MasterCard Wants Back in World Cup

  The World Cup, which ends July 9, is more than a game to MasterCard International. The card association made that point when it sued the Federation Internationale de Football Association in April for awarding Visa International sponsorship of future World Cup soccer tournaments.
  MasterCard charges that FIFA, which owns the rights to the World Cup, violated a contractual agreement that gives MasterCard the right to sponsor future games. MasterCard began its relationship with FIFA in 1990.
  Visa and FIFA on April 10 signed an eight-year World Cup partnership agreement, which takes effect Jan. 1, 2007. MasterCard's lawsuit, which is before the U.S. District Court for the Southern District of New York, seeks to block the deal.
  The loss of the World Cup is bad news for MasterCard, says Gwenn B?zard, research director for Aite Group. Both MasterCard and Visa USA face a merchant class-action lawsuit over their credit and debit card interchange rate policies.
  "It's not great news" for MasterCard, B?zard says of the FIFA/Visa deal.
  But there is an upside, B?zard explains. "[MasterCard] will save millions of dollars in advertising, and it probably will spend the money on an acquisition," he says.
  Soccer-challenged American investors learned about the World Cup reading MasterCard's Dec. 5, 2005, S1 Registration Statement submitted to the U.S. Securities and Exchange Commission in advance of the card association's May 25 initial public offering. They learned more about the World Cup's importance from MasterCard's lawsuit.
  "If FIFA is not enjoined from proceeding with its purported sponsorship agreement with Visa and directed instead to perform its obligations to MasterCard, MasterCard will be deprived of a unique asset (FIFA World Cup sponsorship) and will suffer irreparable harm for which monetary damages, even of hundreds of millions of dollars, will not adequately compensate it," the lawsuit charges.
  The Visa/FIFA agreement violates language contained in a 96-page, 2002-2006 sponsorship agreement both sides approved after difficult negotiations, MasterCard contends.
  In its initial plans for future World Cup sponsorships, FIFA reduced its sponsoring partners to six from 15 and sought to charge the six partners more money, a move MasterCard says would "quadruple" its World Cup sponsorship costs. So the card association balked, and it suggested that FIFA test the new pricing structure with the card association's competitors.
  MasterCard was certain they also would turn FIFA down, and it was right. FIFA and MasterCard then began to negotiate a new deal, according to the lawsuit.
  According to an agreement between MasterCard and FIFA, MasterCard contends, FIFA was to provide 90 days notice of its intention to send the card association a written offer setting the terms of sponsorship. If MasterCard did not exercise its rights to purchase the package within 90 days, FIFA could offer the same package to another business.
  MasterCard signed the agreement, but FIFA's board refused, citing an ongoing disagreement with MasterCard over a particular FIFA trademark.
  MasterCard says it knew FIFA and Visa were talking, but FIFA executives assured MasterCard that they would not sign an agreement with MasterCard's "arch-competitor." So, MasterCard says, it was surprised to learn of FIFA's deal with Visa.
  FIFA said in an e-mail it will not comment on the lawsuit. Visa is not a defendant, but a spokesperson says it expects the court to uphold the contract.
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