The World Cup starts in weeks and half the sponsor slots are still empty — the biggest event in sport is in trouble too

FIFA is mired in scandal, and the way advertising reaches people has been turned upside down. After the Olympics, the World Cup is now under the same pressure.

FIFA is in an awkward spot.

With less than a month to go before the Russia World Cup, at least 16 sponsor slots are still unsold.

It can either cut prices sharply and dump what it has left, or leave the slots empty to protect the interests — and the face — of the partners it already has, which piles a heavier burden on an organization that has been losing money for years.

Neither choice looks good.

FIFA sells sponsorships in three tiers:

• Tier one: 6-8 global partners;
• Tier two: 6-8 World Cup sponsors;
• Tier three: 20 regional sponsors.

So far only five tier-two slots have sold, and 15 tier-three slots are still empty. In Asia, the only tier-three regional sponsor is Yadea.

According to the price list that circulates outside the organization, a sponsorship cycle — that is, a World Cup year — costs roughly £100 million, £50 million and £8 million by tier. FIFA is currently about 20% short of its sponsorship target.

For any World Cup in history, that would be unthinkable. Four years ago in Brazil, FIFA hit its target six months before kickoff.

The prediction made by Patrick Nally, the father of modern sports marketing, is coming true: the corruption scandals have tainted the FIFA brand, and a quarter of the target sponsorship money will simply vanish. Nally built FIFA's sponsorship system, and in the 1970s he brought Coca-Cola to the World Cup.

FIFA's 2016 financial report estimated that the Russia World Cup would have to earn $4 billion to end up in surplus. Going by the 2014 Brazil figures, advertising and sponsorship supply 25%-30% of revenue, broadcast rights 60%-65%, and the last 10% comes from tickets and merchandise.

The broadcast rights have been hard to sell this time as well. For a while, Russian television refused FIFA's asking price.

The absurd prospect of the host country's own people being unable to watch never materialized: late last year FIFA reached a deal with Russia's 2SPORT2 consortium. The whole thing was handled quietly, and in the end neither side would even disclose the price.

For comparison, FIFA's asking price a year earlier had been $120 million, which blew up the talks. The Russians turned it down because it was nearly four times what they paid in 2014.

That is a world away from 2011, when the American broadcaster FOX signed a $425 million deal seven years ahead of time, covering both the 2018 and 2022 tournaments. With the US team's unexpected failure to qualify, FOX is now widely mocked as one of this World Cup's biggest losers.

In today's television market, it is no small achievement that broadcast rights — FIFA's lifeline — still fetch prices this high. Asking for more is probably out of the question.

Nine years on, Russia's relations with the rest of the world have changed a great deal

Five months ago we wrote about the problems facing the Russia World Cup: the scandals around FIFA, brands priced far above what they are worth, the weakening of television, the absence of popular teams and of the United States, which spends heavily on advertising — plus a next host, Qatar, that looks even less dependable, which made long-standing partners hesitate over renewing.

None of that has improved in the past six months. What is surprising is that sponsorship sales have not picked up as the date approaches. In fact, with kickoff now as close as it can get, nobody can say how this ends, or whether the regional tier will really go into the tournament largely bare.

There are firm signs that FIFA's plan to sell more sponsorships has missed its target, and that the job will only get harder.

Since 2011, not one American company and not one European company outside Russia has joined the World Cup sponsor list. Every new sponsor has come from the Middle East, China or Russia itself. Germany's Continental, Britain's Castrol and America's Johnson & Johnson all declined to renew. The new tier-one and tier-two sponsors are Qatar Airways, Gazprom, and China's Wanda, vivo, Hisense and Mengniu.

Seen through geopolitics, the Russia World Cup also forces American and European brands to weigh risks that have nothing to do with football. One CEO, who asked not to be named, put it this way: "Even if the World Cup draws a billion viewers, at a nine-figure price and with all these risks, brands don't think FIFA and Russia are trustworthy."

The mood inside Russia today is nothing like it was nine years ago, when the country was bidding.

In 2009, the year before the bid, the Russian stock market was at a record high and relations with the United States were calm. Then came Russia's conduct in the wars in Ukraine and Syria and a steady stream of condemnation from Europe and America; EU economic sanctions run until July 31, 2018. American politics has split over Trump, but supporters and opponents alike — whether or not they believe Russia interfered in the election — have grown more hostile to the country Putin runs.

Oleh Lyashko, leader of Ukraine's Radical Party, recently proposed a law banning broadcasts of the World Cup at home, calling them "propaganda by the aggressor."

Inside Russia the atmosphere is tighter than it was under Medvedev. Dozhd, the country's last independent television channel, disappeared from public view in 2014. Putin has been elected president again, websites and apps have been blocked on a large scale, and protests have barely stopped all year.

At the same time, a human-rights group published a report attacking Russia's ban on "gay propaganda," its abuse of workers, and its crackdown on activists. An Argentine television channel made a satirical ad mocking Russia's treatment of LGBT people.

Dan Wiersema, who works for a sports travel company, says the ban has indeed worried customers: half as many British clients are going to Russia for this World Cup as went to the last one. Russian officials keep insisting that LGBT people will not be targeted during the tournament, but a survey by a football betting site found that almost four in ten respondents worry they will not be free or equal while in Russia.

Thirty-one days before the opening match, Russia refused entry to a German journalist who had exposed the country's doping scandal. Berlin reacted furiously and asked FIFA to intervene, so that "a party for everyone" would not turn out to be an empty phrase.

Search for the Russia World Cup in Chinese and then in English and you get two entirely different climates of opinion. Doping, discrimination and football violence fill English-language headlines; the Chinese-language press is all sunshine. Given that this is the World Cup with the heaviest Chinese involvement since Korea-Japan in 2002, that is easy enough to understand.

As media changes, the value of a World Cup sponsorship draws more doubt

We are not only talking about the eight- or nine-figure fee. To make that money worth anything, a brand has to spend far more on media afterwards — not just pitchside boards and television spots, but mobile, outdoor, roadshows, anywhere you might look.

In 2014, WeChat had only just started running ads in Moments, Weibo's ad business was still crude, and Douyin and Kuaishou, the short-video apps that are booming now, did not exist. The same was true in the United States: Facebook went straight after prime-time television budgets, arguing that viewers spend the commercial breaks scrolling through social media anyway.

All of this is very different from four years ago. Holding a consumer's attention is harder now.

Take the media plan Hisense has disclosed. On top of the advertising rights FIFA grants, Hisense placed its products inside two CCTV shows, 《我爱世界杯》 (I Love the World Cup) and 《豪门盛宴》 (Grand Feast). Outdoors, it booked 268 sites across 13 airports and 17 high-speed rail stations, and 240,000 elevator-lobby frames in 45 cities, plus inflight-magazine pages on Air China, China Eastern, China Southern and Shandong Airlines — a month of saturation coverage across the tournament.

On top of that, Hisense set up more than 50 "Road to Russia" events in China and abroad to show fans its products and its brand.

None of that is under FIFA's control. Put simply: FIFA wants to sell the World Cup for more, while the audience's attention runs out of its hands like sand.

During Euro 2016, a marketing firm called RadiumOne reported that many of the brands people most strongly associate with the tournament were not sponsors at all.

The World Cup is the same. Nike, a master of marketing that plays just inside the line, has no need to be an official sponsor, yet every World Cup year it fights Adidas to a standstill on creative work while neatly stepping around FIFA's rules.

Protecting official sponsors and shutting down every rival's ambush marketing is now close to impossible. Neither the Olympic organizers nor FIFA has found a good answer.

In this changed environment, FIFA's response was to invent a new sponsorship tier and pull in more advertising money.

It had little choice. Corruption among its executives and years of litigation have hollowed the organization out, and the new president spent another large sum keeping his backers happy (on FIFA's financial crisis, see our earlier report). FIFA runs on a four-year cycle; from 2015 to 2017 it lost more than $1 billion, and it is counting on the 2018 World Cup to earn all of it back at once.

The tier where sales are going worst — regional sponsorship — is the new revenue idea for this tournament. In the past this tier was open only to companies from the host country; this year it was opened to five regions worldwide, and the number of slots went from 4 to 20.

On the thing sponsors care about most, visibility at the ground, regional supporters get relatively little: one minute per match on the pitchside LED boards, sharing a combined advertisement with the other supporters from their region.

Honestly, how many Idol Producer trainees can you sign for $10 million? There is no shortage of famous faces at home or abroad. Why crowd in with a pile of logos for a flash on the live feed? Do the arithmetic and the answer is obvious.

The deal is such poor value that even Chinese companies, normally free spenders on marketing, have hesitated. Yadea, which makes electric scooters, is so far the only announced regional sponsor in Asia.

The ones willing to spend are all Chinese, and their reasons differ

"Nobody but a Chinese company would think it unimportant that FIFA is facing a corruption investigation in a New York courtroom." Patrick Nally did not soften it.

But for Chinese companies that know what they want, the World Cup is the top sports property in the world, and the fastest and most effective route to it.

The Chinese companies sponsoring the tournament are mostly mass consumer brands. Ordinary fans, after all, care about the football. "There aren't many properties this big lying around. First we look at what it can give us, not at what's wrong with it," says Zhu Shuqin, brand director at Hisense Group.

Hisense has subsidiaries in 20 markets, and vice president Lin Lan has said repeatedly in speeches that the bulk of the company's future growth will come from abroad. Last year Hisense spent 800 million yuan to buy Toshiba's television business; the World Cup takes it into Russia, a new market for the company. Australia, Japan, South Africa and several countries in Europe and the Americas are its other important markets — in South Africa it holds 23.7% of unit sales and in Australia 19.9%, first place in both.

By February this year Hisense ranked fourth in the world by shipments. Its financial statements show the business is still mostly domestic, with overseas markets its big source of profit growth.

"With sports marketing, too early is useless — nobody sees your product. Too late is no good either, you've missed the window." Lin Lan believes Hisense has its distribution and its products ready. The company was very happy with what its Euro 2016 sponsorship achieved, and that experience helped push it toward the World Cup.

According to CSM data, across the 51 matches of Euro 2016 in France, Hisense's ads were on screen for 415 seconds per match, 21,165 seconds in total. Priced at the going rate for a 15-second spot in the equivalent slots before, during and after a broadcast, that is worth 570 million yuan of advertising. By that arithmetic, Hisense reckons the sponsorship has already paid for itself.

Brand equity in consumer electronics is built up over a long time, which is exactly what Samsung and Sony were doing with the Olympics and the World Cup. "We believe this route has been proven, and our peers' experience is well worth learning from," says Zhu Shuqin.

World Cup sponsorship runs on a one-brand-per-category rule. Hisense got in only because Sony, the former home-appliance giant, dropped out. Zhu Shuqin says FIFA spent more than a month on due diligence before signing Hisense — "at the very least they were comparing us with Sony, asking whether we could fill the gap."

vivo, which also wants a breakthrough overseas, is less upbeat. People close to the company say its efforts to get foreign press coverage went badly: outside trade publications and PR industry sites, hardly any mainstream foreign outlet wrote about its World Cup sponsorship. QDaily asked Hisense and Mengniu the same question; neither had foreign media come to them either.

"Our communication is aimed mainly at the domestic market and domestic consumers. The World Cup has no direct effect on our overseas markets," says someone in Mengniu Group's corporate affairs department. Mengniu currently sells abroad in Mongolia, Singapore, Myanmar and Cambodia — "mostly along the Belt and Road. This time our products can't be sold directly into Russia. It isn't that we don't want to; we made some efforts last year, but there are restrictions."

On December 20 last year Mengniu announced it had become an official sponsor of the 2018 Russia World Cup, the first dairy brand ever to sponsor the tournament. Chinese companies love this kind of line in a press release: the "first dairy sponsor," the "first two-wheeled electric vehicle sponsor" (Yadea remains FIFA's only regional sponsor in Asia). Hisense came late to sponsorship in consumer electronics, but add the word "Chinese" and it too becomes the "first Chinese consumer electronics sponsor."

Mengniu's main World Cup ad, featuring Messi

Within a month of the announcement Mengniu had redesigned its packaging as a FIFA sponsor; in February it signed Messi as its spokesman, reportedly getting the game's biggest star at a relatively good price because of the sponsorship; in March it launched a scan-the-code promotion on World Cup products. Mengniu has sponsored NBA China for more than a decade and has invested in sports marketing for years, fighting hard against Yili, which took the dairy sponsorship for the Beijing Olympics.

"Whether we keep spending long term is a decision for the leadership. Personally I think it will come down to results," says the person from Mengniu's corporate affairs department. "If a company can afford it, the World Cup isn't something it gives up."

Wanda, which holds a tier-one sponsorship, comes closest to the "political sponsorship" that foreign media suspect: a Chinese company spending money to gain influence inside FIFA and help China host a World Cup. Look at what Wang Jianlin has said in public. He divides the sports industry into an A, a B and a C end, with the A end at the top — the international bodies, organizations like FIFA.

"On the surface I'm buying into the sports industry, but the deeper reason is that we want to use sport to build related industries like tourism," Wang Jianlin told a forum in 2016. "If we bring two big international events to China, for instance, only our own travel company has the right to run them and only our own travel site has the right to sell the tickets."

Only with FIFA sponsorship rights does a company get a say. Wanda runs the China Cup, the only FIFA A-level tournament with that name, recognized in FIFA's ranking system. The first edition ended in a rout of the Chinese team, but it shows what Wanda was after, and how far ahead it was looking.

All of that, though, was Wanda's plan before 2017. That year, for a number of reasons, Wanda turned into a completely different company, and probably no longer needs to think that far ahead.

Too few sponsors will eventually change the football itself

Football is still the world's biggest sport, and the World Cup is still its most influential event. It earns slightly less per day than the Olympics, but it lasts more than a third longer. On ratings, compare the 2014 World Cup with the 2016 Rio Olympics: China is no football power, yet CCTV's Olympic ratings still trail the World Cup's.

Even a sports company like Adidas wants to play down the idea that this is about one sport, and to stretch the tournament in a World Cup year to reach consumers who are not football fans.

The strategy dates back to Brazil four years ago. This year, the ad Adidas has put the most media money behind gathers more than 50 of the athletes and celebrities it has under contract worldwide — not only players, but figures from the arts and opinion leaders in fashion.

Adidas made more than a hundred versions of it, so that viewers in each market see faces they recognize. Overseas, Google's technology assembles a custom version automatically from a user's behavior; because Google's technology is limited in China, Adidas cut more than a dozen versions in advance for the Chinese market.

The company's World Cup marketing calendar is built mainly around the TANGO grassroots league, which started in April. "We don't want to fight local Chinese companies for advertising time once the World Cup begins," an Adidas representative said.

Sponsors like Adidas, which have backed the World Cup for decades, are now looking at other sports. And FIFA, under pressure to raise money, is lowering the bar for the companies it takes, which may in turn cost the tournament some of its commercial value.

The nature of World Cup sponsorship is changing: fewer long-term partnerships, more short-term partners with a specific goal.

Whether or not it reaches $4 billion this year, a FIFA that keeps losing more money cannot stop expanding.

And event sponsors are not the only place where the bar is coming down.

The 2026 World Cup has already been approved for expansion, from 32 teams in the finals to 48. More countries qualifying means companies in more countries might consider paying a fee. It also means weaker teams will be there.

FIFA is about to vote on a $25 billion proposal, the first time it has considered selling ownership of its own competitions. Investment funds from the Middle East and Asia are willing to pay $25 billion for an expanded Club World Cup and for a national-team league that is still only a proposal.

What will the World Cup look like in future? FIFA no longer seems to have the room to worry about that.

Cover image: The Japan Times