FIFA turns the screw
Football's governing body is squeezing as much as it can from its World Cup partners. Richard Gillis reports.
For FIFA, less seems to be more. Football's world governing body is restructuring its official partner programme, reducing the number of top-tier World Cup sponsors from 15 to six for the period 2007 to 2014. The enlarged product categories cost between £160m and £180m, dwarfing the average $60m (£32m) paid by FIFA's sponsors for the 2006 World Cup in Germany.
The overhaul may provide FIFA with vastly increased marketing revenues, but it has caused controversy among its existing commercial partners, over half of which will lose the primary exposure slots that sport's biggest single global event provides.
Three of the six available spots have been taken by Sony, Hyundai and Adidas, leaving the incumbent sponsors as well as other bidders in the open market to scrap it out for the remaining berths. But according to Phil Carling, senior vice president of sports marketing agency Octagon, it is worth the effort.
'Brands have a problem buying mass audiences and communicating on a global platform because of media fragmentation,' he says. 'But a World Cup delivers event television - it is the Super Bowl for the world'.
The other major benefit is exclusivity. Partner brands will have effectively frozen out their competitors from any association with the World Cup for the next decade.
Competition for the six partner slots has been fierce. Sony recently paid £162m for the exclusive rights to a wide-ranging digital lifestyle product category that includes home computers, plasma-screen televisions, mobile phones and computer games. The Sony deal does not include mobile wireless rights, a potentially lucrative new revenue stream for sports governing bodies; these will be sold separately.
Adidas is paying £180m to extend its relationship with the World Cup, which goes back to the 1970 tournament in Mexico, including a cash payment of £115m over the next four years. The company will supply the balls and equipment to FIFA's major tournaments. Hyundai paid a similar amount to become the automotive partner.
FIFA has attempted to squeeze even more money from its commercial partners by selling second-tier deals for individual World Cups, either in 2010 or 2014. It has yet to start selling these tie-ups, which will cost about £40m each, but the final top-tier line-up will affect the type of company able to bid for them - meaning that there are already a host of disappointed brands.
'Because of the Sony deal, brands such as Samsung, Toshiba and Philips will have no association with the World Cup for the next 10 years,' explains Carling.
FIFA's sponsorship arrangements were due an overhaul. Having 15 World Cup partners made it difficult for individual companies to generate share of voice. And because of the way rights are bundled together, there have been complaints of wastage, where sponsors paid for rights they did not need or use.
For example, each category is offered the same branding opportunities, such as perimeter boards and interview backdrops. This is likely to be of paramount importance to FMCG brands such as McDonald's, but of less commercial advantage to companies such as technology provider Avaya.
The categories of the remaining three partnerships are expected to cover beer, financial services and soft drinks, and it would be a surprise if the latter category were not filled by Coca-Cola, given the firm's commitment to football globally.
Any brand outside FIFA's final six that wants to buy a high-profile football property may be driven into the arms of UEFA. The governing body for European football is selling an increased number of sponsorship slots around the Champions League for 2006 to 2009 and will soon be marketing the 2008 and 2012 European Championships. The few national leagues with some global appeal, such as the Premier League, Spain's La Liga and Serie A in Italy, may also become more attractive.
'There are not that many truly global properties,' says Carling. 'It is going to be a challenge for the people engaged in sponsorship for a major global company that wants to be associated with the game - the options are running out.'
Beyond football, a brand's options could include an Olympic partnership (about £60m for each cycle of games) or a title sponsorship of a Formula One team (£15m to £35m). But if none of these is attractive, many of the existing World Cup sponsors not affected by the top-tier exclusivity clauses could be left with little option but to take one of FIFA's second-tier deals.
FIFA's tactics may have upset many brands, but they seem to be working.
DATA FILE - NEW FIFA DEALS
There will be six FIFA partners from 2007 to 2014: Sony, Hyundai and Adidas, plus three more to be announced.
As well as the 2010 and 2014 World Cups, partners gain marketing rights to:
- FIFA Women's World Cup
- FIFA Youth World Cup
- Confederations Cup
- World Club Championship (currently run as the Toyota Cup in Japan each
Rights of these tournaments are being valued at £13m per partner.
Total cost: £160m-£180m each.
There will be eight to 10 FIFA World Cup sponsors, gaining rights to
single World Cups. These are yet to be announced.
Cost: £40m-£60m each for the 2010 World Cup in South Africa.
This article was first published on Marketing
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