Time for the World Cup!
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With the London Olympic Games now behind us, I am already starting to look ahead to the next major worldwide sports competition. That next event would be the 2014 FIFA World Cup hosted by Brazil. The World Cup will begin on June 12, 2014. While the start of the World Cup is nearly two full years away, ticket will likely go on sale in a few months. Never too early to start your World Cup plans, as well as consider some of the stock market implications.
The FIFA World Cup is one of the best international marketing platforms for its sponsors (arguably more important the Olympics). The World Cup and its sponsors are able to reach billions of people every four years. The 2010 World Cup finals in South Africa was estimated to have been viewed by half of the entire world’s population. This is a huge marketing opportunity for World Cup sponsors.
FIFA has three levels for its marketing partner activities: FIFA Partners (highest-tier), FIFA World Cup Sponsors and National Supporters. FIFA Partners own the rights to the broadest range of FIFA activities; competitions, special events and development programs. FIFA Partners are for companies that not only want to sponsor the World Cup, but also sponsor the Women’s World Cup, FIFA Confederations Cup and other various FIFA tournaments. FIFA World Cup Sponsors rights are limited specifically to the World Cup itself. Lastly, National Supporters are local companies that are given the rights to promote their company within the World Cup host country.
For the purposes of this article, I will be focusing on the FIFA Partners and the FIFA World Cup Sponsors (those publicly-traded on the major US stock exchanges). So who are these sponsors?
1. Johnson & Johnson (NYSE: JNJ) is one of the newcomers to the FIFA World Cup Sponsors. Johnson & Johnson was formally a top-tier sponsor of the Olympics until they decided not to renew their contract in 2008. Johnson & Johnson instead decided to put their marketing dollars behind the 2014 World Cup. Their sponsorship makes Johnson & Johnson the exclusive and official healthcare sponsor. Johnson & Johnson will use this platform to advertise their vision, oral, sun, skin and wound care products during the World Cup.
2. McDonald’s Corporation (NYSE: MCD) continues its longstanding relationship with the World Cup. McDonald’s is another FIFA World Cup Sponsor and the exclusive retail food service operator of the 2014 World Cup. McDonald’s growth in Latin America has been accelerating in recent years. The World Cup will be a great marketing platform to further showcase that growth.
Another way to play McDonald’s sponsorship of the World Cup is with Arcos Dorados. Arcos Dorados is the exclusive McDonald’s franchisee of Latin America (South America, Central America and the Caribbean). Arcos Dorados will be a huge beneficiary of McDonald’s increased marketing during the World Cup.
3. Visa (NYSE: V) is one of the six FIFA Partners and is the exclusive financial services sponsor. As the exclusive financial services sponsor, Visa will be the only card accepted at all the World Cup event venues (as they were during the London Olympics). Credit card usage for much of Latin America has only recently become relatively wide-spread. While it is becoming more mainstream, there are still many Latin American businesses that are strictly cash-only. Brazil’s credit card users currently make up only about a fifth of the population. The World Cup will undoubtedly help expand business acceptance of credit cards and Visa’s sponsorship with FIFA will be an opportunity for it to gain an even greater foothold in Brazil.
4. Anheuser-Busch InBev (NYSE: BUD) is a FIFA World Cup Sponsor. This World Cup will be the company’s eighth consecutive sponsorship of the tournament. The company’s Budweiser and Bud Light brands have the exclusive ‘pouring rights’ for all World Cup venues (the only beer brand you will find sold at stadiums). Since 1986 the company has seen the World Cup as a terrific opportunity to associate their beer brands with adult soccer fans. Despite being a Belgian company, it is mostly controlled by Brazilian investors. This may have been partly responsible for the Brazilian government's temporarily lifting the ban of alcohol sales at sports stadiums. FIFA lobbied for alcohol to be sold during the World Cup and the Brazilian government finally relented a few months ago.
5. The Coca-Cola Company (NYSE: KO) is another FIFA Partner and longstanding sponsor of the World Cup (an event sponsor since 1950 and an official sponsor since 1978). Like Anheuser-Busch, The Coca-Cola Company’s various brands are the exclusive non-alcoholic beverages of the World Cup and the only nonalcoholic beverage that will be sold at World Cup venues. If Coca-Cola's advertising campaign is anything like their 2010 World Cup ad-campaign, Coca-Cola will likely be the single most prominent and visible brand at the World Cup.
Since Coca-Cola operates their business through a franchise-like model called the ‘Anchor Bottler’ system, there is another way to play Coca-Cola’s sponsorship of the World Cup. Embotelladora Andina is the primary Coca-Cola bottler of Brazil. And like Arcos Dorados and McDonald’s, Andina will be a big beneficiary of Coca-Cola’s increased marketing in the region.
6. Sony Corporation is the third and final of the FIFA Partners on my list. Sony is the exclusive ‘Digital Life’ partner of FIFA. Last World Cup that ‘Digital Life’ sponsorship included Sony being awarded the exclusive 3D media rights to the World Cup (the first 3D broadcast of the World Cup). The upcoming 2014 World Cup will involve another first for Sony. This time Sony will be the provider of the World Cup’s first ever usage of goal-line technology. If anybody remembers some of the awful officiating that took place during the previous 2010 World Cup, soccer fans will certainly appreciate the inclusion of this Sony technology into the tournament. Taking some of the officiating duties away from questionable referees? Thank you, Sony!
7. Oi, formally known as Brasil Telecom, is Brazil’s largest telecommunications company; a provider of mobile, fixed-line and broadband internet services in Brazil. Oi is the official telecommunication services provider of the 2014 World Cup. In addition to sponsoring the event itself, large investments by Oi, other Brazilian telecoms and the Brazilian government will need to be made in the next few years to make sure Brazil’s mobile infrastructure is ready for primetime.
8. Yingli Green Energy is the first ever ‘Green Renewable Energy’ sponsor of the World Cup. The company hopes to increase awareness of solar power in Latin America and to increase business opportunities in Brazil. Yingli will also be bringing solar power directly to the World Cup. The 82,000 seat remodeled Brasilia National Stadium will have solar panels manufactured by Yingli. The stadium will be home to the final match of the World Cup and will be a great showcase for the company’s solar technology.
2016 Summer Olympic Games
Like the 2014 World Cup, the 2016 Summer Olympics will also be hosted by Brazil. This is a country that will be very busy over the next few years. Some of these companies mentioned above will likewise be very busy. If you like any of these companies for their sponsorship of the World Cup or their exposure to Brazil, many of those names will be similarly involved with the next Summer Olympic Games in Brazil.
Visa, McDonald’s and Coca-Cola are each confirmed as official sponsors of the 2016 Olympic Games. These three great American companies (and the Latin American companies of Arcos Dorados and Embotelladora Andina) will give you twice the Brazilian 'major world event' exposure. Two events for the price of one. Sounds like a great deal to me.
And Finally...
Though it may be two years from now:
See you at the World Cup! Go USA!
WhichStocksWork owns shares of Arcos Dorados. The Motley Fool owns shares of Arcos Dorados, Johnson & Johnson, The Coca-Cola Company, and McDonald's and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Andina Bottling, Arcos Dorados, Johnson & Johnson, McDonald's, The Coca-Cola Company, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
