Sports / Off the Field
MasterCard, FIFA settle World Cup sponsor fight
(Reuters)
Updated: 2007-06-22 09:17
NEW YORK, June 21 - MasterCard will drop its sponsorship of the next two
World Cups under a $90 million settlement with FIFA announced on Thursday.
The agreement ends a legal dispute between the credit card issuer, which
had sponsored the tournament for 16 years, and soccer's world governing
body.
The ruling paves the way for FIFA to proceed with a corporate sponsorship
arrangement with Visa International, MasterCard's larger rival, although
FIFA did not provide details on a future sponsorship on Thursday.
A Visa representative was not immediately available for comment.
Under the settlement, MasterCard will drop its claims that it should be
awarded corporate sponsorship of the World Cup -- the world's most
watched sports event -- in 2010 and 2014.
"We have made a decision after taking a hard look at the facts and
circumstances, that substantial financial compensation to MasterCard,
along with severing the relationship between our two companies, at the
end of the day was in the best interests of MasterCard's customers and
shareholders," the credit card issuer's general counsel, Noah Hanft, said
on a conference call.
FIRST REFUSAL
MasterCard, based in Purchase, New York, sued FIFA in April 2006 after
the governing body awarded the coveted sponsorship for the next two World
Cups to rival Visa. MasterCard claimed it had right of first refusal on
future sponsorship pacts.
U.S. District Judge Loretta Preska in New York sided with MasterCard in
December, ruling FIFA breached its contract.
But an appeals court last month ordered a review of that ruling.
Zurich-based FIFA wanted an arbitration panel in Switzerland to decide
the matter.
As part of the settlement, FIFA and MasterCard agreed to terminate legal
proceedings in the United States and Switzerland.
Hanft said the $90 million settlement reflected half the sponsorship
amount entered into in the original negotiations with FIFA.
Under the pact, $87.5 million is being paid to MasterCard in the second
quarter of this year and $2.5 million in the third quarter.
The 2010 World Cup will be held in South Africa, while the venue for the
2014 tournament has not been decided although Brazil has been officially
named as the only bidder.
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