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Emirates Airlines Wanted More For Its World Cup Dollars

Bloomberg Business Week, December 03, 2014

By Ira Boudway

When Emirates Airlines decided not to renew its marketing deal with FIFA last month, the move was seen as the first sign of skittishness among World Cup sponsors over allegations of corruption at soccer’s international governing body. The theory gained momentum when Reuters reported that Sony (SNE) is also withdrawing its support. Have sponsors really had enough of FIFA’s reputation as a bribe collector at the gate of world football? And while FIFA Secretary General Jerome Valcke insisted that this interpretation is wrong, well, FIFA’s trustworthiness has been the problem to begin with.

An Emirates executive has offered a more complicated explanation for the airline’s decision: “I’m not sure that the bang for your buck is that good, to be blunt,” Gary Chapman, Emirates president of group services, said of the airline’s FIFA deal at a business breakfast in Australia last week. Chapman, whose comments were reported by the website Arabian Business, put concerns about return on investment ahead of queasiness with FIFA. He continued:

“You don’t go on the shirt of anyone, so you don’t get that recognition. If you ask people to recall who are the sponsors of these events, you’d be surprised actually how many people can’t actually recall them.

“I think a big part of it is the bang for your buck, there’s a question [there], but you put that with all the other stuff that’s been going on [and] it just kind of gets messy. It’s a lot of money and [FIFA] is an organization that has some questions over it, there’s no doubt, so perhaps there are better ways you can spend that money.”

What Emirates wants out of these arrangements, in other words, is more association with the World Cup and less with FIFA. And if it could splash its name on the shirts of the top national teams, it would probably get over any qualms it has with the bidding process behind Russia 2018 and Qatar 2022.

In Brazil this summer, the airline had to make do with ticket giveaways, stadium signage, a TV spot featuring Pele and Cristiano Ronaldo, and flight attendants as a backdrop to the trophy presentation. Before the World Cup began, Roger Duthie, the airline’s head of global sponsorship, described the company’s calculus this way to sports marketing research agency Repucom:

“In terms of measuring a return on investment, we conduct regular media evaluation on our sponsorship assets. This looks at a number of factors but mostly focuses on the value of television exposure. We would normally expect somewhere in the region of a 6-1 return on our sponsorships—that is, $6 worth of TV exposure for every $1 invested. Print coverage adds many more millions of dollars in coverage, but it’s harder to track globally.”

Six-to-one is an aggressive target. For the 2010 World Cup in South Africa, sponsors paid FIFA a combined $1.072 billion to secure marketing rights, a figure that doesn’t include advertising buys and additional costs that come with touting official sponsor status. According to Repucom, the total exposure value for TV sponsors in 2010 was $4.12 billion.

In 2014, World Cup sponsors spent a combined $1.5 billion on FIFA rights. Of that, Emirates spent about $100 million, according to marketing consultant Brand Finance, to be one of six top-tier partners, along with Sony, Adidas, Coca-Cola (KO), Hyundai/Kia Motors, and Visa (V). The last four have renewed their deals. Qatar Airways is said to be in talks to fill the slot vacated by Emirates. FIFA won’t be starving for sponsor dollars.

A glut of sponsors is part of Emirates’ problem with the FIFA deal. The big spenders in apparel, soft drinks, and finance tend to crowd out relatively small players such as an airline. “Part of the calculus is that the other partners like Adidas, Coca-Cola, and Visa are putting so much marketing muscle behind this that they are going to grab so much share of voice around the World Cup,” says Jim Andrews, vice president for content strategy at sponsorship consultant IEG. Emirates remains a major player in European soccer, where its shirt deals with top clubs in the English, Spanish, French, Italian, German, and Greek leagues provide prime placement in a less-crowded space.

The basic equation for FIFA’s sponsors remains the same: Calculate the benefit of grabbing billions of eyeballs during the world’s biggest sporting event and subtract a small amount for the steady stream of scandal before and after the tournament. “All of these issues of corruption that are surrounding FIFA,” says Andrews, “can help move a company that is already considering leaving into the we-are-definitely-leaving category.”