You might say that the controversy around FIFA is “heating up” this week.
That’s meant to be a reference to the heat in Qatar, where the 2022 World Cup is set to take place—but the dangerously high summer temperatures there are the least of FIFA’s worries now. After years of allegations around the accepting of bribes for World Cup bids, the U.S. Department of Justice brought the hammer down on FIFA Wednesday morning with indictments for nine FIFA officials and five associated sports marketing executives.
The charges include racketeering, wire fraud and money laundering. But this particular crackdown, for now, does not appear to be concerned with a more urgent and upsetting issue: the labor conditions in Qatar, where a large part of overall construction activity (but, admittedly, by no means all of it) is accounted for by the new World Cup stadia and related infrastructure.
There have already been more than 1,400 worker deaths at Qatar’s hot, unsafe building sites since 2010, and the International Trade Union Confederation, in a report entitled, “The Case Against Qatar,” suggests there will be another 4,000 deaths before the Cup in 2022, if the situation there continues unchecked. Most of the migrants are desperately poor Indians and Nepalis who are often required to surrender their passports when they arrive, leaving them at the mercy of employers for the length of their contracts (which can run up to five years).
As the Washington Post writes (whether fairly or unfairly), “it only took a $150 million scandal to make Americans care about soccer.” Indeed, now Americans do care, and both the U.S. media and U.S. sports fans have followed this crackdown with great interest and excitement—as well as criticized the sponsors still involved with the beleaguered league.
Last November, Emirates airline, an official FIFA sponsor, announced it would not renew its sponsorship when it expired at the end of 2014. Emirates had signed its deal in 2006. Just weeks later, Sony, which had signed an 8-year deal with FIFA in 2005 for a reported $277 million, decided not to renew its deal, either, when it expired after the 2014 World Cup. Each company made statements that the decisions were about investing their marketing dollars elsewhere, but both moves were seen as responses to the ongoing corruption probes that, at the end of last year, were approaching a boil. Fuel company Castrol and German tiremaker Continental AG (CTTAY) also decided at the end of last year they had had enough and let their contracts lapse.
Now the remaining FIFA sponsors have a problem on their hands that goes beyond a few corrupt fat cats, and involves loss of human life. The shocking numbers of worker deaths are creating very bad press for these corporations.
Web designers have been submitting redesigned “anti-logos” to the web site Bored Panda, tweaking the corporate logos of the sponsors to depict blood or slavery and adding the slogan, “proudly supporting the human rights abuses of World Cup 2022.”
Virgin Group CEO Richard Branson, who has launched a wide range of humanitarian efforts over the years, wrote a blog post this week on Virgin’s corporate web site that summed up what many are thinking about FIFA.
“The beautiful game and its key event are being dragged through the mud by the very institution claiming to be its guardian,” he wrote, condemning “a corruption crisis so severe and shocking that I don’t see how it can survive without completely reinventing itself….As the old adage goes, the fish rots from the head down. Even if Blatter had no knowledge of any of the crimes alleged yesterday by U.S. authorities, he must step down now and get out of the way. Enough is enough.”
As you might expect from a businessman with no skin in the game, the post was markedly different from the short, cautious press releases from corporations—it is lengthy, candid, informal, and severe.
In response to the mounting criticism, Visa has issued two separate statements—first one last week that expressed “grave concern” over the migrant worker conditions, then a stronger one this week over the corruption charges that said, “Our disappointment and concern with FIFA in light of today’s developments is profound. As a sponsor, we expect FIFA to take swift and immediate steps to address these issues within its organization… Should FIFA fail to do so, we have informed them that we will reassess our sponsorship.”
Adidas issued a statement this week as well, saying it was “deeply concerned” and calling for the organization to become “more transparent,” but stopped short of spelling out the consequences if FIFA failed to respond. Adidas’ position as a World Cup partner is one of the key global marketing advantages it has left over Nike Inc. (NKE), which would be an obvious candidate to replace it if it walked away from FIFA (reputational issues allowing).
Both Adidas and Visa remain sponsors. In fact, all eight of FIFA’s ‘partners’—its term for top-level sponsors—are still on board. The official marketing partners currently listed on FIFA’s web site are Visa, Adidas, Coca-Cola, Gazprom, Hyundai, and Kia (as “partners”), plus Budweiser and McDonald’s (as “sponsors”).
Sponsors spend big money to be involved with FIFA—a combined $413 million on last year’s World Cup alone, according to its financial report. That’s far more than the $150 million the U.S. indictment alleges the organization received in bribes. That’s (perfectly legal) money FIFA certainly doesn’t want to lose, and the sponsors would rather not lose the brand exposure they get from the World Cup.
The situation is reminiscent of one the National Football league faced just last year, when it had a slew of players involved in domestic violence cases that played out publicly, beginning with the Ray Rice incident, continuing with the alleged child abuse by Adrian Peterson, and leading to a national spotlight being shined on many other ongoing criminal cases. During that scandal, corporate sponsors issued similar statements to those coming out now, and, in the end, none of the sponsors ended their league sponsorships (except for Radisson Hotels cutting ties with a single team, the Minnesota Vikings). The NFL’s steward Roger Goodell, though widely criticized, emerged relatively unscathed. Will FIFA president Sepp Blatter be so lucky?
The world will find out on Friday, as the FIFA presidential election takes place and Blatter seeks a record fifth term.