In the sports world sponsorships are supposed to help teams make money, keeping ticket prices low and helping to defray the costs of high salaries. This is not what's supposed to happen. MasterCard today ended its legal dispute with FIFA, accepting a $90 million settlement from soccer's governing body. It will also discontinue its sponsorship of the 2010 and 2014 World Cup tournaments.
MasterCard and FIFA have been entangled in a suit over MasterCard's right to sponsor the tournament. An official sponsor since 1994, MasterCard felt that FIFA did not honor its agreements when it awarded sponsorship rights to VISA, MC's main rival.
MasterCard let CMO Larry Flanagan lay the smack down on FIFA:
Flanagan said the decision to end the relationship with FIFA was based on "irreparable damage" to the company's trust in the organization. He said MasterCard determined the sponsorship was "basically not worth it, based on the need to have an ongoing, collaborative relationship with the other party."Having apparently signed VISA as a sponsor, I suppose FIFA can afford to lose MC. Yet this loss seems devastating on a number of different fronts. First, events like the World Cup depend on large corporate sponsors in order to help fill their coffers. FIFA's actions don't send a positive message to its other main sponsors. FIFA was willing to give up millions here, but it also lost a sponsor who had been with them for over a decade. To spurn that kind of loyalty is nuts.
The financial penalty for FIFA is also astounding. $90 million is a huge sum, even for a money-maker like FIFA. I went to Dortmund, Germany last summer to watch the semi-final game between Germany and Italy, and continually emptied out my pockets for WC related and operated things. Food, souvenirs, you name it. 5 Euro here, 5 Euro there. And next time, in South Africa, because if this, everything will just be higher. Except this time it's in Rand, not Euro.