MasterCard and FIFA settle World Cup sponsor fight

NEW YORK, June 22 (Reuters) MasterCard will drop its legal fight to get sponsorship rights for the next two World Cups under a 90 million dollar settlement with soccer's governing body announced.

The agreement ends a court dispute between the credit card issuer, which had sponsored the tournament for 16 years, and FIFA.

It also paves the way for FIFA to proceed with a sponsorship deal with Visa International, MasterCard's larger rival, for the 2010 and 2014 World Cup tournaments, although neither FIFA nor Visa would discuss future sponsorship plans yesterday.

''Visa has followed this case with great interest and we are pleased to see that FIFA has worked with MasterCard to resolve this issue. We look forward to full resolution of this matter in the near future,'' Visa spokesman Michael Sherman said in a statement.

MasterCard said it decided to settle the case for business reasons and that it no longer wanted to work with FIFA. FIFA declined to comment beyond the brief announcement of the settlement released by MasterCard.

MasterCard decided that ''substantial financial compensation to MasterCard along with severing the relationship between our two companies at the end of the day was in the best interests of MasterCard's customers and shareholders,'' the card issuer's general counsel, Noah Hanft, said on a conference call.

FIRST REFUSAL MasterCard, based in Purchase, New York, had sued FIFA in April 2006 after the soccer group awarded the coveted sponsorship for the next two World cups to Visa.

MasterCard claimed it had right of first refusal on future sponsorship of the tournament, the world's most watched sports event.

US District Judge Loretta Preska in New York sided with MasterCard, ruling in December that FIFA breached its contract.

But an appeals court last month ordered a review of that ruling.

Zurich-based FIFA wanted an arbitration panel in Switzerland to decide the matter.

The settlement ''is clearly a significant win for Visa, as World Cup sponsorship is a major worldwide marketing opportunity,'' Calyon Securities stock analyst Craig Maurer said in a research note to clients.

But Maurer said that MasterCard's prior World Cup sponsorships already had helped the company build up its brands in Europe, and that it still has other significant sports sponsorship deals in place.

Visa was not a defendant in the lawsuit, but had tried unsuccessfully to intervene.

As part of the settlement, both FIFA and MasterCard agreed to terminate legal proceedings in the United States and Switzerland.

Hanft said the 90 million dollar settlement reflected half of the sponsorship amount that was entered into in the original negotiations with FIFA.

Under the pact, 87.5 million dollar is being paid to MasterCard in the second quarter of this year and 2.5 million dollar will be paid in the third quarter.

The 2010 World Cup will be held in South Africa.

REUTERS PDS BST0442