FIFA’s Leadership Suspension: Should Adidas Cut Ties?

In the wake of the provisional suspension of FIFA’s top leaders, insiders have mixed opinions about whether it’s time for Adidas to give up its sponsorship.

FIFA’s Independent Ethics Committee handed down 90-day provisional bans on Thursday to FIFA President Joseph Blatter, VP Michel Platini and Secretary General Jérôme Valcke. In addition, former FIFA VP Chung Mong-joon has been banned for six years and fined 100,000 Swiss francs (or $103,000 at current exchange).

Amid the rampant allegations of corruption in soccer’s governing body, FIFA sponsors Sony, Castrol and others have already discontinued their partnerships. Sponsors Coca-Cola, Visa and McDonald’s upped the pressure in July, submitting written requests to FIFA asking for information about how it was cleaning up its governance of the sport.

“Many of the FIFA sponsors have chosen to distance themselves from Blatter by calling for his resignation,” Matt Powell, sports-industry analyst with The NPD Group, told Footwear News. “But as the FIFA situation continues to deteriorate, Adidas may have to join the other sponsors.”

Adidas was actually the first major sponsor to speak out when news broke, in May, that nine FIFA officials were arrested on corruption charges. The company said it would continue to support the sport of soccer, along with its players, but expected transparency and honesty from its partners. Then, in June, Adidas lauded Blatter’s announcement of his resignation — a statement Blatter reportedly reversed later.

B. Riley & Co. analyst Jeff Van Sinderen said that while the highly publicized saga doesn’t bode well in the near-term for soccer, Adidas or FIFA, the athletic brand could see “advantages” once the global sports industry is “cleaned up.”

“Adidas has strong technical performance product for soccer and other sports. When the dust settles, [I] would think they will rise above the scandal,” Van Sinderen said. “I suspect that the FIFA scandal will be sorted out, the World Cup will go on and Adidas will remain a key sponsor of everything associated with the sport of soccer throughout the world.”

The relationship between FIFA and Adidas dates back to 1970. Since then, the Herzogenaurach, Germany-based athletic company has been supplying the official match ball for all FIFA World Cup matches.

Adidas’ sales in the soccer category declined year-on-year in both the second quarter and first half of 2015, due mainly to tough World Cup comparisons — an indication of the significant revenue boost the brand receives during the tournament, played every four years.

“There appears to be an ongoing investigation and one would hope that the individuals suspended are cleared, but either way, FIFA and major sports governing entities of the world need to be led by individuals with integrity. One would hope that things are moving in that direction,” Van Sinderen said.

Issa Hayatou, the longest-serving VP on FIFA’s Executive Committee, will serve as acting president of FIFA in the interim.

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