As Visa, Coca-Cola and other sponsors deal with the fallout of this week's arrests, corporate boards will need to ask why it took so many years to publicly take a stand.
After years of reports of poor governance practices, shady business dealings, an endless parade of stories about corruption, kickbacks, fiefdoms, labor violations, and more, investigations by the FBI and Swiss authorities have led to high-profile arrests of senior FIFA executives on corruption charges. We are now at the start of what will likely be months of stories untangling a Gordian knot of complex global deals and unethical behavior.
The big sponsors of FIFA are now scrambling to be the first to put out statements of concern and condemnation. We can applaud them, but it’s also ironic how quickly they are delivering these statements given how slowly they have dragged their feet over the years when asked to comment or take a stance on ethics violations.
Visa V says that they are disappointed and concerned and give veiled threats of potential withdrawal. Adidas AG is encouraging FIFA to continue to establish and follow transparent compliance standards in everything they do. Coca-Cola KO has let us know that they have repeatedly expressed their concerns, and the list goes on.
Oddly enough, it is not as if these investigations and arrests have come out of nowhere. FIFA has been getting progressively worse for years, dogged by stories of corruption, poor labor practices, and questionable ethics. Sponsors only needed to pick up a paper or do a fast Internet search to know that.
Any responsible brand manager of a sponsor should have known they were playing with fire, and that it was a proverbial game of chicken. These companies took a calculated risk and chose to be lulled by FIFA’s assurance that they had the situation under control.
But by taking that risk, they have put their own reputations in jeopardy. All of that hard work could be tainted by their association with FIFA if they don’t choose their course carefully from here on out.
There is a lesson in here for all corporate boards – not just the boards of these companies. Boards help guide a company’s strategy and also calculate its risk appetite to reach its goals. The boards and senior executive teams need to look hard at, how they balance risk and reward; whether, in hindsight, it would have been better to have stood up and be counted in the hopes that the benefit in walking away from something harmful would of outweighed staying.
FIFA’s biggest sponsors have extensive experience in sponsorship relationships. They are knowledgeable about the benefits and potential pitfalls of those relationships and likely have done careful calculations into what makes it worth it. It’s obvious that whatever systems were in place have failed. And going forward, boards and executives will need to determine if their company’s relationship with FIFA will hurt their reputation and they will also have to answer hard questions about how they have willfully turned a blind eye to FIFA’s behavior.
It is not too late for the sponsors to step up take decisive action, and be a force for real change. They can do that one of two ways. Either by staying sponsors and pushing for real change, or taking back the money they used to sponsor FIFA and walking away.
If they engage in creating real change, it will require regime change, but by engaging they could do a lot to save the global football movement and all of the communities affected by FIFA’s poor governance and oversight. It is all well and good for sponsors to pile on with statements of outrage about FIFA’s behavior now that there have been arrests, but that is neither brave nor proactive. The world will be watching the sponsors and their boards to see what they do next and to see if they use their buying power to push through root and branch change, as they should have been doing all along.
Lucy Marcus is a writer and expert on corporate governance. Marcus sits on the board of Atlantia SpA. She is also the CEO of Marcus Venture Consulting.