Mastercard is entitled to sponsor the next two World Cups despite a deal Visa signed with FIFA calling for it to receive the rights on Jan. 1, a judge ruled Thursday.
U.S. District Judge Loretta A. Preska issued the 125-page ruling in Manhattan after MasterCard sued FIFA, saying the governing body of world soccer signed its deal with Visa even though MasterCard had a right of first refusal to sponsor the 2010 and 2014 World Cups.
``FIFA is dismayed by the decision,'' the organization said in a statement. ``FIFA will appeal this decision and fully expects to prevail.''
MasterCard, a New York-based company and the nation's second-largest credit card brand behind Visa, said it returned a signed contract to extend a sponsorship deal with FIFA that made it the exclusive payments sponsor for the 2006 World Cup in Germany.
Preska said FIFA breached its obligation under Swiss contract law to give MasterCard the first right to acquire the sponsorships through 2014.
She said FIFA's negotiating team even misled MasterCard into believing it had an exclusive 90-day period from Feb. 8, 2005, to May 8, 2005, to consider a sponsorship deal for the next two World Cups when FIFA was actually ``simultaneously and aggressively'' negotiating with Visa as well.
Preska noted that FIFA's slogan is ``fair play.'' Yet, she added, its dealing ``with FIFA's long-standing `partner' MasterCard constitutes the opposite of `fair play' and violates FIFA's own requirement that `its negotiators deal honourably with its business partners.'''
``This ruling stands as a victory for sound business ethics over the deceptive and deceitful practices perpetrated by certain members of the FIFA management team,'' MasterCard lawyer Noah Hanft said in a statement. ``We now look forward to reforms in FIFA's business practices going forward.''
MasterCard had shown it would suffer irreparable harm for which money could not adequately compensate it if it were deprived for at least the next eight years and likely longer ``the unique opportunity to sponsor the most popular and widely viewed sporting event in the world,'' Preska said.
On the other hand, FIFA ``would suffer no discernible harm from an injunction, other than potential liability to VISA, potential liability for which FIFA is solely to blame,'' the judge said.
``FIFA remains convinced that at all times it acted in good faith and it will therefore continue to vigorously pursue its case. Furthermore, FIFA notes that the Zurich arbitration tribunal is competent to hear this dispute, and FIFA awaits the outcome of this proceeding,'' FIFA said.
Preska said Visa cannot complain of the consequences of its decision to proceed with executing its contract with FIFA because it already was on notice that MasterCard believed it did not fairly acquire the rights.
MasterCard had argued that San Francisco-based Visa should not be allowed into the lawsuit because its interests were represented by FIFA. The 2nd U.S. Circuit Court of Appeals had agreed.
Visa said it was considering its options. It said it negotiated its global sponsorship agreement with FIFA in good faith after FIFA assured it that the deal was valid and binding and did not conflict with any of MasterCard's rights.
``During the trial, Visa was surprised and dismayed to learn that during the negotiations, FIFA had not been truthful with Visa regarding its obligations to MasterCard. Nevertheless, we are disappointed by the court's ruling today,'' it said.
