Emirates Airline rules out renewal of Fifa World Cup sponsorship … for the meantime

Emirates Airline has terminated its sponsorship of the Fifa World Cup as an avalanche of allegations of bribery and corruption threatens to engulf world football’s governing body. But the tournament is still a big draw for many.
The German striker, Andre Schuerrle, above centre, celebrates with his teammates after Germany beat Argentina in the 2014 Fifa World Cup final on July 13. Adrian Dennis / AFP
The German striker, Andre Schuerrle, above centre, celebrates with his teammates after Germany beat Argentina in the 2014 Fifa World Cup final on July 13. Adrian Dennis / AFP

A succinct 37-word statement issued on November 4 2014 was enough to end Emirates Airline’s sponsorship of the Fifa World Cup, or in Fifa speak, “terminate its relationship as Official Fifa Worldwide Partner”.

“Emirates can confirm that a decision has been made not to renew the sponsorship agreement with Fifa past 2014. This decision was made following a re-evaluation of Fifa’s contract proposal, which did not meet Emirates’ expectations,” it said.

With that, the carrier brought the curtain down on an eight-year relationship, from 2007, incorporating sponsorship of the South Africa tournament in 2010 and the 2014 tournament in Brazil.

The World Cup accounts for the majority of world football’s Zurich-based ruling body’s annual revenue of US$1.2 billion, about a quarter of which comes from commercial affiliates, or some $300 million from companies that see the competition as the ultimate shop window on the world high street.

The controversy over the awarding of both 2018 and 2022 World Cups to Russia and Qatar, respectively, has refused to abate since the vote in 2010.

It seems Emirates finally saw Fifa as a brand not to be associated with as Boutros Boutros, the senior vice president of media relations, sponsorship and events for Emirates Airlines said in December 2013: “… we do not get involved in politics unless it starts affecting our reputation. That’s why I am a bit disappointed with Fifa.

“Maybe we will consider whether to renew our contract when the time comes.”

Becoming a Fifa “partner” is an expensive but rewarding endorsement. This years’s month-long World Cup in Brazil garnered more than 3 billion interactions on Facebook and 672 million messages on Twitter and more than 1 billion people logged on to Fifa’s Global Stadium, Fifa.com’s social, online and mobile hub, throughout the tournament. Those figures do not include TV audiences or the crowds in the stadia.

“The passion and following of the Fifa World Cup is such that, as long as Fifa does not lose control of the situation – which I don’t see happening – sponsors will be queuing to align themselves with the football festival,” says Rakesh Kumar, the chairman of Firefly Amap, a brand management agency in Dubai. “From a sponsorship point of view there are very few truly global events that can reach as many people, as many eyeballs, as the Fifa world cup.

“Yes, there is a certain amount of bad press but there is also a chance for sponsors to join the conversation with Fifa – as they are ‘partners’ – so sponsorship can help change the dynamic, can help change the fabric of the organisation, which would be very well received.”

Emirates currently sponsors the football teams Arsenal FC (and its stadium); Real Madrid; Paris St Germain; AC Milan; Hamburg; Olympiakos; and the Zain Saudi professional league, spending an average of $100m a year. Emirates, reportedly, believes in football as a medium that can spread its name to the great and the good with little downside risk.

However, with the European football governing body Uefa’s president Michel Platini allegedly receiving a painting by Picasso, fished out of a Russian museum, from president Putin to secure a Russia vote for the 2018 competition, it seems the mercenary nature of allocating venues is ingrained in the system. That is just one claim among many that have tarnished the bidding process for the rights to host the biggest single sports event on the planet.

Emirates declines to comment on why it has stepped away from its exclusive commitment to the showpiece or what its expectations were and how Fifa had not met them.

However, as the sponsorship agreement, sorry, Official Fifa Worldwide Partner agreement was to be renewed this year, the pressure was building. Fifa has had to set up its own ethics committee, with an investigation into possible corruption, to probe the mess that was the voting process for the World Cups in 2018 and 2022.

In a shock move, the committee report summary was last month disowned by its chief investigator Michael Garcia due to “numerous materially incomplete and erroneous representations of the facts”.

That came after half the executive committee, responsible for the 2018 and 2022 votes, stepped down under a hail of allegations involving mysterious brown envelopes full of cash, misappropriated funds and Jack Warner, the Fifa Concacaf president, citing “a lack of stardust in the English bid” (for the 2018 Word Cup).

The slurs on the beautiful game continue to rain down on Fifa and its delegates.

However, it seems the magic lives on. Kia, the car company and official automotive partner of Fifa, recorded increased global sales of 4.8 per cent for September year-on-year, while sales growth in China, Korea and North America post hit 27.3 per cent, 20.2 per cent and 3.5 per cent, respectively, for the same period.

“The Fifa world cup gives brands a visibility that few can match,” says Johlee Jimenez, the chief marketing officer at Brandterminus. “If you look at Kia, the World Cup has put its name next to the biggest on the planet, its sales have gone from strength to strength.

“One of the reasons is because people know how much it costs to become a key sponsor. It gives consumers a belief that the brand they are buying is wealthy … whereas before they may not have,” she says.

“I feel there is very little downside risk from sponsoring the World Cup. Emirates Airline is now a global brand, maybe it doesn’t need the World Cup.”

At present, Emirates Airline is the only top tier sponsor that has decided against renewing its agreement while Sony is reportedly in talks about signing up again. However, reportedly, waiting in the wings are two giants of similar capacity Qatar Airways, which said “No statement has been issued by Qatar Airways with this regard,” and Samsung. How they play it could have major repercussions for the tournament’s image.

Fifa , meanwhile, has outlined a new tier of sponsorship that will offer regional sponsorship packages “lifting income from third-tier sponsors by as much as 30 per cent”, says Thierry Weil, the marketing director for Fifa. Fifa’s partnership agreements are broken down into three categories. Six companies – Coca Cola, Hyundai (Kia), Adidas, Visa, Sony and Emirates – were given top billing as global partners in Brazil. The highest tier contributes 50 per cent of sponsorship revenue.

The second level generates 35 per cent and is made up of eight international World Cup sponsors including Anheuser-Busch InBev (Budweiser) and McDonald’s to name two.

The remaining 15 per cent currently comes from six national supporters or host-nation companies.

This third tier will be revised for the next World Cup with national sponsors being replaced by 20 “regional supporters”, split into five territories: North America, South America, Europe, the Middle East and Africa, and Asia.

Still, while this new tier forecasts a 30 per cent growth in Fifa revenues – from $1.2bn to $1.6bn – it does not factor in the corporate social responsibility (CSR) that is increasingly becoming a facet of brand building and endorsement.

In the United Kingdom a recent study by the Institute of Practitioners in Advertising (IPA) found CSR is the basis of nearly 20 per cent of UK advertising and marketing communications expenditure. Companies are increasingly wanting to be seen as the good guys with a focus on the welfare of society rather than a corporation with dollars in its eyes.

Fifa controls a game loved by a worldwide audience and the power the organisation wields has governments and nations fawning over it. While the huge corporations that lavishly bankroll its activities are still enthralled by its global reach, the avalanche of allegations of corruption and financial malfeasance must surely concern long-term sponsorssuch as Visa and adidas.

Does the weight of suspicion and obvious greed beat the weight of a huge guaranteed audience? Sponsors must now bewondering whether they risk an own-goal, or even a penalty knock-out.

ascott@thenational.ae

Follow The National’s Business section on Twitter

Published: December 4, 2014 04:00 AM

SHARE

Editor's Picks
NEWSLETTERS
Sign up to:

* Please select one

Most Read