06 JUL


2018 FIFA World Cup , Highlighted , Macro , Asset Class

FIFA: the temptation of the East

The FIFA1 World Cup is not only one of the world’s largest sporting events, it is also one of the world’s largest marketing opportunities. Looking back at three decades of sponsorship we see a shift from West to East, with FIFA struggling to keep Western firms, who are concerned with their corporate image, onside. Only one Western company has played the long game: Coca-Cola.

Today, FIFA divides sponsors into three groups: partners, sponsors and regional supporters. Among the top tier, we find long-term loyal partners such as Coca-Cola, which has co-sponsored every World Cup since 1978 and has been a FIFA partner since 1974. The only other Western companies which still partner with or sponsor the World Cup are Adidas and Visa.

The roster of sponsors and partners is increasingly filled with companies from the East, with Hyundai-Kia Motors, Emirates and Sony now firmly established. They are joined this year by Russian state oil company Gazprom, the Middle-East’s Qatar Airways and Chinese multinational Wanda Group.

To a large extent, the shift in sponsors can be related to two major trends that have shaped the world economy: globalization and the taking-off of emerging countries. Indeed, from slightly less than 40% in 1982, world trade steadily increased to 60% of world GDP by the eve of the global financial crisis. In the meantime, emerging countries’ share of world GDP rose from 36% in 1982 to nearly 60% in 2018 (in purchasing power parity terms).

Along with the emergence of new economic powers, the last 30 years or so have also seen a tentative rebalancing of global political forces, and it should not come as a surprise that the current and next FIFA World Cups will take place in energy-exporting countries with strong geopolitical aspirations.

While, macroeconomics have played a part in the sponsorship evolution, FIFA’s corporate image is also a factor. In 2015, some Western brands such as Castrol, Continental and Johnson & Johnson, decided not to renew their sponsorship after reports of corruption at the top of FIFA. Chinese firms Mengniu (dairy), Vivo (technology) or Hisense (electronics) have taken their place. Although China’s national team did not qualify for the 2018 Russia World Cup, its businesses are certainly not going to stand on the sidelines.

Asia has long been present on FIFA’s commercial stage – think Hyundai, Sony, Fujifilm or Toshiba – yet the emergence of Chinese companies at pitchside is a new phenomenon. In recent years, football’s importance has been growing in China, with Chinese investors buying up renowned European clubs and players. President Xi Jinping has even proclaimed that by 2050 China should host and win the World Cup.

While his ambition seems far-fetched today, the changing dynamics of the world should give the Chinese genuine hope. The evolution of World Cup sponsorship shows how much can change. In the 1980s, for instance, Japanese companies such as Canon, Fujifilm, JVC, and Seiko were mainstays among FIFA sponsors. For mainly economic reasons, these names have long since withdrawn from World Cup sponsorship. In their place are companies from faster-growing parts of Asia, which are thriving on the emergence of middle classes in their home countries and are now exporting their goods across the world.

The global economy, driven by technology, is changing so rapidly there is no way of knowing whether these companies will remain sponsors in 2022 or 2026. Will Alibaba or China Telecom become a major sponsor, or could African and South American companies start to join FIFA’s ranks?

Like the World Cup itself, the winners will be those who prepare the best, innovate, invest wisely and, also, enjoy a slice of luck!

[1] FIFA : Fédération Internationale de Football Association.