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Ambush marketing

The driving commercial concern of sports governing bodies when they plan major events is to protect the interests of the official sponsors of the event under an assumption that, without such astute protection, the price they will pay to act as sponsors will be depressed. ‘Ambush marketing’ comes in as many forms as there are legal rules, specific and general, to suppress it.n8 The smiling young person outside the stadium’s car parks and train station handing out a t-shirt or a cap bearing the logo of a company that is not officially associated with the event is an ‘ambush marketer’. Advertising a product or service heavily during the television broadcasts of an event when the supplier is not actually a sponsor of the event is another device. The general intent is plain: the ambush marketer seeks to take a free ride on the goodwill extended towards sponsors of major sporting events by consumers without having paid the necessary fee to acquire an official association. The ambush is to imply such association. This is a source of alarm to those hosting events, who fear that the price they can extract from real sponsors will be reduced if those sponsors feel they are being undermined. There are obvious possible violations of private law involved—such as, in English law, passing off and/or trademark infringement. A clever ambush marketer will avoid such legal wrongs. Some jurisdictions may envisage protection pursuant to unfair competition law. The ambush marketer may violate property rights, depending on where he or she goes about his or her tactics. And contractual protection is available to combat the ambush. It is open to the official sponsor to do a deal with a television company to exclude advertisements by ambushers during the event. There are plenty of legal and commercial means to protect the interests of the official sponsors. And if the ambush is successful because the official sponsor has been outwitted, that is no more than the free market at work. Clever commercial strategies are meant to be rewarded. Perhaps a case may be made that the private law is insufficiently attentive to the phenomenon of ambush marketing and that it therefore leads to inhibited investment in major sporting events, thereby justifying public regulation. But no such case has ever been coherently made. This is a matter of economic power. Where the IOC or FIFA is concerned, the free market is aggressively suppressed by rules that the organizations are able to extract from countries as part of the price that is paid to win hosting rights. Their concern is to maximize their income.

They are very good at maximizing income—ruthlessly so. Requiring the host country to exercise a tight grip over ambush marketing is only one, albeit vivid and visible, example. The Football World Cup held in Brazil in 2014 revealed how FIFA, careful of its sponsors’ interests, was able, according to one detailed account that traced the negotiation between Brazil and FIFA and the consequent adoption of the General Law of the Cup, to enjoy a ‘temporary monopoly’ on the economy of Brazil.[1] [2] [3] Broadly, FIFA was able to use the lure of staging the event as a lever to induce the Brazilian government to agree to a remarkably imbalanced business model, where FIFA was able to lay claim to much of the income while placing much of the commercial risk on Brazil. A vivid example of FIFA’s power is provided by its ability to extract a (temporary) change in the law forbidding the sale of beer in Brazilian football stadiums. Jerome Valcke, FIFA Secretary General at the time, was not remotely coy in depicting the power FIFA, a sports governing body, held over Brazil, the world’s fifth most populous country: ‘The fact that we have the right to sell beer has to be a part of the law’.00 And so it was.m Less open to view are the tax arrangements typically made. The IOC was able to wrest significant exemptions from the normal rules of taxation of income earned in the United Kingdom, to the point where it has been vividly noted that the taxpayer was an ‘unofficial sponsor’ of the 2012 London Olympic Games.°2 FIFA performs similarly. FIFA’s own website declares that ‘[approximately 90 per cent of FIFA’s revenue is generated through the sale of television, marketing, hospitality and licensing rights for the FIFA World Cup™’.i23 It adds too that some 72 per cent of spending is directed at the development of the game. Its own documentation reports that its revenue in 2014 was US$2,096 million, largely as a result of the sale of broadcasting rights and other marketing deals struck in connection with the 2014 World Cup which was hosted by Brazil, and that at the end of 2014 its reserves exceeded $1,500 million.04 A year later this had slipped to $1,340 million after ‘an incredibly tough year for FIFA.m Most federations, including the IOC and FIFA, are located in Switzerland and that is where they pay the tax due on the immense profits made in staging major events elsewhere in the world. And the relatively low tax rates applied in Switzerland coupled to the rules protecting commercial confidentiality are plainly a major factor for that choice of location.06

There are good arguments that the legal protection which has been granted is far too generous,07 there is proper disquiet about the extent of the restrictions on freedom of expression at stake in the brand protection rules of the type just considered.08 There is, moreover, a vast gulf between the binding commitments ruthlessly extracted from hosts in order to maximize the profits of governing bodies and the much lighter touch typically associated with securing a long-t erm socially useful legacy from staging a major event.09 The extraordinary skewing of priorities is vividly illustrated by the criticism aimed by the chief executive of the (doomed) English bid to host the 2018 World Cup at the BBC as ‘unpatriotic’ for [4] [5] [6] [7] [8] [9] [10] [11]

broadcasting a programme critical of FIFA shortly before the decision was taken.[12] [13] [14] [15] [16] [17] Even the Prime Minister of the time, David Cameron, saw fit to intervene, describing the BBC’s scheduling as ‘frustrating’.131 Even if the driving political attraction is association with the major event rather than with the federation responsible for selecting a host, the two come as a package and there is plenty of evidence of politicians’ eagerness to work with and acquire the blessing of officials of FIFA and the IOC and Formula 1, even where the murky background is far from unknown.132 Governing bodies in sport may sometimes appear to ask for the moon, but they have willing suppliers among national politicians. Nor is this lunacy. Given that the commonly expressed claims that hosting tournaments will be commercially lucrative for the host have been exposed as unfounded,^ it seems plain that political gain from association with the glitter and ‘soft power’ of top-level sport counts as the true motivation.

Admittedly, powerful though FIFA and the IOC are, their mitigating stupidity should never be overlooked. Rules adopted by South Africa as part of the deal to host the 2010 World Cup led to a group of thirty-six women, who had been paid to attend a match wearing dresses advertising the Dutch beer Bavaria, being removed from the stadium and threatened with criminal proceedings.^4 Bavaria, an ambush marketer with no official connection to the tournament, might have hoped for a small dose of publicity but in fact, thanks to the absurdly high-handed response, gained worldwide sympathetic attention. FIFA was ridiculed. And derision can sometimes be meted out to the freeloading host politician: George Osborne, then the United Kingdom’s Chancellor of the Exchequer, was roundly booed when he presented medals at the London Olympics in 2012.135 But overall this is a sorry tale of over-intrusive public regulation designed to promote private interests and political vanity. The ability of (most of all) the IOC and FIFA and, to some extent, the organizers of Formula 1 motor racing to wring immensely lucrative concessions from large and democratic sovereign states is the main story. It is well known that the franchise system on which the North America sports model is founded allows wily owners to play cities off against each other and to extract generous concessions on, for example, financial arrangements and/or support for infrastructure under the threat of relocation.[18] [19] [20] [21] To watch the race to host the Olympic Games in summer or in winter or the Football World Cup is to watch this model expanded many times over in size and projected on to the global stage.

  • [1] JT Wendt and PC Young, ‘Protecting Spectator Rights: Reflections on the General Law of theCup’ (2014) 14 Intl Sports LJ 179.
  • [2] accessed 29 November 2016.
  • [3] On other concessions, see the unofficial site Brazil 2014— accessed 29 November 2016.
  • [4] k Tetlak, ‘The Taxpayer as the Unofficial Sponsor of the London 2012 Olympic Games’ (2013) 13 Intl Sports LJ 97.
  • [5] accessed 29 November 2016. No one except FIFAcalls the FIFA World Cup™ anything other than the World Cup.
  • [6] FIFA Financial Report 2014 accessed 29 November 2016.
  • [7] FIFA Financial and Governance Report 2015, p 7 accessed 29 November2016.
  • [8] See eg Dudognon (n 9).
  • [9] eg A Louw, Ambush Marketing and the Mega-Event Monopoly: How Laws are Abused to ProtectCommercial Rights to Major Sporting Events (TMC Asser 2012), which (as is plain from its title) arguesthat the legal controls over ‘ambushing’ have been extended too far. See also, on the London Olympicsin particular, James and Osborn (n 118) 410.
  • [10] eg R Gauthier, ‘Major Event Legislation: Lessons from London and Looking Forward’ (2014) 14 Intl Sports LJ 58; K De Beer, ‘Let the Games Begin ... Ambush Marketing and Freedom of Speech’(2012) 6 Human Rights and International Legal Discourse 284.
  • [11] S Stuart and T Scassa, ‘Legal Guarantees for Olympic Legacy’ (2011) 9(1) ESLJ 3 accessed 29 November 2016; P Bretherton,J Piggin, and G Bodet, ‘Olympic Sport and Physical Activity Promotion: The Rise and Fall of theLondon 2012 Pre-Event Mass Participation Legacy’ (2016) 8 International Journal of Sport Policyand Politics 609.
  • [12] ‘2018 chief dubs BBC “unpatriotic” ’ , BBC News, 17 November 2010 accessed 29 November 2016; ‘England’s Bid Chief: BBC is“Unpatriotic” and “Sensationalist” ’ The Independent (London, 18 November 2010) accessed 29 November 2016. The fury of the tabloid press at the BBC’simpertinent concern to find out the truth was still more extreme, though exceeded again by its reaction to FIFA’s subsequent refusal to award England hosting rights, but such circus events do notdeserve citation.
  • [13] ‘Panorama Won’t Hurt 2018 Bid—PM’ BBC News, 26 November 2010 accessed 29 November 2016; ‘Panorama Shadow HangsOver England’s 2018 World Cup Bid’ The Independent (London, 27 November 2010) accessed 29 November 2016.
  • [14] 132 See eg A Jennings, Foul! The Secret World of FIFA. Bribes, Vote Rigging and Ticket Scandals(Harper Collins 2007); J Sugden and A Tomlinson, Badfellas: FIFA Family at War (Mainstream 2003);A Jennings and C Sambrook, The Great Olympic Swindle: When the World Wanted its Games Back(Simon and Schuster 2000).
  • [15] See eg A Zimbalist, Circus Maximus: The Economic Gamble behind Hosting the Olympics and theWorld Cup (2nd edn, The Brookings Institution 2016); V Matheson and R Baade, ‘Mega-SportingEvents in Developing Nations: Playing the Way to Prosperity?’ (2004) 72 South Africa Journal ofEconomics 1085; E Molloy and T Chetty, ‘The Rocky Road to Legacy: Lessons from the 2010 FIFAWorld Cup South Africa Stadium Program’ (2015) 46 Project Management Journal 88.
  • [16] ‘How Ambush Marketing Ambushed Sport’ BBC News, 17 June 2010 accessed 29 November 2016.
  • [17] ‘George Osborne is Booed at Paralympic Games’ BBC News, 4 September 2012 accessed 29 November 2016.
  • [18] See eg M Mitten, Sports Law in the United States (Wolters Kluwer 2011) 60—64; P Andersonand W Miller, ‘Sonic Bust: Trying to Retain Major League Franchises in Challenging Financial Times’(2011-12) 21 JLAS 117.
  • [19] BBC News, 24 April 2013 accessed29 November 2016.
  • [20] ‘IOC hits out as Norway withdraws Winter Olympic bid’ Financial Times (London, 2 October 2014).
  • [21] ibid.
 
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