Special Report and Q&A: Governance Expert Calls for Sponsors to Pressure FIFA

By iSportconnect | November 5, 2014

By Christian Radnedge

A leading governance expert has called for more action from sponsors in sport to demand a higher level of ethics and transparency in leading sporting organisations.

Michael Hershman, president of Transparency International and now a board member of the International Centre for Sport Security, spoke to iSportconnect in the same week Emirates announced it had ended its $200 million relationship with FIFA.

The airline had said three years ago that the company was restructuring its sponsorships, which also include Arsenal, Real Madrid, Paris Saint-Germain and Hamburg.

But many suggest the announcement was hastened by the number of scandals surrounding world football’s governing body.

Last year, Emirates was quite vocal in expressing concern about the allegations of corruption in the successful Russian and Qatari bids to host the 2018 and 2022 World Cups.

FIFA confirmed that Emirates had decided not to renew their contract which expires next month, and that talks are ongoing with electronic giants Sony about extending their deal.

In June, Sony said the corruption claims should ‘be investigated appropriately’ and called for FIFA to observe ‘its principles of integrity, ethics and fair play’.

The organisation, run by president Sepp Blatter, earned more than £230 million from sponsors and other marketing partners last year.

But Hershman, a former member of FIFA’s independent governance committee, urged the sponsors to stand up for good governance in a Q&A with iSportconnect:

Are you frustrated that there hasn’t been much coming from the sponsors in terms of their perspective on a number of very serious allegations?

I’m very frustrated by what I see as a lack of involvement on the part of sponsors in trying to help create a better environment for governance and compliance in the sporting business.

Coca Cola were hesitant to say much about the Garcia report at the recent Leaders Sport Summit – but surely any negative publicity for FIFA tarnishes their brand as well?

It does and I understand this protecting the brand concept. But sponsors have been much more aggressive when it comes to dealing with individual athletes who have crossed the line, who have made mistakes in withdrawing support from them, in criticising them, in saying they demand a higher standard from them.

But at the same time they have not said that about the sporting organisations and I frankly think that it has a lot to do with the fact that they have to negotiate sizeable contracts with these organisations and are afraid to be too critical because it might adversely impact their negotiating positions with the organisations. 

That’s a fair point; sponsors have been very vocal in the past in the cases of Lance Armstrong, or even Luis Suarez…

Or Tiger Woods, I mean there’s a hundred examples we can name where they withdraw almost immediately their sponsorship for these athletes at any hint of wrongdoing yet major scandals occur in the major sporting organisations and the most you can get out of the sponsors is a standard comment such as “we expect a high degree of integrity from our partners”.

Is there anything that can be done from a government’s perspective to try and improve the situation?

I think a government can play a very important role directly in helping encourage good compliance and governance by the sporting organisations because it’s not infrequent when governments provide resources or legislative relief, financial resources or some other benefits to these sporting organisations.

So governments should take a closer look since they’re paying tax-payers dollars to the management and governors of these organisations. I think governments have less of a role, or less leverage, with the sponsors.

The real leverage with the sponsors is with the stakeholders. Many of the sponsors will have institutional investors, I’m talking about sponsors that in particular are public companies as many of the sponsors are such as Coca Cola, Nike or whatever.

We’re going to have to make the NGO [non-governmental organisation] community and the media and the others that are urging better governance and better compliance are now going to have to turn their attention to the stakeholders for the sponsors in order to get pressure put on the corporate organisation to begin to take a more visible role in insisting better governance among the sporting organisations.

A difficult thing for many people is trying to understand who someone like FIFA is answerable to?

No-one! Theoretically they’re answerable to their stakeholders, which means the member nations and the federations. But frankly the power is so centralised in FIFA that it’s very difficult to organise enough stakeholders amongst the federations and confederations to have an impact on FIFA.

So if that could come from outside; we’re seeing some movement from the Swiss government to improve the oversight laws not only for FIFA but for other sporting organisations – more than 50 of them are headquartered in Switzerland.

This is a step in the right direction and frankly I urge other governments that have sporting organisations headquartered in their jurisdictions to do the same thing, to look at the rules laws and regulations and see if they can’t put pressure on the domestic sporting organisations for improvement.

At the same time, the real pressure point for FIFA is indeed the sponsors. FIFA is a business and the vast majority of the income they receive are from television rights and sponsors.

The broadcasting companies are stakeholders, the sponsors are stakeholders and we’ve got to somehow reach them and make them understand that it’s in their best interests for organisations like FIFA to be run with high standards of ethics and values.

A problem we’ve faced before in the UK is when FIFA issues have been brought up and discussed in the Houses of Parliament, they’ve arguably been told it is none of their business.

The UK has a government that provides support to sporting organisations – that’s tax-payer money and MP’s are responsible for making sure that tax-payer money goes for good purposes.

We’ve heard time and time again from FIFA that sport and politics do not mix – but that’s a view Thomas Bach has turned around on and said that you can’t get away from it in this day and age?

FIFA would say the same thing not only about politics and government but about anything else that threatens their autonomy.

But autonomy is fine and I think sporting organisations should have a high degree of autonomy, but they have failed at self-regulation.

So we’ve got to make an exception, a narrow exception, in this area of compliance and governance and we have to take away a little bit of that autonomy to ensure the public and the stakeholders that these organisations are operating with a high set of standards and values.

If I could just go back to the Garcia report – as of yet we don’t know what’s in it. One thing that’s been talked about is there may not have been significant wrongdoing but that certain loopholes were used by many bids – and that comes down to the bid process itself doesn’t it?

It does. I don’t know whether the findings will be serious enough to warrant major sanctions including up to the rebidding of any of the World Cup decisions – I don’t know yet. But whatever happens has to be taken in context with the rules and culture and customs of the time the bidding process took place.

The bidding process was without appropriate safeguards. In FIFA’s case, there were not appropriate checks and balances and so the system of bidding could be influenced improperly.

But that’s the way it had been done for years, so the giving of gifts and favours the wining and dining and vetting of FIFA exco members and other federation executives; this was a standard routine that was generally acceptable.

Of course when you start with small gifts and travel and hotels; that always leads to more grand corruption.

Now we find ourselves in a position where you are going to have this report.

It will not be a surprise to anyone if the courts find that exco members and people who had influence in the bidding process accepted gifts and money.

This is not going to be a shock or surprise to anyone. But from a host country’s perspective they would be quite right to take the view “we didn’t do anything that hadn’t been done in the past and the rules were such when we did it that it wasn’t really considered any problems”.

That’s of course why the rules have been changed.