.
Whilst it is yet unclear as to what ultimately brought about Mr Blatter’s downfall there is plenty of speculation about the role of the sponsors in this process. Sponsorship contracts account for 33% of FIFA’s income, therefore their collectively ability to erode Blatter’s power base within FIFA was significant. Whether they used their influence or not, sponsors now have to focus on the future and monitor if/how FIFA will clean itself up. If FIFA are unable or unwilling to do this then their sponsors have an obligation to withdraw their support. Given the global trend of a shift from corporate social responsibility to brand social responsibility consumers are increasingly influencing brands to behave more ethically. In turn, these brands are focusing, communicating and celebrating their ethical approach to business practises therefore they constantly monitor whether their suppliers and business partners also share and support these core values. As a result, they have an obligation to ensure that this extends to all their business partners, not just the factories they source from but everyone, including FIFA.
Unfortunately behind many sponsorship strategies is a defensive rationale to block competitors from the property, these can be nearly as influential as the positive benefits of the association. Therefore for a brand to pull out of sponsoring the World Cup could be seen as a risk as it would open the door for a competitor to replace them. However I would challenge if this was a risk; if Coca Cola, for example, were to terminate their contract with FIFA on moral grounds would Pepsi swoop in and replace them? I doubt it, the risk to Pepsi would be far too great to defy Coke’s ethical stance in order to gain a competitive advantage.
There has been plenty of analysis and comment from a number of industry experts in recent weeks about the potential impact on sponsors if FIFA do not reform. It has been suggested by many that consumers don’t really care and are therefore not going to stop buying McDonalds or Adidas, for example, even if there is no reform. I think these experts are missing the point, I agree that loyal consumers aren’t suddenly going to switch to KFC or Nike out of principle. However there is a real danger facing these sponsors as they continue to pay hundreds of millions of dollars for the privilege of supporting FIFA, maintaining the status quo cannot be the primary objective. Whilst sponsor objectives will vary amongst brands and categories, creating incremental value growth has to be the fundamental cornerstone of this investment. The primary principle to any successful sponsorship is that both parties share core values, sponsors enter into these agreements in order to highlight and celebrate these shared values to their consumers through a platform of shared passion. As a result the sponsoring brands must realise that if the two organisations are not aligned it will ultimately cause reputational damage and the incremental value growth will not be achieved. On the flip side, this also provides an amazing opportunity to push reform within FIFA long term. If they can demonstrate their loyalty and passion for the sport by working with FIFA through the difficult times in order to create a stronger sport and marketing platform for the future, it provides an unrivalled credibility within the territory to launch their activations long term.
Whilst this may be causing a headache for FIFA’s sponsors it is also creates an opportunity for other football rights holders and sponsors. UEFA and The FA, for example, have taken a hard line against FIFA therefore their credibility hasn’t suffered following this global football scandal. They should continue to be the standard bearers for the ‘new’ FIFA and push their change agenda to be fully implemented. If the European rights holders do continue to pursue this agenda of change their sponsors can exploit their position of ethical superiority over the sponsors of the FIFA events, particularly those in competing categories. In fact European football sponsors should be exerting pressure on their own rights holders to push for reform of the global governing body. Whilst this may seem utopian and unrealistic from a consumer communication perspective, I would argue that passions around football are so highly charged that fans will be far more engaged with those stakeholders who want to protect ‘their’ sport. Occupying the footballing moral high ground would create a real point of difference in this incredibly cluttered commercial environment.
In conclusion, the key stakeholders within FIFA’s commercial family have too often turned a blind eye to FIFA’s shortcomings, its time that they stand up to ensure that the game they claim to love has long term sustainability and credibility. If they don’t, they are opening the door to competitors who will be able to take advantage from an elevated ethical position.