Why Moving the 2022 World Cup to the U.S. Would be Great for Sponsors, Bad for FIFA

As some of the world's biggest companies look ahead to 2022's tournament in Qatar, they see big problems for their brands.

Jul 21, 2014 at 12:24PM

When the referee blew the final whistle in Germany's 1-0 World Cup final win, the athletic competition wasn't the only thing that ended. The curtain also fell on an advertising bonanza that included commercial airtime, jersey insignias, and sideline banners for some of the largest companies in the world. Fortunately for advertising executives, the opportunity wasn't once-in-a-lifetime. There will be further exposure to be had in 2018 and 2022. But can those events be expected to be anything like Brazil's show?

What have we signed up for?

When major companies like Coca-Cola (NYSE:KO), Sony (NYSE:SNE), and Visa (NYSE:V) signed big deals to sponsor the World Cup, it probably seemed like a no-brainer. After all, soccer is the world's favorite sport, and the World Cup is its premiere event. At least 1 billion people watched some part of the championship match in 2010, not to mention the earlier rounds, which include the national teams of 32 different countries. This year's version was similarly successful. For soccer-focused companies like the German athletic apparel giant Adidas (NASDAQOTH:ADDYY), the advantages are even more obvious. Adidas has been one of FIFA's partners since 1970, making it one of the longest-running sponsors of the World Cup.

But the World Cup and its organizing body, FIFA, are not without their share of controversies. The awarding of the 2022 World Cup to Qatar has subsequently been tainted by allegations of bribery, as well as Qatar's reckless drive to prepare new stadiums at the cost of working conditions. Qatar's construction relies heavily on foreign workers from places like Nepal and India, and treatment of these workers has fallen under international scrutiny. Hundreds have died already, and estimates for the final tally go as high as 4,000 workers.

The sponsors strike back

World Cup sponsors were quick to realize the negative reflection on their own brands. Adidas joined fellow sponsors Sony, Visa, and Coca-Cola in calling for an investigation into the bribery allegations. FIFA is reportedly considering taking the World Cup away from Qatar. Rumors of new locations, including a possible United States-Canada joint World Cup, have already begun to swirl, though real news has been rare in the week following this year's final. A relocation of the cup would be good for the World Cup sponsors for a number of reasons.

First and most importantly, Sony, Visa, and the gang would avoid being further associated with what promises to be a deadly and disastrous run-up to a 2022 Qatar cup. It's worth noting that the 2018 World Cup, which will be hosted by Russia, has also come under scrutiny for possible bribery. That tournament, however, has not caught as much flak. Without the obvious human rights violations, bribery alone does not seem to capture the imaginations of observers – and sponsors have shown much less willingness to speak up about Russia's bid. Besides, 2018 is only four years away, and preparations are much closer to completion in Russia than they are in Qatar.

The home front for American companies

The ramifications of a possible relocation will hit close to home, too. The publicity gains for some sponsors and broadcasters in the United States would be significant. Even if the United States does not end up hosting a relocated cup, any spot besides Qatar would likely mean that the World Cup remains a summer event. Qatar has been lobbying to move the tournament to the winter in order to avoid the unbearable heat the country experiences in the summer months.

American broadcaster Fox (NASDAQ:FOX), which won the rights to broadcast the tournament, is none too pleased with the idea – a winter World Cup would conflict with the NFL season and depress ratings. Fox would benefit even more, of course, if the cup were moved to the United States. Games would be played in prime time instead of in the middle of the night, and the event would be impossible to ignore as major cities across the country played host to thousands upon thousands of excited tourists – all, of course, tuning in.

When FIFA does make a final decision about the 2022 World Cup, it won't just be fans that are interested in the outcome. FIFA's sponsors, national broadcasters, and other business interests are also at play. Interestingly, the decision that would be most embarrassing for FIFA – admitting corruption and turning the tournament over to a new host nation – may be precisely the outcome that's most beneficial to many of its sponsors.

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Stephen Lovely has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Visa. The Motley Fool owns shares of Visa and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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