2010 FIFA World Cup and the SA industry

Opportunities and pitfalls of the 2010 FIFA World Cup

August 2007

There will be many ways in which SA retailers will be able to benefit from the 2010 Soccer World Cup... and even local distributors and manufacturers have some limited opportunities to become involved with the event

World Cup optimism grows

South Africans are becoming more positive about our readiness to host the 2010 FIFA World Cup. In late May and early June this year TNS Research Surveys asked 2 000 urban adults whether they thought SA would be able to host the World Cup in 2010 — and how important they rate the success of the event.

Question 1: South Africa will NOT be ready for the Soccer World Cup in 2010

» Agree – 25% (blacks 21%, whites 35%, coloureds 28% and Indians/Asians 37%); Disagree – 63%; Don’t know – 12%
» Of the 63% who feel SA will be ready, 69% are black, 57% coloured, 52% Indian/Asian and 45% white
» Black people are the most positive, with Indians/Asians and Coloureds next and whites showing the most scepticism. Males are much more positive (67% say we will be ready compared to 58% females) but older people are less positive

An identical question was posed to a similar sample in August 2006: then, 33% felt we would not be ready and 59% felt we would. In September 2005, 45% felt we would not be ready and 46% felt we would. Some differences by area emerge:

» Gauteng – 67% agree that SA will be ready (62% in August 2006); Johannesburg – 68% (63% in August 2006); Soweto (79%) is the most confident
» Cape Town – 52% is least confident
» Durban – 61% (2006 – 53%)
» Eastern Cape – 58% (2006 – 66%)
» Bloemfontein – 63% (2006 - 60%)

Question 2: Making a success of the World Cup is of vital importance to South Africa

» Agree – 81% (blacks 84%, whites 74%, coloureds 77% and Indians/Asians 86%)
» Disagree – 13%; Don’t know – 6%

Although there will only be one SA retailer with the official FIFA Event Store designation, a wide variety of SA retailers will be encouraged to carry official licensed product, says Nicholas Bloom of Global Brands Group (SA), appointed by FIFA as its worldwide exclusive licensing representative and store operator for FIFA branded retail destinations.

"Only the official event store will be permitted to create FIFA store-in-stores, but other retailers can merchandise their ranges, using other innovative point of sale designs created by Global Brands," he explains.

The Global Brands Group have appointed XP Events as exclusive on-site merchandise concessionaire for all FIFA events from 2007 until 2010, including the 2010 FIFA World Cup in South Africa.

Official team replica and supporters jerseys will, however, not be distributed by FIFA or Global Brands and retailers will be able to source these from the individual team sponsors, as in the past.

Global Brands will focus on the official memorabilia.

"We will be appointing local manufacturers and distributors to handle official FIFA merchandise sales to retailers. The program is currently in development, with a number of major appointments expected over the next few months."

While the Global Brands Group intends to partner with best-in-class SA companies of all types, the number of partnership opportunities is limited. "Candidate companies should have a proven track record in their respective categories," says Bloom. "We also insist that products bearing the FIFA name consistently adhere to the best-practice standards in quality, production and related labour practices."

Prospective manufacturers or distributors should submit a business plan with a detailed description of items you’d like to produce or distribute and wholesale sale projections for these products for the term of the agreement, broken down by year, including margin breakdowns for each category. The business plan should also contain detailed company information like the history, BEE status, existing retailer relationships, and manufacturing locations (where applicable).

In addition, Global Brands requires all manufacturers and distributors to provide a Minimum Guaranteed Revenue Share (MG) — a substantial portion of which is payable to Global Brands upon signature of a binding agreement. The balance, paid in installments up to 15 Desember 2009, must be supported by an irrevocable bank guarantee or letter of credit. Two percent of wholesale sales for each quarter is payable into an Advertising and Marketing Fund (AMF) which Global Brands will use to stimulate sales of official licensed product at retail.

Protecting rights

FIFA has repeatedly warned that they will act against any company making unauthorized use of the World Cup for promotions and advertising. Dr Owen Dean, one of the lawyers appointed by FIFA to protect the world cup trademark and the rights of the organisation, recently told the audience at a SA Music Right Organisation presentation of the heavy sanctions that will be imposed on companies and people "doing whatever they can to get a slice of the event’s pie."

Using FIFA or 2010 World Cup trademarks without authorization constitute a criminal offence under the Merchandise Marks Act, Trade Practices Act and Copyright Act, and the Counterfeit Goods Act. According to Dean it is also a civil infringement of common law rights to pass-off products or services as part of the event; as well as unlawful competition and a breach of the Advertising Standards Authority (ASA) code.

The 2010 FIFA World Cup South Africa Special Measures Act also allows for the designation of exclusion areas — like stadims or Fan Parks — in which only persons identified by the Organising Committee may perform any commercial activity.

If found guilty of contravening any of these laws, companies’ director(s) could face a hefty fine or a lengthy jail term. There could also be an interdict against the company or director(s), and lastly a prohibition of advertising by ASA.

This is in order to protect the rights of sponsors, whose millions in effect pays for the event, and to prevent the violation of intellectual property rights.

But, the prohibition on linking any kind of promotion or advertising to the 2010 FIFA World Cup covers all areas, whether a sponsor will be affected or not - as a Cape Town jeweller who announced a jewellery design competition with a World Cup theme found out to his detriment.

Trademark applications

FIFA wants to make absolutely sure that nobody who had not paid for the right to be associated with the 2010 Soccer World Cup will benefit from any kind of association with the event.

And in order to make sure that nobody, except official sponsors, can link ANY kind of commercial activity to the 2010 Soccer World Cup, FIFA has applied for a wide range of emblems and phrases to be trademarked in SA. These include:

They have also applied that the following phrases by trademarked:

If these trademarks are granted, companies and brands that are not FIFA sponsors will not be able to use any of the above in any form of advertising in future — even long after the 2010 Soccer World Cup is gone and forgotten.

Interested persons had until August 2 this year to object, and after receiving feedback from readers — some comments bordering on slander — Sports Trader submitted an objection citing the following reasons:

The use of these words/phrases are not limited to soccer or FIFA:

The hosting of the FIFA World Cup will adversely affect the normal business practices of many suppliers and retailers should the following be trademarked:

Resources:

» Global Brands Group (SA): Nicholas Bloom. Tel: 011 537 4640. Fax: 011 537 4641. enquiries@globalbrandsgroup.com
» www.fifa.com/worldcup/index.html
» www.sa2010.gov.za/government/merchandise_marks.php. 2010 FIFA World Cup South Africa Special Measures Bill

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