FIFA sponsors get what they wanted as Sepp Blatter agrees to leave
President promises to step down amid pressure from sponsors and broader soccer community
It's not clear what compelled FIFA president Sepp Blatter to offer to step down only days after being re-elected amid a widening corruption scandal, but sponsors of the beautiful game are breathing a sigh of relief, sports marketing experts say.
On Tuesday, just days after being elected to another four-year term as FIFA president, Sepp Blatter did an about-face and announced he would step down as soon as a new election for a successor can be held.
"This mandate does not seem to be supported by everybody in the world of football," Blatter said in French at a brief and terse news conference on Tuesday.
A major chunk of the "everybody" Blatter referred to are the league's corporate sponsors, many of whom were full-throated in their demands last week for significant changes atop soccer's governing body.
FIFA needs to "rebuild a culture with strong ethical practices in order to restore the reputation of the games for fans everywhere," Visa said last week. "Should FIFA fail to do so, we have informed them that we will reassess our sponsorship."
Other sponsors including Coca-Cola, Carlsberg, Adidas, Hyundai and even Canadian names like Scotiabank, Bell and Labatt — all of whom have spent to market themselves at the upcoming FIFA Women's World Cup set to kick off in Canada this weekend — have expressed similar concerns.
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All those corporate names add up to a lot of money that can't be ignored forever.
FIFA's $5.72 billion in revenue from 2011-14 included $4.23 billion US from last year's World Cup in Brazil — of which $2.43 billion US was generated by television rights sales and $1.58 billion US from marketing agreements.
Richard Powers, a professor in sports marketing and governance at the Rotman School of Management at the University of Toronto, says Blatter must have been getting a lot of pressure from sponsors since the election.
"We'll never know the true story," Powers said. "I'm not sure if any one sponsor could pull that off, but I could certainly see the sponsors getting together and saying, 'We have the ability to exert some pressure.'"
So, what happened?
As recently as Saturday, Blatter appeared to see himself as the defiant saviour of soccer, but something changed his mind.
"I had always believed from the beginning there was extraordinary pressure from the sponsors," says Howard Bloom, the Ottawa-based publisher of Sports Business News. He adds that it's especially telling that some of FIFA's biggest sponsors at the moment are Visa and Coke, two U.S.-domiciled conglomerates.
The narrative laid out by Attorney General Loretta Lynch last week involved some allegedly illegal activities on U.S. soil, something a U.S. company is always going to be wary of. "The U.S. attorney general made it clear that this was just the start of it," Bloom said. "The only way to begin to repair that brand was to have a complete overhaul in the leadership."
Although he stressed he's unfamiliar with the specifics in FIFA's case, Bloom said it's common for many sports marketing deals to contain a so-called "morality clause" that gives sponsors a way out if they don't like what's happening off the pitch. It's very likely they could make a strong argument that the value of their brand has been tarnished by FIFA's actions — and inaction.
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"They do have tremendous leverage, but it remains to be seen whether they have legal grounds to abrogate their deals," said Neal Pilson, who runs a media consulting firm and who also used to be the president of CBS Sports.
After appearing to peak last week, FIFA's scandal got worse with new allegations this past weekend about three payments totalling $10 million were approved in 2007 by Julio Grondona, the former chairman of the finance committee who died last year.
It's entirely possible that Blatter did what he did on Tuesday because, despite winning an election by delegates who owed their own jobs to him, he realized he had lost the broader battle of public opinion.
"Blatter's supporters are Vladimir Putin, the invader; the Qatari government and their supposed slave employees to build the facilities; and about 80 or 90 tiny countries that he has given each one a vote and a ton of money to," said Marc Ganis, president of Chicago-based consulting firm SportsCorp.
As far as the sponsors go, Bloom suggests they are most likely relieved. "They are glad the Blatter distraction is gone," he said. "Visa made it pretty clear they wanted to see some change … and well, they got it."
Nor does he think that Blatter agreeing to step down is going to bring an end to FIFA's problems, either with their sponsors or in general "The U.S. attorney general is going to follow through," Bloom said. "They're not going to stop now that Blatter has resigned."
Powers agrees that there's more bad news to come, so from a sponsor's perspective, what matters most is what happens now: "All eyes are on who's next," he said. "You have to hope that there will be a distance between the new boss and the old boss."
As England Football Association chairman Greg Dyke put it recently, "This isn't over by any means."
With files from The Associated Press