World Cup 2018: The real reasons western brands distanced themselves from Russia 2018

Paul Fox, chief executive of international gaming company LeTou, who brokered the deal that saw his company become Swansea City's main shirt sponsor for the 2017/18 season, offers his expert analysis on the World Cup sponsorship picture.

World Cup 2018: The real reasons western brands distanced themselves from Russia 2018

China may not be competing on the field at the World Cup, but it has had a great presence at the tournament in Russia due to the large number of sponsorship deals struck by companies from the country.

Soccer fans all over the world will now be visually familiar with the likes of Wanda Group, Hisense and Vivo, with their logos getting air-time during every game.

After TV rights sales, sponsorship accounts for Fifa’s biggest income stream and was worth US$1.6bn for the 2014 World Cup in Brazil. However, the likes of Castrol, Continental, Emirates, Johnson & Johnson, and Sony all decided not to renew their contracts with soccer’s governing body.

So what was the reason behind western brands distancing themselves from the World Cup between one tournament and the next?

As chief executive of an international company that was looking for our first foray into the sports sponsorship market last year, we wanted to associate our brand with a well-respected competition. We chose to sponsor then English Premier League club Swansea City and our credibility as a company increased as a result.

This boost to profile is important for any brand, and few competitions can match the reach and eyeballs that football competitions generate. But for western sponsors, the risks attached with associating with Fifa were too high due to the corruption and bribery scandals that have shamed the sport’s world governing body in recent years.

Castrol is one of a number of sponsors that decided not to renew for this year's World Cup

Since the 2010 vote that awarded the 2018 and 2022 World Cups to Russia and Qatar respectively, 18 of the 22 voting members of the Fifa executive committee have been dismissed because of allegations of corruption.

Despite the dismissal of former president Sepp Blatter in 2016, there are still great concerns around the organisation and the fact that the current World Cup is taking place in Russia was another concern amidst mounting political and economic tensions.

Consumers and brands alike are aware of the problems associated with Russia, from the state-sponsored doping system that saw Russian athletes banned at the Rio 2016 Olympic Games to the incident with former Russian military intelligence officer Sergei Skripal earlier this year.

Russia’s attitude towards players from black, Asian and minority ethnic (BAME) backgrounds and anti-LGBTQ policies would also have been considered by sponsors, but companies have more of an issue with Fifa than just the host nation.

Companies are increasingly aware of how they are viewed in local markets, and many consumers expect brands to take a stand on important issues. Any company that a brand aligns itself with should be one that shares its values, and that has undoubtedly had a big impact on the number of western sponsors.

There is no questioning the global exposure that sponsoring the World Cup can generate but being associated with an organisation that has corruption engrained in its fabric is simply no longer viable. 

Fly Emirates also opted not to get involved with Russia 2018 despite getting exposure during Mario Götze's World Cup-winning goal in 2014

In total, only 20 of the 34 commercial spots were sold ahead of the World Cup and Fifa’s revenue has taken a substantial hit as a result. However, for Chinese companies, being associated with the World Cup simply does not possess the same risks as for western brands.

Whereas prices were too high for many Chinese companies in the past, the reticence by western brands offered an opportunity and the exposure that these brands receive makes it a worthwhile investment. It was reported that businesses in China spent an additional US$835 million on advertising ahead of the World Cup.

The growth of the Chinese Super League and this increased Fifa sponsorship all leads to an anticipated bid by China to host the World Cup in 2030. Chinese President Xi Jinping encouraged companies to sign sponsorship deals with Fifa as he aims to turn China into a footballing superpower over the next 30 years.

The country may not have a rich footballing heritage, but they see associating themselves with the biggest competition in the world as the first step on their journey to becoming recognised around the world.

It remains to be seen if western brands will stay away from the World Cup in the long term, with huge question marks still surrounding the decision to aware the 2022 World Cup to Qatar.

The 2026 World Cup in USA, Mexico and Canada could see western brands willing to delve back into the sponsorship market, but the organisation has a long way to go if they are to regain the trust of these companies.