• by Judy Warner , December 8, 2006

MasterCard International has retained sponsorship rights to World Cup soccer after a U.S. District Court judge ordered the Federation Internationale de Football Association (FIFA) to drop its planned $195-million eight-year deal with Visa that was to have started Jan. 1.

MasterCard, a World Cup sponsor for 16 years, sued FIFA in April, citing breach of contract, after the soccer organization awarded advertising and sponsorship rights to Visa.

In the suit, MasterCard maintained that it had the right of first refusal on future sponsorship pacts, and U.S. District Court Judge Loretta Preska agreed in a decision issued late Wednesday.

The FIFA World Cup, held once every four years, is "the most widely, fanatically watched sporting event in the world," consumed by "billions of people in 200 countries worldwide," the ruling noted.

"MasterCard's loss of the next FIFA World Cup sponsorship would be, in its now-famous words, 'priceless,'" Preska wrote. FIFA negotiators "lied repeatedly to MasterCard," including when they assured the credit card company that FIFA "would not sign a deal for the post-2006 sponsorship rights with anyone else unless it could not reach agreement with MasterCard," she wrote.

After the decision, FIFA officials were quoted by Reuters and others as being "dismayed," and said they would appeal the decision. Visa, although not a party to the suit, was "disappointed" with the ruling and is exploring its options.

"Visa negotiated and executed a global sponsorship agreement with FIFA in good faith. We were assured by FIFA that the agreement was valid and binding and did not conflict with any of MasterCard¹s rights," a statement read.

Visa "was surprised and dismayed to learn that during the negotiations, FIFA had not been truthful with Visa regarding its obligations to MasterCard," it continued.

The judge wrote that FIFA engaged in a double standard, negotiating with Visa and keeping Visa executives informed of its negotiations with MasterCard while keeping MasterCard executives completely in the dark about any negotiations with Visa.

Visa had agreed to pay FIFA $180 million in cash and $15 million in "in-kind marketing" to win the contract. MasterCard had offered $180 million in cash with marketing services included in its overall price.

MasterCard executives expressed vindication by the results of the bench trial.

"Judge Preska's decision to issue a permanent injunction prohibiting FIFA from moving forward with an agreement with Visa, and directing FIFA to honor its commitment to MasterCard for the 2010 and 2014 FIFA World Cup tournaments, supports our long-standing position," said Noah Hanft, general counsel at MasterCard Worldwide, in a statement issued yesterday.

"This ruling stands as a victory for sound business ethics over the deceptive and deceitful practices perpetrated by certain members of the FIFA management team. We now look forward to reforms in FIFA's business practices going forward."