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Soccer Leaders See Copa America From Jail Amid Sponsor Risk

Bloomberg Business , June 09, 2015

By Juan Pablo Spinetto

As Lionel Messi and Neymar bring their talent to Chilean soccer fields in the wake of the FIFA scandal, sponsors of the Copa America risk their brands getting tarnished rather than polished.

Soccer’s oldest national team competition starts in Chile on Thursday under the cloud of the FIFA investigation that resulted in the indictment of 14 people. U.S. prosecutors say they were tied to corruption in the sport, including $110 million in bribes related to television rights to four editions of the tournament. All but two were from Latin America and the Caribbean.

The scandal poses a risk to companies, including Spanish bank Banco Santander SA and MasterCard Inc., who sponsor the tournament, because their brands may be contaminated through their association with FIFA, said Pedro Trengrouse, a professor of sports law at Fundacao Getulio Vargas.

“One way or the other, all this money comes from the companies, so these companies in the end are responsible for injecting money into soccer,” he said by telephone from Rio de Janeiro. “They need to keep watch for their brands not to be associated with these corruption scandals.”

The event probably generates $60 million in sponsorship revenue, including in-kind arrangements, according to Jim Andrews, senior vice president of Chicago-based sponsorship consultant IEG.

Loyal Sponsors

Sponsors of the 2015 Copa America, a competition that for almost a century has staged some of the fiercest soccer battles in the Western Hemisphere, have maintained their backing, with some of them limiting their public statements to say they are monitoring developments.

“We expect any entity we conduct business with operates with the highest ethical practices and standards, without exception,” MasterCard, which is backing Copa America for a 10th consecutive edition, said in an e-mail reply to questions. “We are following this developing situation very closely and we will continue to do so as it evolves.”

Kellogg Co., another Copa America sponsor, said backing the event brings “an opportunity to promote sports” in Latin America while continuing to monitor the situation, echoing comments by Kia Motors Corp., one of three platinum, or top-level, sponsors. Cola-Cola Co., also a sponsor, said in a statement that FIFA needs “to act with urgency” and win back the trust of fans through “concrete actions.” It wasn’t more specific.

Since 1916

Other sponsors, such as Banco Santander and mobile-phone operator Claro — owned by billionaire Carlos Slim’s America Movil SAB — declined to comment. South American soccer’s regional body Conmebol, the organizer of the event, didn’t reply to requests for comment.

The tournament, first held in 1916, comprises 26 games in Chile over the next three weeks and will field some of soccer’s greatest stars, including Barcelona forwards Messi and Neymar, Real Madrid’s James Rodriguez and Arsenal’s Alexis Sanchez. The event comes a year after half the 12 participant teams reached the knockout stages of the World Cup in Brazil, with most games being sold out as fans’ expectations grew.

The tournament draw, held Nov. 24 in the Chilean beach resort of Vina del Mar, showed how the U.S. Department of Justice investigation has hit the heart of South American soccer.

Front Row

Video of the event shows that at least six of the 14 officials and executives facing U.S. indictments on charges of racketeering, wire fraud and money laundering, among other allegations, were sharing the first row with Chilean President Michelle Bachelet that day. Former president of South America’s soccer federation Eugenio Figueredo, 83, was two seats to Bachelet’s left. Next to him was Jeffrey Webb, 50, president of the soccer federation in North and Central America.

Both men — executive committee members at FIFA — remain in custody after being arrested May 27 in Zurich as part of the probe. Uruguay-born Figueredo also is accused of falsely claiming severe dementia to obtain U.S. citizenship in 2006.

Among tributes to the “family of soccer” and promises of holding another “sports party,” the video shows Jose Maria Marin, who led Brazil’s soccer federation during last year’s World Cup and is now also in jail, and Alejandro Burzaco, an Argentine sports-marketing mogul who has been indicted as one of the masterminds behind the tournament’s television bribes. Burzaco turned himself in to Italian authorities Tuesday after Interpol last week issued wanted-person alerts for him and five other soccer executives named in the corruption scandal.

Force for Change

David Carter, a management professor who runs the Sports Business Institute at the USC Marshall School of Business in Los Angeles, said sponsors have a chance to turn the scandal into a force for change.

“If sponsors are seen as key advocates truly demanding reform, then they can be viewed in a positive light,” he said in e-mailed comments. “Fans consider what happened to be a scandal off the field and this provides sponsors cover -– even though it appears to many that FIFA and those entangled in the crisis should have been more proactive in calling for transparency.”

For more, read this QuickTake: World Cup Corruption

Sponsors need to be more careful when deciding to support an event financially, FGV’s Trengrouse said.

“It’s important that we realize the size of the potential damage,” he said. “A transparency shock is needed.”