Home Coca-Cola, guns and money: the genesis of the Fifa Partner programme

Coca-Cola, guns and money: the genesis of the Fifa Partner programme

Fifa’s global sponsorship programme is one of the most lucrative in the world. But its creation, amid the febrile atmosphere of the 1978 World Cup in Argentina, owes more to one man’s persistence than business logic.

Coca-Cola returned as a major sponsor for the 1982 World Cup in Spain

The Fifa Partner programme was born via an unlikely collaboration between a twenty-something PR man, his client – the Coca-Cola Company – and the Argentinian military junta. Throw in the symbiotic relationship between Fifa president João Havelange and the head of Adidas France Horst Dassler, and you have the essential ingredients to a story that takes in the World Cups in Argentina 1978 and Spain 1982, introduces an ambitious Swiss marketer called Sepp Blatter to world football and ends with the formation of the now-discredited ISL agency.

The PR man was Patrick Nally, then the communications side of London sports and communications firm West Nally, which began life in the early 1970s as a two-man partnership with BBC sports broadcaster and Times columnist Peter West.

On first meeting the veteran broadcaster as a 19-year-old, Nally was keen to impress: “I came out with the line saying, ‘Well, Peter, you know all about sport why don’t we make our new PR company one that uses sport and communications?’ It was some smart-arse statement but it did impress him and he thought it was great idea.”

What Nally “stumbled across” – his words – over the next few years was sports marketing, a discipline that barely existed in the early 1970s.

West Nally made a name for itself bringing Gillette razor blades to cricket and Benson and Hedges cigarettes to golf – and Nally was soon mixing with increasingly important people, notably Al Killeen, the head of Coca-Cola marketing internationally, who “thought what we [West Nally] were doing and what they might be interested in doing might fit”.

With West Nally’s operations growing in Australia and Canada, Nally also appeared on the radar of Horst Dassler, son of the Adidas founder Adi Dassler. The younger Dassler was then considered the most influential man in sport, not least for his liberal use of undercover payments to amateur athletes who would wear Adidas shoes at major events like the Olympic Games.

Dassler was the spark for what happened next.

The Adidas France connection

In June 1974, just before the World Cup in Germany, a new Fifa president – Brazil’s João Havelange – was elected on a ticket of developing the game outside its strongholds in Europe and South America.

Dassler, who held sway over most of the European federations, had nearly turned the election in favour of the incumbent, Sir Stanley Rous. Havelange was impressed and thought that the Adidas man might help Fifa fund the youth development projects the new president had promised.

As Nally observes: “Horst didn’t control the marketing money of Adidas – that was the family in Germany – so he was looking for another way to find the funds to help Havelange. If he could help Havelange, it meant that he could control Havelange.”

Enter Nally. “I came in a good two months after the 1974 World Cup because Horst was already talking to various people and was not getting very far. He’d heard of me, but I hadn’t really heard of Fifa! I spent quite a bit of time getting to understand not only Fifa, but what an international sports federation was.

“I went to Strasbourg, and then a place called Landersheim, where Horst had an extraordinary office in the middle of some fields. He had broken away from the German enclave and set up in France. It was ostensibly Adidas France, but really he was manipulating and controlling the whole world from there, fighting with his Mum, Dad, sisters and brothers-in-law in the company all the time.”

There was method in Dassler’s confrontational madness. “Being the clever man that he was, Horst had already seen that Adidas should move away from paying athlete endorsements,” Nally explains. “The future was to actually control the federations: control the administrators, then you control the sports. At any major gathering of people in sports, Horst would be there. Adidas would throw a great dinner, forging relationships with the great international federations because none of them had any money. The IOC was struggling, Fifa was struggling, there was no money.”

Fifa, meet Coca-Cola

“I met with Fifa in Zurich. There was literally five or six of them, including Havelange, the general secretary Dr Helmut Kaiser – Blatter didn’t exist at this stage – and two German shepherd dogs. They had no money, there was no security. It was like a little family. I said to Horst that what Fifa had to offer could be of interest to what I’m doing in sport and that I had one company in mind. Coca-Cola, the world’s universal drink and – through Fifa –football, the worlds universal language. But nothing existed in the way that I would need it to exist to present to Coca-Cola.”

The things that didn’t exist, Nally needed to create. These were a series of youth competition and development programmes to improve standards of football in under-developed soccer countries including big markets like the US, Japan and Australia, that Coca-Cola could brand around the world.

Coca-Cola’s international strategy until then had been to supply the US Army abroad and then stay on in each country. “I had to write a completely robust project programme and cost it because without that, I couldn’t get Coca-Cola. Even then, I was only hoping that Coca-Cola would be my client, I wasn’t serving the sport. Professionally, the whole pitch was to Coca-Cola and then I would be part of a pitch for the agency to execute the programme.”

After spending 18 months of his life on the project, Coca-Cola eventually signed a cheque for $10m in May 1976 to fund the ‘Fifa Coca-Cola Football Development Programmes’, including the Coca-Cola Cup youth tournament – the precursor to the Under-20 World Cup.

The development torch was passed on to someone within Fifa to manage the programme. That person was Sepp Blatter, a PR executive with the Swiss watch company Longines who had been recommended to Nally by the president of Swiss Timing. “He spent some months in London with us in West Nally’s Berkeley Square office and a lot of time with Horst. He was our captive! He was our man that we put into Fifa to run the development programme.”

Al Kileen of the Coca-Cola Company presenting a $10m cheque to Fifa president Joao Havelange. A young Sepp Blatter, then technical director of FIFA, is on the right.

The influence business

The branding programme allowed Coca-Cola to enter new markets like China, the Soviet Union and the Middle East and showed the value and strength of Fifa as a promotional partner.

Beyond that, it meant two things. First, Dassler got credit for finding the person who had delivered the Fifa development money and therefore retain the upper hand in his relationship with Havelange. Second, with the World Cup coming up in 1978, Coca-Cola was receptive to new ideas from Nally.

But this time there were bigger hurdles to overcome, both structurally within Fifa and politically around the hosts, Argentina.

Nally continues: “Fifa had no control over the World Cup and no proper [marketing] rights. These were left almost by default to the host nation and the European Broadcasting Union, the European television coordinator. Fifa didn’t have rules and regulations, they had no concept – when Peter and I started, there was no professionalism, no sports law, it was all on the back of a fag packet. Fifa appointed the hosts and handed it over!”

Getting Coca-Cola on board depended on Fifa allowing Nally to negotiate with the hosts for the marketing and stadium operating rights, a task made all the more challenging when the government in Argentina, which had been awarded the 1978 World Cup in 1966, was overthrown by a military coup in March 1976.

Nally got to work on the problem in a way that only a self-proclaimed “classical agency man” can. “I remember at the 1976 Olympics in Montreal, I hired a house and took over an English cook. My team and I were entertaining Horst, of course, and a lot of sports people, including Havelange. I discussed with them how they were going to get around resolving this issue and how we had to protect Coca-Cola’s interests.

“I was, in effect, mandated by Fifa because Horst was pushing me all the time. He thought I was a hero, he absolutely loved me because I’m giving him the ability to raise money for other federations as well.

“I was already beginning to work with him on the Olympics and the IAAF and he suddenly sees me as someone who could help him get control from more international federations.”

Dassler was right about Nally, who went on to coordinate the Olympic Partnership Programme (TOP), the global partnership package that exits today. But Fifa came first.

Under the gun

The way the Argentinean junta did business was very different to the playbook established by Nally and Dassler. In Montreal, Nally held his first meeting with a representative of the Argentinian government to discuss the 1978 World Cup. It didn’t get far, and he was asked to meet up again in Buenos Aires.

“I remember taking a Caledonian Airways flight from London directly to Buenos Aires, and I took our finance director with me, a guy called Mike Storey. We were met at the airport by the son of one of the two generals who ran the country and taken in a gunship-type convoy of cars and military vehicles down to the Sheraton Hotel.

“We hadn’t even taken our bags out of the car when we were shuffled back in and the convoy went back out to the airport where we were put on a plane. What had happened was that the guy who was going to become head of the World Cup organising committee and who we were supposed to be meeting was blown up in his bed that morning by one of his servants.

“They got us out of the country and said we’ll be in touch. We landed in Miami, I had a visa, Mike didn’t and was arrested. I flew on to Atlanta to talk to Coca-Cola and calm things down – so it was all a bit of a shock.”

Meeting the generals

Nally returned to Argentina for a key meeting with the two generals themselves: General Videla and General Viola. “I had a meeting with the two generals in a fairly palatial sort of building – don’t forget, the son was still delegated to look after us. He would take Mike and I to night clubs in the evening with heavily-armed guards. He was snapping his fingers at any girl he took a fancy to and they had to come over. For two English guys who had never been to Latin America before it was pretty horrific.”

But discussions with the generals turned out to be constructive in terms of getting agreement on the marketing rights and stadium operational rights that Nally needed to get his client, Coca-Cola, on board. “What I found was I could communicate well with the generals. It was obvious they wanted to do something to make Argentina look less terrifying. We talked about image, barbed wire and guns, and why it would be better having people dressed in Adidas kit as opposed to looking like the military.

“They needed the world’s media to come and did not want the World Cup taken away. They agreed that Coca-Cola needed to control the stadiums and have control of the advertising and the logos. I had to get Argentina to change the whole formula to give us all the exclusivity and they agreed because they agreed with me that they needed a good image.

“They were not interested in money but in the importance of the World Cup staying there and the image of Argentina winning the World Cup, which surprise, surprise, they did – exit Peru [Argentina needed to beat Peru by a margin of four goals to qualify for the final. Peru’s conspicuously supine performance in the 6-0 victory ensured it did]. Although it was very frightening and worrying, I actually found them very receptive.”

Cutting the deal

After a set of meetings with Admiral Lacoste, the new head of the organising committee, Nally returned to Atlanta where the full Coca-Cola board listened to his presentation on a “clean concept for the World Cup” and agreed to guarantee 12m Swiss Francs to protect Fifa and underwrite the event.

In return, Coca-Cola was given around 20 per cent of the signage, with the rest sold to generate revenue to reduce – or cover – the guarantee costs. The revenue was split 70:30 between Coca-Cola and West Nally, with Fifa nowhere to be seen. “Seventy per cent of the sales money went towards paying off the guarantee with Fifa and 30 per cent would stay with us to meet our costs. In the end, it was such a success, it cost Coca-Cola nothing.

“Once we started selling to the other sponsors and signage people, it replaced Coca-Cola’s guarantee because we had sufficient money to meet all the obligations. In essence, Coca-Cola had a free ride in 1978 because we were way above our expectations of what we thought we’d generate.”

Nally sold signage packages worth up to $500,000 each to brands like Philips, KLM and Gillette. Other signage rights were sold to Europe’s leading signage groups, who would sell rights to single matches or groups of matches involving specific national teams. Adidas paid “nothing, or almost nothing” for its match ball and referees’ kit supply rights.

But Nally’s head had not yet been turned by the rights business. “My interest was not to sell massive rights for more money, my only interest was to protect Coca-Cola.”

Spain ups the ante

With Argentina deemed a success all round – “I don’t know what would have happened if we hadn’t been doing it” – thoughts turned to the next World Cup in Spain, where wresting the marketing rights from the local organising committee was likely to cost a lot more than in Argentina.

Spanish sport had important power brokers of its own, including Juan Antonio Samaranch, then Spanish ambassador in Moscow [Samaranch would later be elected IOC president] and the head of the Spanish football federation, Pablo Porta.

With Dassler and Havelange, Nally went to Madrid to try and negotiate what he’d done in Argentina for the Spanish market. He soon found out that the price had been agreed without him. “I can remember standing in the gents’ toilets next to Horst and he told me ‘Oh Patrick, I have already done the deal, you will have to fund another 45m Swiss francs’. I thought to myself how the hell do I finance 45 million? It was such a colossal leap. Later, I realised I would need to create a totally new package.”

The package Nally wrote was the ‘Intersoccer 4’ programme, a four-year schedule of competitions, including the 1979 Gold Cup in Uruguay (involving Germany, England and Italy), the 1980 European Championships, which entailed a rights-buy from Uefa, the Toyota Cup between the club champions of Europe and the club champions of South America, and, of course, the 1982 World Cup itself.

“All I can remember is that the total nut that I needed to crack for the whole programme was a modest 135m Swiss francs. We held the risk and had to fund that whole project which is why people like Franz Beckenbauer got involved because Horst was trying to get financiers in because we had no money. He was bringing in all sorts of shady characters. We didn’t use them because I got Coca-Cola again.”

Selling Intersoccer 4

Coca-Cola came in as a cornerstone of the project and took a “fairly healthy chunk of the risk”, says Nally. “They had an expanded position, a favoured treaty and why not because they’d been my client! I did a favoured treaty agreement with Coke and then I started selling the rest – which everyone said I couldn’t do – into the Intersoccer4 programme.

Seeking to fill the portfolio with multinationals, he understood that unlike most US companies, Japanese firms like Seiko, Toyota and Panasonic were the only ones that had central control of their marketing budgets for a global campaign.

Japanese advertising agency Dentsu started to take notice, but Nally eventually made a deal with Dentsu rival Hakuhodo. “Dentsu cooperated on one or two other sports projects but kept saying it [Intersoccer 4] was too expensive. I said, ‘I’m sorry, it’s not too expensive, this is what I have to do’. I also needed a Japanese agency because back in those days moving money internationally was an absolute nightmare, so I had Hakuhodo suddenly helping me and becoming very powerful. They hated Dentsu.”

Nally brought in brands like Seiko, JVC, Fuji Film and Gillette for Spain 1982. “Somehow, I did it, but I did too well because by doing it, it showed to Horst that, bloody hell, this is a monster! It also woke up Dentsu.”

End game

With Nally’s success in selling World Cup rights and Dassler’s influence at the heart of Fifa, the duo used their jointly-held, Monte Carlo-based company, Société Monegasque du Promotion Internationale (SMPI) to sell rights for the 1983 to 1986 rights cycle, which culminated with the 1986 World Cup in Mexico. Nally pre-sold the programme at a 25-per-cent increase on the 20m Swiss Francs paid by sponsors for the 1979 to 1982 package, and then pre-sold the 1987 to 1990 programme as well.

But the partnership did not hold. When Dentsu offered Dassler $55m to block Nally and Hakuhodo, the Adidas man headed for the exit. A joint-venture between Adidas and Dentsu, International Sports and Leisure – better known as ISL – sprang up to sell the rights.

“I didn’t see that coming,” reflects Nally. “I knew there were fights within Adidas and that he needed money and I had agreed to buy him out, but did I see somebody coming out of the woodwork with a vast sum of money for a gift? No.

“Adidas and Dentsu set up ISL from nowhere – and used that money and all the Coca-Cola money and all my sponsors to get the rights in Mexico. And Horst, of course, still had control of Havelange.”

Havelange had a long reign, serving 24 years as Fifa president before Blatter was elected in 1998. Dassler, who led Adidas from December 1984, died less than three years later at the age of 51.

“I’m sure had he lived, because of the relationship he and I had, we would have bonded. I wouldn’t have worked for ISL in a million years, but he would have compensated me, given me an improved position. Fundamentally, he’d had no choice. He said that with me I was paying him the money, but I would have controlled everything. I would have had the relationship with Havelange, Samaranch and [IAAF president] Primo Nebiolo, therefore I would be the monster.”

And there was one other legacy of the split that lived on at ISL: “There was one thing that I and Horst never agreed on. He wanted to make these payments to these individuals, like Havelange who wasn’t paid a salary by Fifa, and I was saying avidly, ‘No we do not, I’ve got no desire to do that’ – and there was no need. He would say, ‘You are too Anglo-Saxon, you don’t understand how these things work. We have to pay him money, because then we’ve got the control’.”

Epilogue

ISL, the company that Dassler built, collapsed in 2001. Having been awarded the right to sell Fifa’s broadcast and commercial rights, for 1994 and 1998, with an option on 2002, the company overextend itself with rights obligations in other sports and went bankrupt.

It would later emerge that millions of dollars had been paid out by ISL in bribes to Fifa officials in a scandal that would expose Havelange and other senior members of the executive committee. This was the prelude to further investigations into Fifa corruption that would lead to the arrest of exco members and the downfall of Blatter himself.

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