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Sponsors Shy Away From FIFA as Russia World Cup Draws Near

  • Corruption worries and price are deterrents, says agency head
  • World Cup expansion will also hit TV rights, Lagardere says

With 16 months to go before the next staging of soccer’s flagship event, corporate sponsors aren’t in a rush to have their names attached to the 2018 soccer World Cup in Russia.

Tournament organizer FIFA has signed just one new top-tier level partner, China’s Wanda Group, since the last tournament in Brazil. Only Moscow-headquartered Alfa Bank has agreed to be a regional World Cup supporter, which has replaced national supporter as the cheapest level of sponsorship.

By the same stage in the tournament cycle for Brazil, almost all the agreements were concluded, with the majority confirmed more than three years before the event kicked off. Reasons behind companies’ reluctance to sign may include the $150 million cost of the most expensive deal and the fallout from FIFA’s 2015 corruption scandal, according to Andrew Georgiou, chief executive officer of Lagardere Sports and Entertainment, one of the world’s largest sports agencies.

“I think compliance issues are affecting brands and I think the price points are affecting brands,” Georgiou said in an interview at his company’s headquarters in London. “Has FIFA got itself back to a place where corporate western brands are comfortable doing business?”

An internal investigation into wrongdoing at the 112-year-old body has been completed by Washington law firm Quinn Emanuel Urquhart & Sullivan LLP, which will provide its report to FIFA next month. That will be three months before Russia hosts the Confederations Cup, an eight-nation tune-up that takes place a year before the main event.

Ambitious Targets

As of now FIFA, which sells three categories of sponsorship, has just nine companies on its roster for the tournament. That compares with 20 by the time the Brazil World Cup kicked off, including two local companies in the global World Cup sponsorship category, the second most-valuable segment.

For a QuickTake on corruption scandals at FIFA, soccer’s ruling body, click here

Russian state-owned gas giant Gazprom PJSC joined FIFA as a partner in 2013 and it wasn’t until July 2016 that Alfa Bank joined as FIFA’s first ever and so far only regional sponsor. The numbers make FIFA’s target of 14 tier-one and tier-two backers, joined by a further 20 regional sponsors drawn from five global territories, seem increasingly ambitious. World Cup-related sponsorship brought in $404 million in 2013, according to FIFA data. That figure was down to $246 million in 2015.

"The sales process is ongoing and new commercial affiliates will join the marketing program before the FIFA World Cup," FIFA said in an e-mailed statement, without providing further details. FIFA’s longtime marketing head Thierry Weil left in October as part of a clear-out of senior management.

Expansion Pains

Further trouble is around the corner, Georgiou said. FIFA President Gianni Infantino convinced members to expand the World Cup from to 48 teams from 32 for the 2026 tournament and beyond. The expansion risks diluting the quality of the competition, and makes the usually two-year long regional qualification programs devalued for television companies, said Georgiou, whose company buys and manages rights.

"The value’s gone down," he said. "I have had the same conversation about the value going down in Asia, same in Africa. The value will go down across the board."

FIFA declined to respond to the comments, referring to a press conference given by Infantino in January.

“The football fever that you have in a country that qualifies for the World Cup is the biggest and most powerful promotional tool for football that you can have,” he said at the time.

Infantino’s World Cup expansion is part of string of campaign promises he made on an ultimately successful run to the FIFA presidency in February 2016. He also promised the group’s 211 member nations an increase in financial support.

“We’ve changed the sport as a result of politics, not because it’s right for sport,” said Georgiou, whose company has contracts with the regional soccer bodies for Asia, North America and Africa. “I’m not sure that’s right.”

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