- MORESPORTS - Blatter's job could be in jeopardy

Wednesday, May 23
Blatter's job could be in jeopardy

LONDON – The collapse of the world's biggest sports marketing company ISMM, who were declared bankrupt Monday, sent shockwaves through the world of sport.

The demise of the Swiss company and its subsidiary ISL Worldwide could result in one of the most powerful men in sport, FIFA chief Sepp Blatter, losing his job, some say.

It will certainly lead to a reassessment by major sporting bodies of how they go about marketing and selling television rights.

Many of those bodies are likely to take responsibility for their own marketing, following a trend started by the International Olympic Committee (IOC) when it cut all ties with ISL in 1995.

ISMM – International Sports Media and Marketing – was founded in 1982 by Adidas sportswear tycoon Horst Dassler. It soon had contracts for the three biggest events in the sporting calendar – the Olympics, soccer's World Cup and the athletics world championships.

The loss of the Olympics in 1995 was a blow, but the company held on to the rights to the World Cup for 2002 and 2006 and embarked on a rapid expansion intended to attract investors for a planned flotation.

But to secure the World Cup deal they had to guarantee world body FIFA $1.56 billion and subsequent deals were also won at an extremely high cost.

The American motor racing series CART was guaranteed $214 million, while the Masters Series deal was worth $1.2 billion over 10 years to the Association of Tennis Professionals (ATP).

Other deals included marketing rights for the 2002 Asian Games, basketball's FIBA superleague and Brazilian soccer clubs Gremio and Flamengo.

The feeling that the company had outstretched itself was fuelled when the man responsible for the expansion, chief executive officer Heinz Schurtenberger, departed abruptly in November last year.

In January, the ATP tennis tour revealed that ISL were attempting to renegotiate just two years into their deal. A month later, ISL canceled their nine-year deal with CART, who immediately launched a $100-million lawsuit.

At the end of March, the company announced that they were to undergo major restructuring to avoid bankruptcy and were courting a 'strong equity partner' to help underwrite it.

Despite the uncertainty, FIFA adopted what they described as a 'positive stance' towards their problems.

Just two weeks later ISMM were ordered by a Swiss court to start bankruptcy proceedings, a ruling later delayed for a month on appeal to allow a possible takeover.

At that stage FIFA called a rare meeting of its emergency committee to draw up contingency plans, while Blatter made a trip to Japan to reassure the organizers of the 2002 finals that FIFA would make up any shortfall in funding.

European soccer's governing body UEFA also revealed that ISL owed them nearly $12 million over their deal to market Euro 2000.

The end for ISMM came last week when French media giants Vivendi balked at the company's huge debts and pulled out of talks on a takeover. FIFA immediately canceled its marketing deal with them.

The ramifications of the end of ISMM will be most acutely felt by FIFA and Blatter.

Left with no sponsors for the World Club Championship, which was due to take place in Spain this summer, they were forced to postpone the event until 2003.

A FIFA source, who asked not to be identified, told Reuters last weekend that this decision could ultimately cost Blatter his job.

"The competition stood as one of the pillars of Mr. Blatter's presidency," he said.

Blatter has already said he will seek a second term as president next year.

German media company Kirch, who held the European and U.S. television rights to the World Cup finals, have now been offered the rights for the rest of the world, which had been ISL's responsibility.

Kirch are already at loggerheads with the British government over their plan to sell the rights to the highest bidder regardless of whether they offer coverage free to air, as it has always been, or to a pay-per-view channel.

FIFA have set up an in-house company called FIFA Marketing to take over responsibility for finding sponsors for the 2002 World Cup finals. But starting from scratch at such a late date with inexperienced staff may cause a shortfall in funding for soccer's showpiece event.

In taking their marketing operation back in-house FIFA are following a trend set by the IOC, whose marketing supremo Michael Payne – himself a former ISL employee – described ISL's collapse as "like an earthquake."

Payne said the IOC, whose sponsorship scheme is the envy of the sporting world, would be prepared to advise other sporting bodies who wanted to go it alone.

The International Amateur Athletic Federation (IAAF), who had a deal with ISL over this year's athletics world championships in Edmonton, may be first in the queue for help.

"We could find some other marketing company. Another option is to reorganize our marketing department and sell directly," said IAAF spokesman Giorgio Reineri last week.

But he added that because they had not sold the television rights to the world championships through ISL, they would be only marginally affected by its collapse.

The ATP, who were well prepared for the collapse of ISL, said last week that they had decided to market the Masters Series in-house and had already had some success in finding new sponsors.

With the possibility of new revenue streams offered by the internet, there is no doubt that someone will attempt to fill the void left by ISL.

Just this week Vivendi and fellow media giants Bertelsmann announced that they had merged their sports rights interests to create one giant player worth more than $875 million.

But it may be a while before the sporting bodies burnt by the ISL collapse sign away their crown jewels again.

Send this story to a friend | Most sent stories