Not everyone in Sydney, Australia prefers Visa.

The San Francisco-based card association is learning this the hard way. Sydney's mayor and city council have issued a legal challenge to Visa International's use of "Sydney prefers Visa" as an advertising slogan, arguing that while Visa can sponsor the 2000 Olympic Games, it does not have rights to the host city.

"The people in Sydney could wrongly assume that the government endorses one company over another," said a spokeswoman for Sydney's lord mayor, Frank Sartor.

Mr. Sartor's displeasure may have broad ramifications. Visa had planned to use the slogan as the centerpiece of a multimillion-dollar global marketing campaign that is just getting started in anticipation of the Olympics in Sydney. If Australia's Supreme Court sides with Sydney's government officials and bars Visa from using the statement, it will be an expensive loss for the association.

It will also impede Visa's efforts to trip up its nonbank rival, American Express Co., which recently relocated its entire Asia Pacific, Japan, and Australia back-office operations to Sydney. Sydney's government worked hard to woo American Express there, and city officials are not about to offend a major employer.

Visa says using the slogan is well within its rights. The company signed an agreement with two marketing groups-the Sydney Convention and Visitors Bureau and Tourism New South Wales-to be the preferred payment card of Sydney and New South Wales through the 2000 Olympic Games.

Visa inked a similar deal to be the preferred card of Australia.

Moreover, Visa officials argue, facts support their case. "Visa's market share in Australia is 43%, while I think (American Express) has a market share of 8%," said Thomas Shepard, senior vice president, global marketing partnerships and sponsorships for Visa International.

"Clearly the cardholders favor one card over another," he said. "We are simply trying to use that powerful cardholder base to move tourism to Australia and to Sydney."

But New York-based American Express has already made its objections clear. The company forwarded a letter to Visa asking executives to reveal the intention of the advertising campaign. Depending on the response, American Express may take legal action of its own.

"The Sydney Convention and Visitor's Bureau has made a proposal to Visa that would give them a chance to own the city of Sydney," said Sally Sussman, an American Express spokeswoman.

"Nobody has the right to own the city of Sydney," she said. "We are not talking about a store or a mall-we are talking about a city."

Neither company is new at gaining the endorsements of localities. Visa has promoted its "preferred destination" program for several years. This past summer, cities in the United States that signed up to prefer Visa included Washington D.C., Palm Springs, Calif., and South Beach, Fla.

American Express launched a similar program last month, in which its brand was designated as the official card of tourism for the People's Republic of China.

But the latest Visa tie-in represents the first time anyone can remember that local authorities have raised an objection to the marketing gimmick. The Sydney City Council has asked the country's Supreme Court whether or not Visa and the two tourism bureaus have the right to make the claim. A hearing has been scheduled for Friday.

Visa would not comment on the specifics of the Sydney officials' complaint. Mr. Shepard said: "American Express has had a history of challenging our preferred programs for some time."

Ms. Sussman said that American Express "objects to the use of the word 'prefers,' because it implies that the government favors one brand over another."

Indeed, the government of Sydney could be walking a fine line between two companies that contribute heavily to its economy.

The mayor's spokeswoman said negotiations with Visa and its partners are continuing behind the scenes, and there remains a possibility that an out- of-court settlement can be reached.

In the meantime, Visa intends to stick to its timeline. The company will launch several marketing programs-for both Sydney and Australia-next year. u

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.