Fifa headquarters in Zurich, Switzerland. Picture: REUTERS/RUBEN SPRICH
Fifa headquarters in Zurich, Switzerland. Picture: REUTERS/RUBEN SPRICH

London/Moscow — Fifa is struggling to secure new commercial partners in time for next year’s World Cup in Russia, with international and local groups balking at the financial cost and reputational risk of being associated with one of the world’s most-watched sporting events.

World football’s governing body lost several major sponsors, including Sony and Emirates, when their deals ended at the end of the last tournament in 2014. For the 2018 tournament in Russia, Fifa has 10 companies signed up as sponsors, but before the last tournament in Brazil, the organisation had 20 corporate partners on board.

The difficulties come as both Fifa, which is trying to emerge from a corruption scandal, and Russia, a pariah for many in the west since it annexed Crimea in 2014, battle with image problems.

Sponsorship and broadcasting deals help cover the $2bn operational costs of running the event, while the host nation picks up the tab for infrastructure such as building stadiums.

Local companies have been the slowest to come on board. So far, only one Russian sponsor, Alfa-Bank, has signed up as a "national supporter," paying for the lowest tier of backing.

Andrei Malgin, a professor at the Russian International Olympic University, said two years of recession had made Russian companies wary of the costs of sponsorship: "They’re essentially worried that they’ll pay the money and won’t see any marketing benefits."

Russian state-run firms are also conspicuous by their absence after spending often exorbitant sums on the 2014 Sochi Olympics, a pet project for President Vladimir Putin. While Gazprom, Russia’s state-run gas company, became a Fifa partner in 2013, other state-run firms prominent among sponsors of sports such as ice hockey have stayed away so far. A consortium of Russia’s main state-run TV channels has been unable to agree on a price for the rights. "In Sochi, it went like it always does: ‘orders received, off we go.’ They haven’t been given the order," Malgin said.

Fifa said it expects to announce new commercial deals "in the next weeks and months, and before the World Cup".

The organisation’s reputation has suffered over the past two years after becoming the subject of investigations by US and Swiss authorities into alleged criminal misconduct and bribery. This is partly alleged to have occurred under the tenure of its previous president, Sepp Blatter.

The scandal-hit organisation handed Swiss public prosecutors a mass of files from its own internal investigation earlier in April, as part of its efforts to reform and clean up its past.

"No question that in the latter era of the Blatter period, the Fifa brand became toxic," said Michael Payne, a former marketing head at the International Olympic Committee. He recently helped to broker a deal worth at least $600m with Alibaba to sponsor the next six Olympic Games.

"It would take a very brave chief marketing officer to say let’s take Fifa and the World Cup. But … the actual product and sport of football … remains one of the most — if not the most — entertaining sports entertainment platforms in the world."

Earlier in April, China’s Hisense announced that it had become a "top-tier" sponsor for Fifa’s Confederations Cup competition this year and the 2018 World Cup, in a deal worth close to $100m.

But the deal runs for far less time than previous deals that Fifa has struck.

In financial results published last week, Fifa reported a loss of $391m in 2016 before taxes and the result on investments and other financial income, up from a restated $117m loss the previous financial year.

The majority of Fifa’s revenue comes from the sale of television broadcasting rights, particularly related to the World Cup. The body has forecast revenues of $5.65bn in the four years up to the Russia tournament that — if realised — would represent a 5% increase on the previous World Cup cycle.

© The Financial Times 2017

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