FIFA World Cup 2022 has kicked off and it’s been a shaky start, with the tournament already being compared to the infamous Fyre Festival. The World Cup is watched by over 5 billion people and should be a sponsor's dream, but this year things are a bit different.
Some have had a rough start. Qatar’s last minute u-turn to ban alcohol sales in stadiums was not exactly what official sponsor Budweiser’s ($BUD) expected from a US$75m contract. Interestingly this restriction won’t apply to luxury hospitality suites during games and Budweiser’s hinted the winning country could enjoy leftover supplies of beer.
It's only the latest in a series of controversies which began back in 2010 when Qatar, a country of 2.9 million with an intensely hot climate and little footballing history, was chosen as the host nation. Investigations have since revealed corruption in the FIFA organisation, further explored in Netflix’s recent FIFA Uncovered.
The Qatar event has also drawn criticism from many human rights groups after reports that over 6,500 migrant workers from South East Asia died during the US$229b infrastructure build. Additionally, human rights abuses relating to LGBT+ individuals and laws with restrictions for women and media freedom clash with the common claim that soccer brings people together.
GlobalData estimates sponsorships could generate US$1.7b for FIFA in 2022, a 16% drop since 2014. This is partially due to a number of brands dropping their sponsorship because of the controversial Qatar placement. Sony pulled out fully, while Danish supplier Hummel unveiled a monochrome kit to demonstrate its lack of support in Qatar.
But many of the world’s most recognisable brands, like Coca-Cola ($KO) and McDonald’s ($MCD), have remained sponsors, albeit supporting the investigation. They argue they’re doing it to be a force for good and to inspire change in the country. It’s a fine line to walk, particularly as younger investors want to invest sustainably and are willing to put their money where their mouth is.
So will the Qatar World Cup bring its fans together in bliss or will the controversy be too great and tarnish the sponsors – and potentially their share prices?