The Global Soccer Industry and the Effect of the FI FA Scandal

Ch apte r 8. Mini -Case

The Global Soccer Industry and the Effect of the FI FA Scandal

Don't use plagiarized sources. Get Your Custom Essay on
The Global Soccer Industry and the Effect of the FI FA Scandal
Just from $13/Page
Order Essay

Th e Fédé ration Interna tiona le de Foo tba ll Assoc iation (FIFA) was founde d in Pa ris in 190 4 an d

was initially co mprise d of on ly Eu ropea n na tions . By W orld W ar II, FIFA ha d adde d a few Sou th

America n membe rs. Newly independen t states in Africa , As ia, an d the Caribbea n joine d later.

Howeve r, it con tinue d to be gove rne d “as thoug h it was an exc lus ive Eu ropea n club ”— un til 197 4

whe n Joã o Have lange , a Braz ilian , won the elec tion as FIFA’s pres iden t. Have lang e was ab le to

trans form the organ iza tion an d expan d the W orld Cup co mpetiti on to tea ms from na tion s ou tside

Eu rop e an d Sou th America an d mad e the tou rna men t a major money -mak ing en terprise . W ith

the amoun t of exposu re an d mone y invo lved , co mpan ies des ired sponso rsh ip righ ts becaus e of

the adve rtising po ten tial. Ad ida s AG an d Coca -Cola were origina l sponso rs. Have lang e also

ove rsa w sign ifican t inc rease s in revenu e from telev ision righ ts. In the process , Have lang e was

allege d to hav e pa rticipa ted in muc h co rrup tion an d even tua lly was suspec ted of amass ing $5 0

milli on in bribes .

Have lang e fac ilit ated the elec tion of Sep p Blatter who beca me FIFA pres iden t in 199 8 an d

con tinue d to follow Have lange ’s app roac h to po liti cs . After FIFA beca me a worldwide

organ iza tion , espec ially in deve lop ing coun tries in La tin America , Africa , an d the Caribbean ,

more allega tion s of co rrup tion su rfaced . One ana lys t sugges ted tha t “FIFA cou ld no t hav e

deve lope d socce r in poo rer coun tries withou t co rrup t prac tices .” Of cou rse , the re ha s also bee n

co rrup tion in more deve lope d coun tries , suc h as the United Kingdo m an d the United States ,

althoug h no rmally no t throug h blatan t bribe ry. On May 27 , 2015 , the United States Depa rtmen t of

Jus tice an d the FB I announce d a lon g list of ind ictmen ts, an d simultaneou s arres ts of FIFA

officials were mad e at the Zu rich FIFA mee ting s in Switze rland . Seve ral day s after the ind ictmen t,

thoug h he was no t officially ind icted , Blatter steppe d do wn from his lon g pres idenc y.

In orde r to unde rstan d the amoun t of exposu re an d mone y invo lved , an es timated on e billi on

peop le watche d at leas t so me of the 201 0 W orld Cup Fina l. In the sa me yea r the Nationa l

Foo tba ll League ’s Supe r Bo wl accu mulated on ly 114 .4 milli on worldwide viewers. Give n the

mass ive exposu re, it is no wonde r tha t sponso rs alon g with telev ision an d med ia ou tlets wan t to

be invo lved . Howeve r, sponso rs do no t wan t to be assoc iated with a large scanda l. Coca -Cola,

Ad idas , Nike , McDona ld’s, an d Hyunda i Motor were all sa id to be “deep ly conce rned ” abou t the

FB I allega tions — an d by ind ictmen ts brough t recen tly by the United States Depa rtmen t of Jus tice

aga ins t man y reg iona l an d coun try-leve l FIFA-affili ated execu tive s who were iden tifi ed as hav ing

pa rticipa ted in the allege d co rrup tion . Man y of the sponso rs are cau tiou s abou t suppo rting an organ iza tion tha t ha s bee n tainted

po liti ca lly suc h as FIFA. Appa ren tly, the way the co rrup tion ha s bee n pu rsue d is throug h

intermed iaries who are pa id exo rbitan t amoun ts for con trac ts tha t the y he lpe d to es tab lish ; thes e

intermed iaries funne l the bribe s to the leade rs of the reg iona l an d coun try FIFA- related

assoc iations . Fo r exa mple, in orde r for Nike to ge t a con trac t in the socce r-craze d coun try of

Braz il, it pa id a spo rts marke ting agenc y, Traffic Braz il, $3 0 milli on be twee n 199 6 an d 1999 ,

which Traffic Braz il used , in pa rt, for bribe s an d kick -backs . Th is allowed Nike to sign a 10 -yea r,

$16 0 milli on ag ree men t to beco me a co -sponso r of the CBF, the Braz ilian socce r con fede ration .

Nike ’s strateg ic inten t for the dea l was to be tter co mpe te with its ch ief ove rsea s riva l, Ad idas . In

2014 , the W orld Cup was he ld in Braz il, an d Nike ha d $2 .3 billi on in sa les of socce r produc ts, an

annua l inc reas e of 21 pe rcen t, co mpa red with $2 .29 billi on in sa les for Ad idas , which was up 20

pe rcen t ove r its prev iou s yea r. Thes e figu res illus trate ho w stron g the incen tive s are for sponso rs

as well as for med ia ou tlets to pa rticipa te; the adve rtising po ten tial an d se lling oppo rtun ities are

eno rmou s for thos e invo lved .

Howeve r, becaus e of the wea k ins titutiona l infras truc ture in man y coun tries aroun d the world

whe re the ga me of socce r is played , the re is oppo rtun ity for co rrup tion . Appa ren tly, man y

invo lve d in the FIFA infras truc ture globa lly, reg iona lly, an d within spec ific coun tries hav e take n

advan tag e of this oppo rtun ity. Fo r exa mple, Pa ragua y ha s bee n the headqua rters for the La tin

America n reg iona l con fede ration kno wn as CONM EB OL sinc e 199 8 whe n Nico lás Leoz , a

Pa raguaya n bus iness man an d pres iden t of the La tin America n Con fede ration , nego tiated to

hav e the con fede ration headqua rtered the re. As pa rt of the ag ree men t, he ob taine d

prosecu torial imm un ity for the organ iza tion throug h the Pa ragua y pa rliamen t. In essence , this

gav e the fede ration licens e to ac t in way s tha t wou ld protec t it aga ins t loca l law en force men t

officials, similar to loca l embass ies tha t hav e exe mption from prosecu tion in a pa rticu lar foreign

coun try. As such , this allowed the loca l con fede ration to pu rsu e dea ls unde r the tab le. Leo z was

cha rge d in the FIFA ind ictmen ts by the U.S. Depa rtmen t of Jus tice , alon g with 13 othe r FIFA

officials, of bribe ry an d mone y launde ring sche mes related to fund s he rece ive d from spo rts

marke ting firms du ring his tenu re at CONM EB OL. Interes ting ly, following the ind ictmen t,

Pa raguay ’s cong res s move d qu ick ly to repea l the prosecu torial imm un ity for the CONM EB OL

fede ration .

Like wise , man y othe r lega l an d inves tiga tive organ iza tion s in Switze rland , La tin America , an d

aroun d the world, inc lud ing INTE RPOL, an interna tiona l inves tiga tion organ iza tion , hav e begu n

to initiate the ir own enqu iries . Man y fan s in the socce r world hav e bee n exc ited abou t thes e

ind ictmen ts becaus e the y felt tha t the co rrup tion was hu rting the ga me. Peop le were profiti ng in

illega l way s tha t tainted man y organ iza tion s assoc iated with the ga me of socce r. Th is ou tline s a

main dange r of working in coun tries whe re man y pa rticipa te in co rrup t prac tice s ind irec tly sponso red by the gove rnmen t. Th is is no t to sa y officials in more deve lope d gove rnmen ts are no t

also co rrup t, bu t the rule of law is no t as stron g in man y deve lop ing coun tries .

Sou rces : 2015 , A timeline of the FIFA scanda l, Lo s Ange les Times, ww w.latimes .co m, Jun e 2; P.

Blake , 2015 , FIFA scanda l: W hy the US is po licing a globa l ga me, BB C News, ww .co m,

May 28 ; M. Fu tterman , A. Viswana tha , & C. M. Matthe ws, 2015 , Socce r’s geyse r of cash , W all

Stree t Jou rna l, May 28 , A1 , A10 ; S. Germano , 2015 , Nike is coope rating with inves tiga tors, W all

Stree t Jou rna l, May 28 , A11; P. Ke irnan , R. Je lmaye r, & L. Maga lhaes , 2015 , Socce r bos s

lea rne d rope s from his Braz ilian men tor, W all Stree t Jou rna l, May 30 –31 , A4 ; K. Malic, 2015 , Th e

co rrup tion rhe toric of the FIFA scanda l, New York Times , ww w.ny times .co m, Jun e 16 ; S. S.

Munoz , 2015 , FIFA pro sho ws socce r state within a state, W all Stree t Jou rna l, Jun e 20 –21 , A7 ; S.

Vran ica , T. Mick lel, & J. Rob inson , 2015 , Scanda l pressu res socce r’s sponso rs, W all Stree t

Jou rna l, May 29 , A1 , A8 ; A. Viswana tha , S. Germano , & P. Ko wsmann , 2015 , U.S. probe s Nike

Braz il mone y, W all Stree t Jou rna l, Jun e 13 –14 , B1 , B4 ; M. Yg les ias & J. Strombe rg, 2015 , FIFA’s

hug e co rrup tion an d bribe ry scanda l, exp lained , VOX, ww w.vox .co m, Jun e 3; C. Zillman , 2015 ,

Here’s ho w major FIFA sponso rs are reac ting to the scanda l, Fo rtune , ww w.fortune .co m, May

28 .

Cas e Discuss ion Ques tion s

1. How doe s the FIFA scanda l rep resen t a form of po liti ca l risk for co mpan ies ope rating in foreign

coun tries ?

2. W ha t are the bene fits to co mpan ies suc h as Nike an d Coca -Cola ac ting as sponso rs of socce r

organ iza tion s in foreign coun tries ?

3. W ha t interna tiona l strateg y is be ing use d by the major co mpan ies ho lding thes e sponso rsh ips ?

Pleas e exp lain.

4. Give n the proces s desc ribe d for ga ining sponso rsh ips (e.g., throug h spo rts marke ting

agenc ies ), shou ld Nike an d othe r major co mpan ies rea lize tha t bribe s an d othe r co rrup t

prac tice s were tak ing place ?

5. How ca n co mpan ies hand le co rrup t prac tice s in foreign prac tices ? Can the y find way s to

co mpe te the re withou t engag ing in thes e prac tices ? Pleas e exp lain.


Calculate the price of your paper

Total price:$26
Our features

We've got everything to become your favourite writing service

Order your assignment today!
Ace that class.

Order your paper
Live Chat+1(978) 822-0999EmailWhatsApp