maalbastaki The Global Soccer Industry and the Effect of the FIFA Scandal The… The Global Soccer Industry and the Effect of the FIFA Scandal
The Federation Internationale de Football Association Department of Justice and the FBI announced a long (FIFA) was founded in Paris in 1904 and was initially list of indictments. and simultaneous arrests of FIFA comprised of only European nations. By World War II, officials were made at the Zurich FIEA meetings in FIFA had added a few South American members. Switzerland. Several days after the indictment, though Newly independent states in Africa. Asia, and the he was not officially indicted, Blatter stepped down Caribbean joined later. However, it continued to be from his long presidency. governed “as though it was an exclusive European In order to understand the amount of exposure and club” – until 1974 when Joao Havelange, a Brazilian, money involved, an estimated one billion people watched won the election as. FIFA’s president. Havelange was at least some of the 2010 World Cup Final. In the same able to transform the organization and expand the year the National Football League’s Super Bowl accumu. World Cup competition to teams from nations outside lated only 114.4 million worldwide viewers. Given the Europe and South America and made the tournament massive exposure, it is no wonder that sponsors along a major money-making enterprise. With the amount with television and media outlets want to be involved. of exposure and money involved, companies desired However, sponsors do not want to be associated with a sponsorship rights because of the advertising poten- large scandal. Coca-Cola, Adidas, Nike, McDonalds, and tial. Adidas AG and Coca-Cola were original sponsors. Hyundai Motor were all said to be “deeply concerned” Havelange also oversaw significant increases in reve- about the ( mathrm{FBI} ) allegations-and by indictments brought nue from television rights. In the process, Havelange recently by the United States Department of Justice was alleged to have participated in much corruption against many regional and country-level FIFA-affiliated and eventually was suspected of amassing ( $ 50 ) million executives who were identified as having participated in in bribes. the alleged corruption. Havelange facilitated the election of Sepp Blatter Many of the sponsors are cautious about supportwho became FIFA president in 1998 and contin- ing an organization that has been tainted politically ued to follow Havelange’s approach to politics. After such as. FIFA. Apparently, the way the corruption has FEA became a worldwide organiration, especially in been pursued is through intermediaries who are paid developing countries in Latin America, Africa, and exorbitant amounts for contracts that they helped the Canbbean, more allegations of corruption sur- to establishi these intermediaries funnel the bribes to faced. One analyst suggested that “HIFA conld not have the leaders of the rcgional and country FIFA-related developed soccer in poorer countries without corrupt associations For example, in order for Nike to get a practices. Of courke, there has also been corruption in contract in the sococt-crazed country of braril, it paid more developed countries, such as the United Kingdom a sports marketing agency. Traffic Bratil, 530 million and the Uniled States, alihough normally not through between 1996 and 1999, which Traftic Fraxil used. in blatant bribery. On May 27, 2015, the United States part, for bribes and kick-backs. This allowed Nike to
sign a 10 -year, ( $ 160 ) million agreement to become a 13 other FIFA officials, of bribery and money launder co-sponsor of the CBF, the Brazilian soccer confederation. ing schemes related to funds he received from sport Nike’s strategic intent for the deal was to better com- marketing firms during his tenure at CONMEBOI pete with its chief overseas rival, Adidas.
In 2014, the Interestingly, following the indictment, Paraguay’s con World Cup was held in Brazil, and Nike had ( $ 2,3 ) billion gress moved quickly to repeal the prosecutorial immu in sales of soccer products, an annual increase of nity for the CONMEBOL. federation. 21 percent, compared with ( $ 2,29 ) billion in sales for Likewise, many other legal and investigative organi Adidas, which was up 20 percent over its previous year. zations in Switzerland, Latin America, and around the These figures illustrate how strong the incentives are world, including INTERPOL, an international investifor sponsors as well as for media outlets to participate; gation organization, have begun to initiate their own the advertising potential and selling opportunities are enquiries. Many fans in the soccer world have been enormous for those involved. However. because of the wed about these indictments because they felt that the However, because of the weak institutional infra- corruption was hurting the game. People were profiting structure in many countries around the world where in illegal ways that tainted many organizations associated the game of soccer is played, there is opportunity for with the game of soccer. This outlines a main danger of corruption. Apparently, many involved in the FIFA working in countries where many participate in corrupt infrastructure globally, regionally, and within specific practices indirectly sponsored by the government. This countries have taken advantage of this opportunity. is not to say officials in more developed governments are For example, Paraguay has been the headquarters for not also corrupt, but the rule of law is not as strong in the Latin American regional confederation known many developing countries. as CONMEBOL since 1998 when Nicolas Leoz, a Sources: 2015, A timeline of the FIEA scandal, Los Argeles Time, www Paraguayan businessman and president of the Latin Latimescom, June 2; P. Blake, 2015, FIFA scandal Why the US is policing American Confederation, negotiated to have the con- a global game, BBC Nens, www.bbccom, May 28; M. Futterman, federation headquartered there. As part of the agree. A. Viswanatha, & C. M. Matthews, 2015, Socceri geyser of cash, Wall Stred ment, he obtained prosecutorial immunity for the orga- lournat, May 28, A1, A10; S. Germano, 2015, Nike is cooperating with nization through the Paraguay parliament. In essence, investigators, Wall Strect lournal, May 28, A1i; ( mathrm{P} ) Keirnan, R. Jelmayer. this gave the federation license to act in ways thce, & L Magalhaes, 2015, Soccer boss learned ropes from his Brazilian menwould protect it against wact in ways that thetoric of the FIFA scandal, New York Tomes, www,nttimes,com, lune 16s similar to local embassist officials, S. S. Munoz, 2015, FIFA pro shows soccer state within a state, Wall Strect prosecution that have exemption from Journal, June 20-21, A7: S. Vranica, T. Micdel, & 1, Robinson, 2015, prosecution in a particular foreign country. As such, Scandal pressures soccer’s sponsors, Wall Street Jourmal, May 29, Al, A8; this allowed the local confederation to pursue deals A. Viswantha, S. Germano & P. Kowsmann, 2015, US, probes Nike Brazil under the table. Leoz was charged in the FIFA indict- money, Wall Stret Journal, lune 13-14, B1, B4: M. Yglesias & 1. Stromberg. ments by the U.S. Department of Justice, along with vox.com, June 3; C Zillman, 2015, Herres how major FIFA sponsors are reacting to the scandil, Fortume, www fortune com, May 28 .
The Questions:
Image transcription textThe questions: 1 How does the ?fa scandle reoresent a form of political risk for companies operating inforeign countries? 2 What are the bene?ts to companies such as nike and coca cola acting as sponsors ofsoccer organizations in foreign countries? 3 What international strategy is being used by the majo… Show more… Show more BusinessBusiness – Other
