Yesterday, Sepp Blatter, FIFA boss since 1998, announced his intention to resign. Over the last few days, the world governing body of football has seen several high profile officials arrested by Swiss authorities working in collaboration with America’s Department of Justice and Federal Bureau of Investigation. Switzerland’s office of the Attorney General also announced the opening of criminal proceedings into the FIFA 2018 and 2022 World Cup bids. As a result FIFA’s reputation has plummeted and its credibility is currently at an all-time low.
Following the news of Blatter’s resignation, here is an analysis of three factors that eventually made his position untenable.
Sponsors: Not all PR is good PR
Predictably, a lot of the negative spotlight on FIFA has been deflected on its sponsors including global brands like VISA, Coca-Cola and Adidas. Following the events of the last few days, some sponsors, including McDonalds, Budweiser, Adidas, VISA and CocaCola, have released statements which clearly detailed their displeasure with events at FIFA. For these sponsors, getting caught up in a web that includes words such as fraud, bribery and corruption is a worst case scenario. Now faced with the prospect of losing more sponsorship dollars seven months after former top tier FIFA partners, Emirates and SONY, ended their partnerships, FIFA needed to change something definitive.
Also, one of the consequences of the current FIFA crisis is that labour issues in Qatar, previously discussed here, are back on the front burner. Activists and pressure groups have been rallying to make sponsors push FIFA into making changes in its collaboration with Qatar, with some going as far as mockingly redesigning sponsors logos. Again, sponsors, who accounted for $1.6 billion of FIFA’s total revenue from the 2014 World Cup, were hoping for a totally different set of headlines in exchange for their money.
UEFA’s power move: A game of numbers
Shortly after Sepp Blatter was re-elected as President after FIFA’s May 29 elections, UEFA (Europe’s football governing association) hinted that it could pull out of FIFA and stage an alternate World Cup.
More than anything else, the World Cup is FIFA’s ultimate cash cow as it accounted for 85 percent of the body’s revenues between 2011 and 2014. Threatening its success surely caught FIFA’s attention.
How does UEFA threaten the World Cup by pulling out? It is a game of numbers.
TV rights revenue was the most profitable component of FIFA’s revenue pool at the 2014 World Cup with broadcast rights generating $2.6 billion of FIFA’s $4.8 billion revenue. These rights are most valuable in leading European nations with large football friendly audiences who, given their national economies, have more disposable income and are prime targets for advertisers.
At the last World Cup, after the opening rounds, data confirmed that matches involving England, Italy, Germany, Netherlands and France all registered record TV audiences for a single sports event. France registered the least viewers with 7.2 million watching and Germany registered the most with 26.4 million people watching.
Should UEFA ever walk out of FIFA, simply put, it will take these impressive numbers with it. Crucially a World Cup without UEFA and star players from Europe’s leading nations would be less appealing for viewers across the world including in emerging markets like Australia and the United States.
With FIFA’s prime asset and bottom-line significantly threatened, something had to give.
Legal investigations and proceedings
The FIFA debacle all began with arrests on the morning of May 27. With the US Department of Justice and the FBI in possession of solid and damning evidence, they came after FIFA officials. In the days that followed, more evidence proved that the corruption and underhand practices at FIFA were widespread. The 2018 and 2022 World Cup bidding processes were already under question so it was always going to be a matter of time before the head of FIFA, who supervised the process, was mentioned. Ultimately it was one of the post-arrest events that triggered Blatter’s resignation as FIFA faces another crisis: explaining a questionable $10 million payment involving South Africa and CONCACAF.
Blatter survived a number of scandals during his time as FIFA boss, but the current crisis has proved one too many. His FIFA has lost credibility, the up-coming World Cups are the subjects of criminal investigations, key personnel have been arrested for fraud, sponsors are agitated and an the idea of an alternate World Cup floated — all under Blatter’s watch.
Running low on options, Blatter used up his last resort: resignation.
