EXCLUSIVE: Fifa stalled on Hyundai renewal worth $300m-plus per cycle

Hyundai chairman and president of the Korea Football Association Chung Mong-gyu (left) with Fifa president Gianni Infantino (Photo by VI Images via Getty Images).
Hyundai chairman and president of the Korea Football Association Chung Mong-gyu (left) with Fifa president Gianni Infantino (Photo by VI Images via Getty Images).

Fifa stalled on a sponsorship renewal offer from Hyundai in 2019 worth more than $300m (€291.96m) for the four-year cycle from 2023 to 2026 as the brand sought to lock down its top-tier Fifa Partner sponsorship rights for the next men’s World Cup in 2026, SportBusiness can exclusively reveal.

The Korean automotive company, which has been a Fifa sponsor since 1999, is understood to have been especially eager to secure the sponsorship rights to the 2026 event, which will be hosted in the prime US market together with Mexico and Canada, and tabled the aggressive four-year bid just before the Covid pandemic.

North America last year accounted for 51 per cent of the company’s car sales outside of South Korea while the car manufacturer’s 2017 loss of Uefa national team competition sponsorship rights to rival Volkswagen is also understood to have been a factor in its bid.

The offer would have been worth more than $75m per year, making it one of the largest sponsorship deals in sport.

The fee would have represented a more than 100 per-cent increase on the figure of around $150m the car company is paying in the current cycle from 2019-22. Hyundai’s existing deal is understood to be worth $125m in cash and around $25m in value-in-kind components, including the supply of a fleet of 616 environmentally-friendly vehicles for this year’s tournament in Qatar, as well as a provision for other Fifa competitions. For comparison, the highest paying Fifa Partner in the current cycle is Qatar Airways, which pays around $190m for its rights.

Hyundai has previously moved early to extend its Fifa sponsorship deals, renewing its previous agreement with the global federation in 2010, even though the deal didn’t expire until the end of the 2014 World Cup in Brazil. That renewal secured the Fifa Partner rights until 2022 and included the 2018 World Cup in Russia and this year’s event in Qatar. The Fifa Partner designation also grants sponsorship rights across all of Fifa’s other men’s, women’s and esports events.

However, this time around, SportBusiness understands there was little appetite at a senior level at Fifa to accept the $300m-plus offer, with several figures at the organisation confident that there were other sponsorship options in the market.

Offer withdrawn

The delay in reaching a decision is understood to have frustrated the car manufacturer, which subsequently decided to withdraw the bid as it rationalised its sponsorship strategy in the face of the Covid pandemic in early 2020. The car industry has since been buffeted by the pandemic, issues in the semiconductor supply chain, and, more recently, the global economic downturn, that could make it difficult for Fifa to command a similar or improved fee now.

Football’s global governing body appears to have been taking an aggressive line in negotiations with commercial partners at the time the deal was tabled. The firm stance it took towards renewal discussions with video game developer EA Sports is also understood to have prompted the company to walk away from its licensing deal with the global federation at the end of the current cycle in 2022.

The New York Times reported Fifa wanted to double the $600m – or $150m per year – the games developer is paying across the current four-year cycle from 2019-22, having eyed the significant revenues EA Sports has itself generated from the game during its long association with the global federation.

However, the company stood firm in the discussions and warned that it was exploring the idea of renaming its global football games and reviewing its naming rights agreement with the federation in a blog post by group general manager Cam Weber in October 2021.

The company then announced in May this year that it would not renew the partnership and would rename the video game series as ‘EA Sports FC’ from 2023 onwards.

Fifa has downplayed the loss of the licensing partner, announcing that it will launch its own portfolio of video games in the coming years that will enable it to develop a closer relationship with fans. However, several sources expressed scepticism about its ability to plug the $600m gap left by the licensing deal, or develop games of a similar standard to the publisher.

Fifa has also been publicly critical of the rights bids submitted by broadcasters in Europe’s major markets for the 2023 Women’s World Cup. Last month, Fifa chief business officer Romy Gai called on broadcasters in France, Germany, Italy, Spain and the UK to “pay what the women’s game deserves”.

The global federation announced it would unbundle the sponsorship rights to its men’s, women’s and esports competitions in December, 2021, but retained the top Fifa Partner tier which grants sponsors the rights across all of its competitions.

The tough negotiating stance in sponsorship renewal discussions has been prompted by the fact the next World Cup will be co-hosted in the lucrative US sports market. As reported previously by SportBusiness, the governing body has also highlighted the recent launch and global reach of its new direct-to-consumer platform Fifa+ in conversations with brands, while the next edition of the tournament is also being expanded to include 48 teams rather than the current 32.

However, sponsorship agency sources say the governing body has more recently revised the price of its Fifa Partner packages downwards because of the global economic downturn and a slow response from brands.

Several deals in the Fifa Partner tier expire at the end of this cycle.

Agreements with Visa, Qatar Airways and Qatar Energy all end in 2022, with the latter two related-party deals thought unlikely to extend after Qatar’s hosting of the men’s tournament.

Visa agreed a deal to become Fifa’s first ever ‘Women’s Football Partner’ in 2021 after the governing body created a dedicated sponsorship package for its women’s competitions and could still upgrade this to a Fifa Partner deal covering all Fifa competitions. The governing body’s agreements with Adidas, Coca-Cola and Chinese conglomerate Dalian Wanda, are locked in until 2030.

It remains to be seen if the Hyundai will return with a similar or reduced offer for its Fifa Partner rights.

When SportBusiness approached Fifa for a comment, a spokesperson said: “In December 2021, FIFA launched its new commercial partnership structure for the 2023-2026 period. Following the launch, FIFA was in the position to start selling and contracting rights for the new cycle.

“Given the growth of the FIFA Women’s World Cup Australia & New Zealand 2023 and the FIFA World Cup 2026 in North America, which will see more teams and more matches at both competitions, we are experiencing a highly competitive marketplace in terms of companies making offers to secure global sponsorships across a wide range of categories. As a general rule, please note that FIFA does not comment or disclose details on individual commercial agreements.”

Hyundai declined to comment.

This article was updated on November 22. The original article said Hyundai tabled an offer for the next two four-year cycles, but SportBusiness now understands the bid was for one cycle.