Bloomberg News

FIFA’s Sponsorship Change Emulates Manchester United Model

October 29, 2013

FIFA will for the first time offer regional sponsorship packages for the soccer World Cup, sport’s most-watched event, emulating a model successfully implemented by England’s Manchester United.

The overhaul will lift income from third-tier sponsors by as much as 30 percent, FIFA marketing director Thierry Weil said in a telephone interview. Weil was speaking from Kazan, Russia, where FIFA officials including Secretary General Jerome Valcke are meeting the organizing committee for the 2018 tournament.

The World Cup accounts for the majority of the Zurich-based ruling body’s annual revenue of $1.2 billion, about a quarter of which comes from commercial affiliates. FIFA’s partnership agreements are broken down into three categories, with six companies including Coca Cola Co. (KO:US) and Hyundai Motor Co. given top billing as global partners. The highest tier contributes 50 percent of sponsorship revenue.

The second level generates 35 percent and is made up of eight international World Cup sponsors including Anheuser-Busch InBev NV (ABI), the world’s biggest brewer.

The remaining 15 percent currently comes from six national supporters or host-nation companies. This third tier will be revised following next year’s World Cup in Brazil with national sponsors being replaced by 20 “regional supporters,” split into five territories: North America, South America, Europe, Middle East & Africa and Asia.

United Model

FIFA’s new model is similar to that of Manchester United, one of sport’s most valuable brands. The Premier League champion’s visibility has allowed it to assemble a roster of more than 30 global corporate partners ranging from Chicago-based insurer Aon to Malaysian brand Mister Potato.

Since 2008 the club has also signed agreements with regional partners, which are given exclusive rights to promote their companies alongside United within specific geographic areas, though they have little or no visibility in Manchester or on the team’s website.

“It’s a smart move by FIFA,” said Tim Crow, chief executive officer of Synergy, a London-based sponsorship agency. “Manchester United has shown that there’s plenty of demand for this model from big regional players and I’d expect FIFA to be similarly successful.”

Crow added that the shakeup gives the World Cup organizer a commercial advantage over the International Olympic Committee.

“It strongly differentiates the FIFA offer from its biggest competitor, the IOC, which offers either global or local with nothing in between.”

Multiple Brands

The regional division means the third sponsorship tier could accommodate companies from the same industry, though with no geographical conflict, Weil said.

“For example you could have four insurance companies in different regions,” he said. “You’re multiplying the number of brands, but at the same time you’re taking a little bit away from that famous exclusivity.”

Weil, who spent over 25 years working for current top-tier partner Adidas AG (ADS) before joining FIFA in 2007, said the new commercial model suits smaller companies seeking wider exposure.

“They don’t want to be a national sponsor because its limiting them, but they are not big enough, or they are not financially strong enough, to become a worldwide sponsor,” Weil said. “More and more often, companies want the opportunity to be seen in the region. Over the last two World Cups the demand has become bigger and bigger.”

Weil said the product categories may vary from one territory to another. Once a product category is taken up in any of the three sponsorship tiers, it then becomes blocked to the other tiers, he said.

In May, Grupo SBF’s Centauro unit, Latin America’s largest sporting goods retailer, became the final commercial partner for the Brazil tournament. Centauro said it will spend more than $50 million on marketing as a World Cup national supporter.

To contact the reporter on this story: Ben Priechenfried in London at bprie@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net


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