Mastercard settles suit with FIFA

Mastercard settles suit with FIFA

By Kristen A. said Thursday it will accept a $90 million settlement and discontinue its sponsorship of the 2010 and 2014 World Cup soccer tournaments, in a move to end its legal dispute with FIFA.

MasterCard and soccer’s governing body, the Federation Internationale de Football Association, have been fighting in court over MasterCard’s right to sponsor the tournaments. district judge ruled in December that FIFA did not honor its agreements with the credit card issuer when it awarded sponsorship rights to MasterCard’s rival, Visa International Inc.

In May, a federal appeals court asked the lower court judge to review her ruling due to uncertainties over whether a 2006 contract was valid. MasterCard had served as the tournament’s official sponsor since 1994.

In a conference call and interview following the announcement, MasterCard’s General Counsel Noah Hanft said the appeals court was looking at a “narrow question” and that the company’s argument was supported by the court’s decision.

“At the end of the day we felt we were in a very strong position,” he said.

Chief Marketing Officer Larry Flanagan said the decision to end the relationship with FIFA was based on “irreparable damage” to the company’s trust in the organization. He said MasterCard determined the sponsorship was “basically not worth it, based on the need to have an ongoing, collaborative relationship with the other party.”

Flanagan said the settlement is in the best interest of shareholders, based on the cost of legal proceedings. and in Switzerland, where FIFA had wanted an arbitration panel to decide on the matter.

Hanft said the $90 million settlement payment represents half of the sponsorship amount. Of the settlement payment, $87.5 million is being paid in the second quarter and $2.5 million will be paid in the third quarter, according to a regulatory filing Thursday with the Securities and Exchange Commission.

Flanagan noted that MasterCard also sponsors the soccer associations UEFA Champions League in Europe and CONMEBOL Copa America in Latin America.

In 2002, the FIFA World Cup had a cumulative television audience of 28.8 billion worldwide in 213 countries, according to MasterCard’s Web site.

MasterCard shares dropped $2.29, or 1.4 percent, to $161.17 in afternoon trading. During the past 52 weeks, the stock has climbed from a low of $43.67 in mid July 2006 to reach a high of $169.40 in intraday trading on Wednesday.

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