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MasterCard blocks Visa’s World Cup sponsorship

Summary

Judge rules that MasterCard wins their eight year bid over Visa to sponsor soccer tournament.

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MasterCard has blocked Visa‘s bid to sponsor the World Cup soccer tournament, which takes place every four years and draws 30 billion viewers worldwide, and retained its own World Cup sponsorship.

On Dec. 6, 2006, a federal judge sided with MasterCard, ruling that the World Cup’s governing body cannot award an eight-year soccer sponsorship to Visa International despite a deal established earlier in 2006.  Instead, the judge said, FIFA must award the funding arrangement to MasterCard, the World Cup’s sponsor for the last 16 years.

FIFA announced plans to appeal.

In granting a permanent injunction filed by MasterCard, U.S. District Court Judge Loretta Preska supported the credit card association’s attempt to block last spring’s sponsorship agreement between Visa and Switzerland-based FIFA.  Legal papers indicate that Visa would pay $180 million for the World Cup sponsorship, which runs through the end of 2014.

The ruling is the most recent development in a fierce battle that began when FIFA unexpectedly chose Visa to sponsor the World Cup events.  Soon after, MasterCard sued FIFA to halt the new deal.  MasterCard’s motion for a preliminary injunction charged that its earlier sponsorship arrangement with FIFA, covering 2002 through 2006, gave MasterCard the right of first refusal regarding a new contract, and that FIFA broke those terms by inking a deal with Visa after previously drafting a new agreement with MasterCard.

FIFA, however, challenged that claim, noting that it had allowed MasterCard a number of chances to seal a fresh sponsorship agreement.  FIFA said that the collapse of discussions for a new deal stemmed from an ongoing unrelated disagreement regarding their logos.

To describe the impact of the sponsorship, the judge made use of MasterCard’s popular advertising campaign, writing, “MasterCard’s loss of the next FIFA World Cup sponsorship would be, in [its] now-famous words, ‘Priceless.'”  She added since MasterCard and FIFA had agreed on all terms of their 2007-2014 deal, with the final version of that agreement sent by FIFA to MasterCard for execution and the duly executed agreement then returned to FIFA, it is “fair and equitable” that FIFA be compelled to specifically execute the agreement with MasterCard.

The ruling marks a major win for MasterCard, which would have lacked any major sports sponsorship if the deal with Visa had been allowed to proceed.  Visa, meanwhile, controls sponsorship rights for the Olympics through 2012.  Additionally, the ruling comes at a time when both Visa and MasterCard are working to increase soccer-loving Latin America’s use of credit cards and debit cards.

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