Joseph "Sepp" Blatter must have been feeling triumphant when he appeared at the opening game of the World Cup in Seoul on May 31. The heads of national soccer associations from around the globe had just reelected him to another four-year term as president of the Zurich-based Fédération Internationale de Football Assn., or FIFA, the organization that oversees arguably the biggest show on earth.
Blatter, accused by members of FIFA's executive committee of bribery and financial mismanagement, had insisted that he was unfairly attacked. Now here was vindication in the form of a 139-56 vote in his favor.
But no one had asked the fans. When Blatter spoke, spectators in Seoul booed and whistled. It was an unexpected and ominous moment not only for the 66-year-old Blatter but also for World Cup sponsors such as McDonald's (MCD ), Coca-Cola (KO ), and Anheuser-Busch (BUD ), which have invested about $28 million each.
So far, sponsors have kept to the sidelines as an internal battle roils FIFA. That didn't change even when Blatter's onetime protégé, FIFA General Secretary Michel Zen-Ruffinen, issued a damning report in May. It charged that Blatter sold U.S. broadcast rights for the World Cup to Munich-based KirchMedia for $220 million and rejected an offer that was $100 million higher from Lucern-based AIM International, one of a series of questionable moves that have helped push FIFA to the brink of insolvency. Through it all, sponsors have insisted that fans care only about what happens on the field.
Perhaps. But the spontaneous voice vote in Seoul suggests that the soccer Establishment has grown dangerously out of touch with the fans. That's one more reason sponsors should be pushing for reform before the next World Cup, in 2006. "It's in their enlightened self-interest to take action," says Jeremy Pope of the London-based anticorruption group Transparency International.
As an organization, FIFA operates with almost no oversight. Blatter--who won't even give FIFA's executive committee a clear idea how much he is paying himself--has refused to cooperate with an independent audit launched by the committee.
Only the national soccer associations can oust Blatter, and they've missed their chance, since elections won't be held again until 2006. Swiss prosecutors are investigating Zen-Ruffinen's allegations, including one that Blatter paid $25,000 for damaging information on a man who accused Blatter backers of buying votes in FIFA's 1998 presidential election. Blatter declined an interview but said in a written response to Zen-Ruffinen's report that the money was a personal gift to a needy friend.
FIFA's problems are playing out against a background of upheaval in the soccer business. In Germany, Kirch is $60 million behind in payments to pro teams after declaring insolvency. If Kirch or a new rights holder can't pay up, weaker teams could fold. The situation is similar in Britain after the bankruptcy of broadcaster ITV Digital. A third of Britain's 72 second-tier teams could go bust if they can't recover $260 million they say ITV owes them.
At the end of the day, the sponsors alone are in a position to force change. Yet Korea's Hyundai Motor Co. is the only one to exert pressure publicly, suggesting that FIFA's problems could affect whether it signs up again in 2006. But very soon, FIFA faces a day of financial reckoning. It raised $420 million in November by selling securities tied to revenue from the 2002 and 2006 World Cups, booking the revenue in 2000 and 2001 to stay in the black. In the worst case, FIFA would go under, and sponsors would be forced to rescue it or build it anew.
To thwart such scenarios, sponsors must urge Blatter to cooperate fully with the independent audit. And they should insist that FIFA better account for the tens of millions it dispenses to member nations. Without more disclosure, "the beautiful game" will continue to suffer from off-field ugliness.
By Jack Ewing
With Kerry Capell in London