Blatter resignation could be spur for sponsors to exit FIFA deals, says expert

Out-Law News | 04 Jun 2015 | 5:19 pm | 1 min. read

Businesses that have sponsorship agreements with FIFA might be able to more easily terminate those deals as a result of Sepp Blatter's resignation announcement, an expert has said.

Blatter, FIFA's president, announced on Tuesday that he was resigning his position and would step down when a successor is found. The resignation follows investigations by US and Swiss authorities into alleged corruption involving FIFA and mounting pressure on Blatter in the media as a result of those allegations.

Sports rights specialist James Earl of Pinsent Masons, the law firm behind Out-Law.com, said FIFA sponsors will have been considering their association with the world football governing body as a result of the reports.

He said that whilst many sponsors would be reluctant to withdraw their partnership for global events like the FIFA World Cup, some sponsors that want to exit their contracts with FIFA could be concerned about their ability to do so, as well as the associated costs involved.

However, Earl said that sponsors might be able to point to Blatter's resignation as a basis for terminating those contracts.

"Sponsorship deals of the magnitude which FIFA has in place with its sponsors, will very likely contain provision allowing termination where a party's name, or brand, is damaged by the conduct of the other party," Earl said. "These provisions are, understandably, subjective and can be difficult to enforce - the facts are therefore critical since allegations alone may not be enough."

"In the current circumstances, whilst Sepp Blatter has denied any wrongdoing and says his resignation is unconnected with the present furore, he has nevertheless resigned after presiding over FIFA for over 17 years. This alone may not allow termination of contracts but it has to be seen as a pivotal moment in the situation, and is probably still the current zenith in terms of the fall out from the corruption scandal engulfing FIFA. It may just tip sponsors over the edge, unless FIFA can convince them that fundamental change is on the way, and very soon," he said.