Tom Wiesman, Senior Director, looks at the trends in FIFA sponsorships

Oh, how so much can change in four years!  Back in 2014, before the kick-off of the FIFA World Cup in Brazil, we discussed the value of a FIFA sponsorship and if sponsors would see a reasonable return on their investment.  Fast forward one World Cup cycle to Russia 2018 and this story presents a new question: “Where have all the sponsors gone?”

To recap our previous blog post, FIFA’s commercial strategy consisted of three Sponsorship Tiers:

  • FIFA Partners –  are the top tier with a relationship that reaches beyond the World Cup, covering all major FIFA events, and supporting football globally.
  • FIFA World Cup Sponsors – have rights to the FIFA Confederations Cup and the FIFA World Cup on a global basis.
  • National Supporters – are companies within the pre-defined global regions to promote an association with the FIFA World Cup in the domestic market.

By this time four years ago FIFA had most of sponsors locked in across each of these tiers.  However, 2018 presents a different story.

Sponsorship Participation Varying by Tier
  • FIFA Partner (7 sponsors, up from 6):  Gone are Sony and Emirates Airlines. Instead, Russian energy giant Gazprom, Qatar Airways and Wanda, the first Chinese top-level sponsor, have joined. This level now has seven of eight possible spots filled, representing an increase from the six partners in 2014 – but the makeup of companies represents an interesting shift. (More on that later.)

The lower tiers are where the declines have occurred.

  • World Cup Sponsor (5 sponsors, down from 8):  Only mainstays Budweiser and McDonalds have renewed for 2018. The remaining six, including Johnson & Johnson and Continental have decided not to participate.  Only three new sponsors have stepped up to fill the gap: Hisense, Mengniu, and VIVO – all Chinese companies. This again represent a shift in the supporter makeup.
  • National Supporter (3 sponsors out of 20): The situation is a bit worse here.  Currently only three companies Yadea, Alfa Bank, and Rostelecom have signed on for three out of 20 possible slots, with the only countries represented being Russia and China.
What is Driving the FIFA Trend?

The FIFA Brand is likely the primary culprit for the lack of participation.  Bribery and corruption probes from American and Swiss law enforcement agencies in 2015 have hurt the brand over the last few years. Since the scandal, FIFA has lost US$369M and US$192M in 2016 and 2017, respectively, as it has struggled to regain its footing.

Political controversy in Russia has not helped and may have made potential sponsors, especially National Supporters, hesitant to sign up.

Finally, the qualification failures of certain countries have also hit hard.  The United States failing to qualify is the most significant from the commercial side, as the US represents nearly 30% of the world’s consumer market.  From a competitive standpoint, a tournament lacking 4-time champions Italy, the Netherlands and Chile – with a host of world stars between them – has also taken some of the lustre off 2018.

Implications of Sponsorship Landscape

At the Partnership level, FIFA has struggled to land American and Western European Sponsorship.  Of the new Partners brought on board since 2014, two (Qatar Airways and Gazprom) are either state owned – or majority owned by governments. These governments have a vested interest as World Cup host nations.  The third, Wanda, is based in China which is angling to host the event in the future.  So, the investment for these companies appears as much (if not more) political as commercial.

The Sponsors level has only McDonalds and Budweiser – both with growth opportunities outside of developed markets – alongside three Chinese firms which see opportunity with their country set to land the World Cup in 2034.

The lack of National Supporters truly speaks to the environment in Russia, and the hesitation to invest in a local market with so much uncertainty.

So overall the current landscape is not surprising and there are indications that ROIs may decline relative to 2014.  FIFA partners such as Coke, with immense scale and global presence, likely benefit both in the short term (through incremental sales) and long term (building equity and brand loyalty).  However, the latest projections are that FIFA sponsorship revenues are expected to be relatively flat between the 2014 and 2018 World Cups at $1.5B, meaning with fewer sponsors, each organization will have to invest more to participate.  These costly investments, and a smaller global footprint from the sponsors, could impact the ability for strong returns.  The failure of key countries to qualify will no doubt impact TV ratings, also making it more difficult for organizations to deliver a profitable ROI.

The Value of Sponsorships

FIFA sponsorships, and sponsorships in general, still have a lot of potential for positive short and long-term returns, but companies considering major sponsorship investments should seek guidance from knowledgeable and experienced partners. Together you can more accurately measure the long-term value of sponsorships and provide the proper risk assessment.  It is also vital to ensure marketing measurement programs are executed by those with local market knowledge of data, channels, and business environments. This knowledge is needed to provide the maximum return on investment.

Contact us if you would like to discuss your sponsorship plans and help determine your true long-term return on investment.