Visa, McDonalds, Coca-Cola, Hyundai, Budweiser and Adidas are among the major companies that have set out to build their brands through association with international football, the World Cup and the now embattled organisation that oversees it, FIFA.
For a fee now in the region of $24-million to $44-million a year, the sponsors have guaranteed exposure to a global audience well in excess of a billion consumers and association with the world’s most loved sporting event.
There has no doubt been a significantly positive effect on their brands over the years. Brand values for the top sponsors currently total nearly $100-billion (Coca-Cola: $35,8-billion, McDonalds: $22-billion, Hyundai motors: $8,6-billion, Kia: $5,2-billion, VISA: $8,5-billion, Gazprom: $7-billion, Adidas: $6,8-billion, Budweiser: $4,3-billion).
These-billion-dollar valuations refer specifically to the value of brand rather than the business entity, so theoretically all of this value could be lost as it is intangible and contingent upon reputation and continuing consumer goodwill. That goodwill is ebbing away and only a comprehensive overhaul of the governance of the organisation is likely to reverse it.
Accusations of endemic corruption within FIFA are becoming not just widespread but impossible to ignore. The sands are rapidly shifting, making any kind of association with FIFA increasingly risky for a brand’s reputation. Negative headlines now surround not just FIFA itself but the sponsors too. With FIFA apparently deaf to calls for change, activists and social media users are turning their fire on the top tier sponsors, accelerating the reputational risk.
FIFA’s own brand is in the most imminent danger of all, being heavily contingent upon the support of its partners and sponsors. It is down to $2.8-billion, having lost $400 million in the last few days alone as the result of the arrests and subsequent negative attention. Even broadcast revenues could be under threat as the possibility of relocation of World Cups in Russia and Qatar creates significant uncertainty.
A boycott of FIFA by national football authorities has even been mooted, which would lead to the collapse of FIFA’s $12-billion franchise.
Brand Finance CEO David Haigh comments,: “Sponsors have partnered with FIFA in order to build their brands, not have their reputations tarnished. The kind of activities that are alleged to have been going on could destroy-billions of dollars of brand value.
“A lot depends on what happens in the next few days but without knowing how quickly FIFA are going to clean out the Augean stables, my recommendation to the major sponsors would be to move towards the exit. As for FIFA, if Blatter were to stand down with immediate effect, that go a long way to securing its future and we estimate it would add over half a billion to FIFA’s brand value.”