The opinion of the court was delivered by: Loretta A. Preska, U.S.D.J.
AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW
Fédération Internationale de Football Association ("FIFA") is the worldwide governing body of soccer and the organizer of the FIFA World Cup, a once-every-fourth-year tournament that its president calls "the world's largest and most beloved sporting event." As befits a sporting organization of this stature and renown, FIFA's slogan is "fair play."
MasterCard, the payment card services provider, has sponsored the World Cup in the financial services category for the last four cycles or sixteen years. Section 9.2 of MasterCard's most recent sponsorship contract with FIFA gave MasterCard the first right to acquire the FIFA World Cup sponsorship for the next cycle. As is set out in detail below, FIFA breached its obligation under Swiss contract law to give MasterCard the first right to acquire the next round of sponsorship. In addition, FIFA's conduct in performing its obligation and in negotiating for the next sponsorship cycle was anything but "fair play" and violated the heightened obligation of good faith imposed by the applicable Swiss law (as well as FIFA's own notion of fair play as explained by its president). For example:
FIFA's negotiators lied repeatedly to MasterCard, including when they assured MasterCard that, consistently with MasterCard's first right to acquire, FIFA would not sign a deal for the post-2006 sponsorship rights with anyone else unless it could not reach agreement with MasterCard.
FIFA's negotiators lied to VISA when they repeatedly responded to the direct question of whether MasterCard had any incumbency rights by assuring VISA that MasterCard did not.
FIFA's negotiators provided VISA with blow-by-blow descriptions of the status of the FIFA-MasterCard negotiations while concealing from its long-time partner MasterCard both the fact of the FIFA-VISA negotiations as well as the status of those negotiations -- an action FIFA's president admitted would not be "fair play."
FIFA's marketing director lied to both MasterCard, FIFA's long-time partner, and to VISA, its negotiating counterparty, to both of which FIFA, under Swiss law, owed a duty of good faith. When, pursuant to his engineering, VISA raised its bid to the same level as MasterCard's, he declined his subordinates' suggestion to give MasterCard the opportunity to submit a higher bid based on his concern for his own reputation with the FIFA Board. He also declined his subordinates' recommendation that he recommend to the FIFA Board that it continue with its prior approval of MasterCard as the post-2006 sponsor. Instead, he told the board it was difficult for him to make a recommendation and never mentioned MasterCard's first right to acquire the post-2006 sponsorship.
On the morning of the first of March 2006 FIFA board meetings and after all three FIFA boards had previously approved MasterCard as the post-2006 sponsor, FIFA's marketing director called VISA to say that if VISA increased its cash bid by $30 million to the level of MasterCard's bid, VISA "would be the partner."
Even after MasterCard had signed the "FINAL version" of the post-2006 sponsorship agreement and returned it to FIFA, FIFA's negotiators delayed telling MasterCard that the FIFA Board had chosen VISA; instead they waited for the VISA board to ratify the VISA agreement.
After the FIFA boards had approved MasterCard as post-2006 sponsor and after MasterCard had agreed to FIFA's asking price and agreement had been reached on all other terms and after FIFA's in-house counsel had solicited FIFA members for items that might be used to claim that MasterCard breached the Agreement, FIFA pointed to a trademark issue that had been present since 2000 or 2001 to justify granting the post-2006 sponsorship to VISA and sent a letter to MasterCard -- after the commencement of this lawsuit -- purporting to terminate the Agreement and thus MasterCard's first right to acquire.
After MasterCard and FIFA waived, under Swiss law, both the 90-day time periods set out in section 9.2 by their "conclusive conduct," FIFA now seeks retroactively to revive one of the 90-day periods, but not the other, to justify its choice of VISA for the post-2006 sponsorship.
While the FIFA witnesses at trial boldly characterized their breaches as "white lies," "commercial lies," "bluffs," and, ironically, "the game," their internal emails discuss the "different excuses to give to MasterCard as to why the deal wasn't done with them," "how we (as FIFA) can still be seen as having at least some business ethics" and how to "make the whole f***-up look better for FIFA." They ultimately confessed, however, that "[I]t's clear somebody has it in for MC."
Thus, as set out in detail below, FIFA has breached its obligation under section 9.2 to give MasterCard the first right to acquire the post-2006 sponsorship, both under the applicable Swiss contract law and the applicable Swiss law requiring good faith. Because section 22 of the parties' Agreement permits the Court to grant equitable relief upon a finding of breach, the only equitable result is that FIFA be prohibited from proceeding with the subsequent FIFA-VISA agreement and be required to proceed with the 2007-2014 MasterCard Agreement that the parties agreed to and MasterCard signed and returned to FIFA.
1. MasterCard is a corporation organized under the laws of the State of Delaware and having its principal place of business in Purchase, New York. (Complaint ¶ 5; Answer ¶ 5). MasterCard provides an inter-face for credit, deposit, electronic cash, business-to-business and other payment transactions between the over 25,000 financial institutions in its network and those institutions' customers. (Declaration of John Stuart, executed on June 6, 2006 ("Stuart Decl."), ¶ 5).
2. Defendant FIFA is an association organized under the laws of Switzerland and having its principal place of business in Zurich. (Complaint ¶ 6; Answer ¶ 6; Pl. Ex. 421). FIFA is the worldwide governing body of soccer, known outside the United States as "football." It also is the organizer of, and owner of the rights with respect to, the FIFA World Cup, the famous worldwide soccer tournament. (Complaint ¶ 6; Answer ¶ 6; Pl. Ex. 422).
3. The predominate language in which business is transacted at FIFA is English, (Trial Tr. p. 48, l. 1-3), and each of the FIFA witnesses who testified at trial was completely fluent and sophisticated in English.
4. As determined by the history of negotiations and series of sponsorship contracts, FIFA and MasterCard have roughly equal bargaining power.
MasterCard's Use of and Reliance on Sports Sponsorships
5. Sports sponsorships are an important part of MasterCard's global marketing effort. MasterCard utilizes sports sponsorships around the world to increase public awareness of, preference for and usage of its brand. (Stuart Decl. ¶ 8).
6. Through advertising rights associated with a given sponsorship, MasterCard is able to promote its brand to target audiences. Furthermore, through the development and execution of marketing programs tied to the sponsorship, MasterCard and its member institutions are further able to leverage the sponsorship directly into increased card issuances and usage. Sponsorships also provide MasterCard with content for many of its advertising campaigns. For example, MasterCard's sponsorships of Major League Baseball, golf, football, hockey and soccer have all been featured in "Priceless" commercials broadcast throughout the world. (Stuart Decl. ¶¶ 8-10).
The Uniqueness of the FIFA World Cup and of FIFA World Cup Sponsorship
7. The FIFA World Cup, the once-every-fourth year worldwide soccer tournament held most recently in Germany this past summer, is the most widely watched, fanatically followed sporting event in the world. (Complaint ¶ 10; Answer ¶ 10; Blatter Tr.*fn1 134/17-135/1, 135/9-135/15; Houseman Tr. 44/14-44/22; Lampman Tr. 58/23-59/4).
8. FIFA concedes, and indeed capitalizes on, this fact. FIFA touts on its official website, www.fifa.com, and its representatives admitted under oath that:
a. "The FIFA World Cup is the world's largest and most beloved sporting event." (Blatter Tr. 133/2-133/6; Lampman Tr. 54/9-54/12; Schuster Tr. 53/9-53/12; Pl. Ex. 5; See also Blatter Tr. 135/9-135/15);
b. "The FIFA World Cup enjoys the undisputed status as the greatest single sporting event of the modern world." (Lampman Tr. 55/19-55/22; Schuster Tr. 53/19-53/22; Pl. Ex. 5);
c. "No other sporting event captures the world's imagination like the FIFA World Cup." (Lampman Tr. 54/13-54/16; Schuster Tr. 53/13-53/15; Pl. Ex. 5);
d. "Every four years, the FIFA World Cup holds the entire global public under its spell." (Schuster Tr. 53/23-54/1; Pl. Ex. 5); and
e. "Every four years, the spotlight of world attention focuses on the month-long FIFA World Cup when billions of people in more than 200 countries around the world tune in to watch arguably the biggest show on earth." (Schuster Tr. 55/11-55/16; Pl. Ex. 5).
9. Statistics confirm the immense world-wide popularity of the FIFA World Cup (Complaint ¶ 10; Answer ¶ 10):
a. An accumulated television audience of more than 30 billion people around the globe watched the 1998 (France) FIFA World Cup tournament. (Schuster Tr. 54/25-55/1; Pl. Ex. 5);
b. More than 28 billion viewers in 213 countries collectively watched on television the 2002 (Korea/Japan) FIFA World Cup tournament . (Complaint ¶ 10; Answer ¶ 10; Schuster Tr. 55/24-56/4; Pl. Ex. 5); and
c. FIFA estimates that more than 30 billion people in the world collectively watched this year's 2006 (Germany) FIFA World Cup tournament on television, with more than one billion people watching the final match alone. (Schuster Tr. 56/13-56/17, 56/25-57/4).
10. Because, as FIFA acknowledges, the event "reaches an audience of a size and diversity that is unrivaled by any other single sports body," the FIFA World Cup is "a sporting, social and marketing phenomenon" that FIFA itself describes as "the most effective international marketing platform" in the world, "more valuable than the Olympics." (Blatter Tr. 134/17-135/1; Schuster Tr. 55/3-55/6, 55/17-55/23; Pl. Ex. 5; Pl. Ex. 340) (emphasis added).
11. For all of these reasons, sponsorship of the FIFA World Cup is -- to quote FIFA's co-Head of Business Development & Sales -- a "unique property." (Schuster Tr. 279/11-280/8; See also van der Noll Tr. 20/1-20/3). In the words of FIFA and its representatives, "the FIFA World Cup is a five-star sponsorship that gives its sponsors unrivaled exposure." (Blatter Tr. 134/7-134/9; Schuster Tr. 55/5-55/10; Pl. Ex. 5) (emphasis added).
MasterCard's Long-Running Sponsorship of FIFA World Cup Soccer
12. Because of the unique benefits it provides, MasterCard has paid nearly $100 million in the aggregate to be an official sponsor of the FIFA World Cup for the past 16 years. (Complaint ¶ 12; Answer ¶ 12; Stuart Decl. ¶¶ 14, 17; Pl. Ex. 94). Throughout that time and up through the filing of this action, FIFA and MasterCard have enjoyed a "strong partnership" and an "extremely successful" and "long-term" relationship. (Pl. Ex. 86; Pl. Ex. 27; Pl. Ex. 4; Valcke Tr. 59/15-59/20).
13. MasterCard began its affiliation with the FIFA World Cup in 1990 as the Official Card of World Cup Italia. Since then, MasterCard has been an Official Sponsor of the 1994 FIFA World Cup (USA), 1998 FIFA World Cup (France), 2002 FIFA World Cup (Korea/Japan) and 2006 FIFA World Cup (Germany) tournaments. MasterCard also has sponsored the 1999 and 2003 FIFA Women's World Cup tournaments. (Stuart Decl. ¶ 14).
14. MasterCard derives numerous benefits from its long-running sponsorship of the FIFA World Cup. The sponsorship provides a platform for MasterCard to promote its brand to a worldwide audience through in-stadium and broadcast advertising. (Stuart Decl. ¶ 15). Through various marketing programs that it develops and implements, both alone and in conjunction with various financial institutions in its network, MasterCard is able to increase the circulation and usage of its branded cards, thereby generating revenues both for itself and the financial institutions in its network. (Declaration of Rogerio Bonfiglioli, executed on June 7, 2006 ("Bonfiglioli Decl."), ¶¶ 9-12; Stuart Decl. ¶ 16). Additionally, MasterCard's association with the world's most popular sporting event has been critical to its ability to compete globally with its larger competitor, VISA International ("VISA"), which has long been a sponsor of the Olympic Games. (Bonfiglioli Decl. ¶ 17; Stuart Decl. ¶ 16).
MasterCard's Ongoing Insistence on a Right of First Refusal or Right of Renewal in Its World Cup Sponsorship Agreements
15. MasterCard's 16-year sponsorship of the FIFA World Cup has been effectuated pursuant to a series of written agreements. Prior to 2002, those agreements were between MasterCard and ISL Marketing AG ("ISL"), a sports licensing and marketing company in Europe that served as the exclusive sponsorship sales agent for FIFA. After ISL declared bankruptcy in mid-2001, FIFA decided to handle the negotiation and sale of World Cup sponsorship rights in-house, through its subsidiary FIFA Marketing AG and, later, FIFA Marketing & TV AG.*fn2 (Declaration of Carl Munson, Jr., executed on June 8, 2006 ("Munson Decl."), ¶ 5; seealso ¶¶ 7-11 & Pl. Exs. 238-40). Thereafter, any World Cup sponsorship agreement into which MasterCard entered was with FIFA. (Munson Decl. ¶ 5).
16. As set out in detail in the unimpeached testimony of Carl Munson, Jr., Associate General Counsel of MasterCard, whose testimony I credit, until 2005, Mr. Munson "negotiated every one of MasterCard's FIFA World Cup sponsorship agreements, dating back to 1988." (Munson Decl. ¶ 4).
17. Mr. Munson traces the genesis of Section 9.2 at issue in this action "back to the very first FIFA World Cup sponsorship agreement into which MasterCard entered in 1988. In negotiating that agreement (relating to the 1990 FIFA World Cup in Italy), MasterCard insisted -- as a condition of acquiring sponsorship rights (in other words, as a 'deal breaker') -- that it receive a right of first refusal with respect to sponsorship of the 1994 FIFA World Cup. A telex from Alan Shulteis, then Head of Marketing at MasterCard, dated May 25, 1988 . . . demonstrates this. In this telex, Schulteis wrote:
Notwithstanding the verbal statements made by ISL supporting our desire and requirement for a 'right of first refusal' for 1994 they are unwilling to provide such protection of our investment in Italia 1990. After reviewing this with Russ Hogg and others we cannot go forward without this protection or assurance. To proceed without a 'right of first refusal' for 1994 [the year of the next FIFA World Cup] would violate our responsibility to our worldwide membership. Simply put, we and the members would build and invest in Italia 90, potentially to the benefit of a competitor . . . All I can do is apologize to you and your company but we cannot go forward without this protection. (emphasis added)." (Munson Decl. ¶ 6).
18. As Mr. Munson explained in detail, in each of the fiveWorld Cup sponsorship agreements into which it has entered (either with ISL or FIFA), MasterCard has bargained for rights with respect to the next World Cup cycle, either in the form of a right of renewal or a right of first refusal. (Munson Decl. ¶¶ 6-11; Houseman Tr. 31/14-31/19).
The 2006 World Cup Sponsorship Agreement and Section 9.2 Thereof
19. The contract at issue in this proceeding and pursuant to which MasterCard recently sponsored the 2006 FIFA World Cup is entitled the Official FIFA Partner Agreement between FIFA and MasterCard, made as of November 26, 2002 (the "2006 World Cup Sponsorship Agreement" or the "Agreement"). (Pl. Ex. 61; Stuart Decl. ¶ 21).
20. Under the Agreement, FIFA granted to MasterCard exclusive sponsorship rights, in the category of "real and/or virtual payment and/or account access systems" (e.g., credit cards, debit cards and ATMs), with respect to the 2006 FIFA World Cup and other enumerated FIFA competitions, including the FIFA Women's World Cup, held during the term of the Agreement, commencing on January 1, 2003 and concluding three months after the conclusion of the 2006 FIFA World Cup. (Pl. Ex. 61; Stuart Decl. ¶ 21). In return for such rights, MasterCard agreed to pay a total of $50 million over the course of four years. (Pl. Ex. 61).
21. The exclusive sponsorship rights that MasterCard acquired under the Agreement include the right to (i) use the designation of the official sponsor, partner, supplier or product of FIFA World Cup soccer, (ii) use FIFA's official World Cup marks, (iii) display advertising boards, and advertise on giant video screens, within the stadiums hosting World Cup events, (iv) advertise, free of charge, in official FIFA World Cup programs sold during events, (v) receive hospitality facilities in or near World Cup sites, in addition to tickets, parking passes and accreditations to attend World Cup games and events, (vi) receive exposure and advertising on FIFA's official website and (vii) receive preferential advertising arrangements with respect to World Cup broadcasts. (Pl. Ex. 61; Stuart Decl. ¶ 21).
22. In addition, MasterCard received the "first right to acquire" any package of advertising and sponsorship rights that FIFA offers, in MasterCard's product category, during the next World Cup cycle. Section 9.2 of the Agreement states:
In the event that MASTERCARD has not materially breached this AGREEMENT, MASTERCARD will have the first right to acquire, with respect to PRODUCTS, the package of advertising and sponsorship rights offered by FIFA, if any, in connection with the football competitions that are the subject of this AGREEMENT and which will be held during the period 2007-2010. Such right is to be exercised by MASTERCARD within ninety (90) days of receipt of the written offer from FIFA setting out the terms and consideration payable for such package of rights. Thereafter, FIFA will be free to grant to any entity such rights on comparable terms for such football competitions with respect to PRODUCTS. Ninety (90) days prior to FIFA sending MASTERCARD the written offer detailed above, FIFA shall notify MASTERCARD, in writing, that it intends to send out such an offer. (Pl. Ex. 61).
23. As the Court previously has found, "the right of first refusal [in section 9.2] was bargained for, was hard bargained for, and MasterCard paid more for the bundle of rights including the right of first refusal than it would have paid without such a right." (7/27/06 Tr. of Decision Denying Defendant's Motion to Compel Arbitration, at p. 8). Likewise, FIFA's co-Head of Business Development & Sales admitted that MasterCard's "first right to acquire" is a "significant" and "important" right in the Agreement. (Schuster Tr. 8/14-8/17, 178/18-178/24). The Parties' Mutual Understanding of the Operation of Section 9.2 and The Negotiation and Drafting History of the Section
24. There is no dispute between the parties as to the operation of section 9.2, although they differ as to its nomenclature. MasterCard refers to its right under section 9.2 as a "right of first refusal"; FIFA calls it a "first right to acquire." (CompareMunson Decl. ¶ 2, withHouseman Tr. 163/10-164/3; seealsoAnswer ¶¶ 22-23).
25. The parties agree that section 9.2 does not require FIFA to offer to MasterCard a package of advertising and sponsorship rights, in MasterCard's product category, with respect to the next World Cup cycle, unless FIFA, of its own volition, has determined to grant rights in that category. The parties further agree that, in the event that FIFA has determined to grant such rights, FIFA is obligated, under section 9.2, to afford MasterCard the first right to acquire such rights. FIFA must send to MasterCard a "written offer" of the package of rights, setting out the terms and consideration for such package. (Munson Decl. ¶ 32; Houseman Tr. 60/7-60/9). The written offer must be in a form that, if accepted by MasterCard, would constitute a binding agreement between the parties. (Munson Decl. ¶¶ 34-40; Houseman Tr. 55/20-56/12, 83/17-83/20, 84/4-84/8).
26. At least 90 days prior to making such an offer, FIFA must notify MasterCard in writing of FIFA's intent to make the offer. (Munson Decl. ¶ 32; Pl. Ex. 97; Houseman Tr. 63/5-63/24; Schuster Tr. 194/13-194/190). The notice requirement is intended, in part, to make it transparent to both parties that FIFA has "start[ed] the clock ticking" under section 9.2. (Pl. Ex. 97; Munson Decl. ¶ 32; Houseman Tr. 84/4-84/8, 342/25-343/7).
27. If, within 90 days after receiving the "written offer," MasterCard exercises its rights under section 9.2, then MasterCard has acquired the package of rights offered by FIFA, and FIFA is prohibited from granting the rights to a third party. (Stuart Decl. ¶ 2; Houseman Tr. 139/15-140/20). On the other hand, if, after 90 days of receiving the written offer, MasterCard does not exercise its rights, then FIFA is free to grant such package of rights to a third party, but only on terms "comparable" to those offered to, and declined by, MasterCard. (Munson Decl. ¶ 24; Pl. Ex. 97; Houseman Tr. 80/5-80/18; Lampman Tr. 202/9-202/14, 203/21-204/8, 204/19-205/2; Schuster Tr. 23/1-23/7; Valcke Tr. 97/5-97/20).
28. If no third party accepts the package, and thereafter FIFA determines to revise the package of rights and grant a different set of rights or terms from those previously offered to MasterCard, then the requirements of section 9.2 apply anew, and, as the Head of FIFA's Commercial Legal Department described it in his testimony, "the whole process effectively starts again": FIFA would be obligated to offer the revised package of rights to MasterCard in a written document setting forth the terms and consideration for such package; FIFA would be required to precede the offer with no less than 90 days written notice of its intent to offer a revised package of rights; and, if after 90 days of MasterCard's receipt of the revised offer, MasterCard does not exercise its rights, FIFA would then be free to grant such package of revised rights to a third party, but only on comparable terms. (Munson Decl. ¶ 24; Houseman Tr. 82/2-82/24, 116/22-117/3; Lampman Tr. 216/13-217/2; Schuster Tr. 22/16-24/8, 144/20-145/3).
29. The parties' positions with respect to the operation of section 9.2 are consistent with the negotiation and drafting history of the provision, which, under Swiss law (which governs the Agreement), may be considered by the Court.
30. The initial draft of the section, prepared by FIFA and circulated to MasterCard on September 6, 2002, provided:
9.2 In the event that FIFA continues to hold the necessary advertising and sponsorship rights and MASTERCARD has not materially breached this AGREEMENT, MASTERCARD will have the first right to acquire, with respect to PRODUCTS, the package of the same or similar advertising and sponsorship rights offered by FIFA, if any, in connection with the football competitions that the subject of this AGREEMENT which will be held during the period 2007-2010. Such right is to be exercised by MASTERCARD within 60 days of receipt of the written offer from FIFA setting out the terms and consideration payable for such package of rights. Thereafter, FIFA will be free to grant to any entity any rights for such football competitions with respect to PRODUCTS. (Munson Decl. ¶ 16; Pl. Ex. 242).
31. At an all-day negotiating session on September 11, 2002, at MasterCard's offices in Purchase, New York, Mr. Munson negotiated significant changes to this language. Mr. Munson negotiated that, after the time expired for MasterCard to exercise its right to acquire the package of sponsorship rights offered to it, FIFA would be free to grant "such" rights to a third party only "on comparable terms." (Munson Decl. ¶¶ 22-24). He further negotiated that the 60-day exercise period proposed by FIFA be expanded to 90 days and that FIFA be required, at least 90 days before offering rights to MasterCard, to notify MasterCard, in writing, of FIFA's intent to make an offer. (Munson Decl. ¶¶ 25-27).
32. These negotiated changes were reflected in the next draft contract circulated by FIFA on October 8, 2002, which provided:
9.2 In the event that FIFA continues to hold the necessary advertising and sponsorship rights and MASTERCARD has not materially breached this AGREEMENT, MASTERCARD will have the first right to acquire, with respect to PRODUCTS, the package of the same or similar advertising and sponsorship rights offered by FIFA, if any, in connection with the football competitions that are the subject of this AGREEMENT which will be held during the period 2007-2010. Such right is to be exercised by MASTERCARD within 90 days of receipt of the written offer from FIFA setting out the terms and consideration payable for such package of rights. Thereafter, FIFA will be free to grant to any entity such rights on comparable terms for such football competitions with respect to PRODUCTS. 90 Days prior to FIFA sending out the written offer detailed above, FIFA shall notify MASTERCARD, in writing, that it intends to send out such an offer. (Munson Decl. ¶ 28; Pl. Ex. 244) (emphasis added).
33. After receipt of the October 8 draft, Mr. Munson negotiated additional changes to the language of section 9.2. Most notably, Mr. Munson negotiated that MasterCard shall have the first right to acquire "the package of advertising and sponsorship rights offered by FIFA," and not merely a package that is "similar" to that offered by FIFA. The first sentence of section 9.2 was thus changed from "MASTERCARD will have the first right to acquire . . . the package of the same or similar advertising and sponsorship rights offered by FIFA" to "MASTERCARD will have the first right to acquire . . . the package of advertising and sponsorship rights offered by FIFA." (Munson Decl. ¶¶ 29-30).
34. The drafting changes set out above support the common understanding of the parties that the obligations of section 9.2 were ongoing and that the procedures of section 9.2 applied anew each time FIFA offered a package of rights to MasterCard.
FIFA Determines to Revise Its Sponsorship Structure
35. Within several months after the parties' execution of the 2006 World Cup Sponsorship Agreement, FIFA began to explore possible changes to its sponsorship structure to be implemented in connection with the sponsorship cycle following the 2006 World Cup. (Lampman Tr. 27/9-27/20, 28/3-28/9, 29/6-29/13, 64/8-65/24; Valcke Tr.12/5-12/18, 24/24-25/22). It hired Jérôme Valcke as Director of FIFA Marketing & TV in September 2003 to, among other things, review and, if appropriate, restructure FIFA's sponsorship program in time for the sponsorship cycle following the 2006 World Cup. (Blatter Tr. 31/25-32/11; Valcke Tr. 12/1-12/18).
36. Mr. Valcke determined that, given the changed business environment where numerous of FIFA's then 15 sponsors had expanded their lines of business so as to overlap with each other, it was no longer possible for FIFA to grant "exclusive" sponsorship rights to that many sponsors. He concluded that FIFA had to reduce the number of top level sponsors from 15 down to six. (Blatter Tr. 31/25-32/23; Valcke Tr. 24/24-25/22; Pl. Ex. 77). Because, at the same time, revenue from sponsors is critical to FIFA's ability to meet its budgetary needs, Mr. Valcke understood that the reduction in the number of top level sponsors would require FIFA significantly to increase the price of sponsorship. (Valcke Tr. 24/24-25/22). Mr. Valcke figured that the price of a top level or "Tier 1" sponsorship would have to be increased to at least $100 million per four-year FIFA World Cup cycle and that sponsorships should be sold for two four-year terms instead of one four-year term. (Valcke Tr. 24/24-25/22, 38/24-39/8). In Mr. Valcke's view, there were only a small handful of product categories in the world that could afford that price. "Financial services," a combination of two then existing product categories (payment services and banking services), was one of those categories. (Lampman Tr. 70/25-71/17, 75/9-75/15; Valcke Tr. 29/3-29/11; Pl. Ex. 77).
37. After determining that one of the product categories FIFA would seek to exploit in its revised sponsorship structure would be "financial services," Mr. Valcke and a team working under him (referred to as the "Beyond 2006" team) set out to identify companies in the financial services industry that would be interested in the sponsorship. In addition to the incumbent sponsor, i.e., MasterCard, Mr. Valcke identified a number of other credit card companies and banks that could be interested in the sponsorship. (Valcke Tr. 29/3-29/19). At the top of the list was VISA. As Mr. Valcke testified, "if . . . you have to think about various companies potentially who could have an interest or are already in the world of sport[,] [y]ou're thinking about MasterCard and VISA, that's it." (Valcke Tr. 34/5-34/14; see alsoValcke Tr. 49/8-50/2).
FIFA Reviews Its Obligations to Incumbent Sponsors
38. In connection with its internal review of FIFA's sponsorship program and how to restructure the program, Mr. Valcke and his team analyzed the renewal rights, if any, that FIFA's then 15 existing sponsors had under their contracts. (Houseman Tr. 29/3-29/15, 30/7-30/9; Valcke Tr. 39/20-40/18). In considering any new sponsorship platform, Mr. Valcke wanted to know if FIFA was operating with a clean slate or whether there were obligations to existing sponsors that would constrain FIFA's restructuring efforts. (Valcke Tr. 40/5-40/18). In late 2003, Mr. Valcke thus asked the Head of FIFA's Commercial Legal Department, Tom Houseman, to prepare a written analysis of the renewal rights, if any, in FIFA's sponsorship contracts. (Pl. Ex. 97; Houseman Tr. 45/4-45/20; Valcke Tr. 41/2-41/22, 42/2-42/5, 42/9-42/11, 43/2-43/3).
39. Mr. Houseman, who holds himself out as "legal counsel" but is not authorized to practice law in any jurisdiction, prepared a six-page document entitled "Official Partner Renewal Rights," analyzing the renewal rights, if any, of FIFA's 15 then-sponsors. (Houseman Tr. 33/11-33/18, 34/15-34/19, 219/15-219/19, 220/2-220/4). Among the "renewal clauses" that Mr. Houseman addressed was section 9.2 of the Agreement, which, in Mr. Houseman's opinion, required FIFA, "before it grants any rights with respect to the products within MC's product category, [to] keep open for 90 days the opportunity to acquire any package of sponsorship rights in relation to ANY MC products" and to "give MC 90 days notice that it will make MC an offer, which means that 180 days must elapse between the original notice and the expiry of the offer period." (Pl. Ex. 97; Pl. Ex. 56).
40. In his written analysis, Mr. Houseman concluded that, notwithstanding these constraints, FIFA is "not restricted from approaching or making presentations to third parties prior to a MC decision." (Pl. Ex. 97; Pl. Ex. 56). As he explained in testimony, section 9.2, in his view, meant that FIFA was "free to offer, but not free to sell" a sponsorship in MasterCard's product category at any time prior to or during the 180 day period set out in the clause. (Houseman Tr. 64/10-64/12, 85/17-85/24). When asked what would happen if a third party that had been offered the sponsorship by FIFA proceeded to accept the offer prior to MasterCard exercising its rights under section 9.2, Mr. Houseman responded: "We might have had a problem;" namely, "MasterCard would be entitled to claim that we'd breached their first right to acquire." (Houseman Tr. 66/4-66/13). In that scenario, according to Mr. Houseman, it would be a "passive breach" on the part of FIFA, because "[i]t ended up that FIFA was, by virtue of the actions of a third party, unable to give the benefit of the first right to acquire." (Houseman Tr. 69/3-69/11). Mr. Houseman acknowledged that under his interpretation, MasterCard's rights under section 9.2 were therefore "contingent on the fortuitousness of a third party not accepting the offer from FIFA" or, in other words, "MasterCard's rights under section 9.2 were a matter of luck." (Houseman Tr. 69/16-70/4, 114/24-115/1). In that regard, Mr. Houseman's conclusions were accepted by Mr. Valcke and his sponsorship team and became the basis for FIFA's conduct described below. (Schuster Tr. 24/3-24/8, 132/24-133/4; Valcke Tr. 55/7-56/2).
41. With respect to section 9.2's "restriction relating to 'comparable terms,'" Mr. Houseman wrote in his analysis that: "if FIFA wants to appoint VISA in relation to any of MC's products, it can only do so if the terms are comparable to the terms offered to MC." (Pl. Ex. 97; Pl. Ex. 56) (emphasis added). VISA is the only company other than FIFA's then-existing sponsors mentioned by name in Mr. Houseman's analysis. Neither Mr. Houseman nor Mr. Valcke could recall whether Mr. Valcke specifically asked Mr. Houseman to opine on whether FIFA could enter into a sponsorship contract with VISA. (Houseman Tr. 75/15-75/24, 76/5-76/7, 76/23-76/25, 77/13-77/21; Valcke Tr. 47/6-48/2). Mr. Valcke testified: "Either it's: yes, I have clearly asked him to put VISA in or he put VISA because it was the only one competitor of MasterCard able to reach an agreement with FIFA." (Valcke Tr. 47/6-48/2). FIFA Solicits VISA's Interest in a World Cup Sponsorship -- March 2004
42. While Mr. Valcke and his "Beyond 2006" team were in the later stages of restructuring FIFA's sponsorship program, they decided to pursue VISA's interest as a potential sponsor of the FIFA World Cup. (Lampman Tr. 130/8-130/14).
43. In or around March 2004, Robert Lampman, then a Sales Director of FIFA Marketing & TV (and now co-Head of Business Development & Sales at FIFA) and a member of Mr. Valcke's "Beyond 2006" team, without solicitation, called Michael Lynch, a VISA representative involved in sports marketing, to arrange a meeting with him at an upcoming sports marketing conference in California that both men were scheduled to attend. (Lampman Tr. 78/9-78/15, 81/14-82/10, 82/21-83/13, 85/2-85/18).
44. Messrs. Lampman and Lynch met during the first week of March at the conference in California. (Pl. Ex. 55). During the meeting, Mr. Lampman informed Mr. Lynch that FIFA was restructuring its sponsorship structure and inquired about VISA's interest in pursuing a World Cup sponsorship. Mr. Lynch said that he was not certain but that the opportunity to sponsor the FIFA World Cup would be one that would certainly elicit discussion internally within VISA. (Lampman Tr. 87/20-88/7, 88/11-88/18). Mr. Lampman told Mr. Lynch that once FIFA had completed the restructuring of its sponsorship program, he would be back in touch to discuss sponsorship in more detail. (Lampman Tr. 91/14-91/23).
45. Mr. Lampman followed up the meeting with an e-mail to Mr. Lynch on March 12, 2004 in which he thanked Mr. Lynch for meeting with him and confirmed FIFA's "interest in developing a relationship with VISA on an informal basis." (Pl. Ex. 55).
FIFA Sends Notice of Its Intent to Make an Offer to MasterCard -- July 2004
46. In accordance with the provisions of section 9.2 of the Agreement, FIFA notified MasterCard, by letter dated July 14, 2004, of its intent to send out an offer concerning "marketing rights in relation to FIFA properties for the term 2007-2014" in not less than 90 days. (Pl. Ex. 86).
47. The letter, co-signed by Mr. Valcke and Eelco van der Noll, a former MasterCard employee who left to become Head of Marketing & Sponsorships at FIFA, acknowledged that "[i]n accordance with Section 9.2 of our agreement dated 26 November 2002, FIFA is required to give MasterCard 90 days' notice of its intention to present an offer to MasterCard for sponsorship rights to the competitions outlined in the agreement." (Stuart Decl. ¶ 26; Pl. Ex. 86). It then stated that "[t]herefore, this letter is intended to provide MasterCard with written notice that FIFA intends to make an offer to MasterCard outlining the package of marketing rights, the events covered, and the product category which FIFA proposes to offer" and "that this offer will not be made to MasterCard prior to 90 days from today." (Stuart Decl. ¶ 26; Pl. Ex. 86).
48. During a meeting between Messrs. Valcke, Lampman and Van der Noll of FIFA, and Deborah Hughes of MasterCard, Ms. Hughes requested, and FIFA consented, to postpone the time FIFA would present its written offer to MasterCard. The reason Ms. Hughes gave was that MasterCard needed preparation time so that it could respond to the expected written offer within the 90-day time frame prescribed by Section 9.2.
49. In a September 30, 2004 e-mail, Ms. Hughes requested that FIFA "extend you[r] visit date as far as you can" -- meaning the date on which FIFA would arrive in New York to deliver the written offer to MasterCard. (Valcke Decl. ¶¶ 13-14).
FIFA and VISA Meet in Athens -- August 2004
50. About a month after FIFA gave notice of its intent to make an offer to MasterCard, on August 20, 2004, three senior members of FIFA's sponsorship team, Messrs. Valcke, Lampman and van der Noll, met with Tom Shepard, Executive Vice President, Global Merchant Partnerships & Global Sponsorship, of VISA, in Athens in the midst of the Olympic Games. (Lampman Tr. 92/18-92/25, 93/19-94/19). The meeting was initiated by the FIFA representatives, who were "pursuing to find out whether VISA had an interest" in a FIFA World Cup sponsorship. (Lampman Tr. 130/8-130/18).
51. The FIFA team explained to Mr. Shepard the nature of FIFA's new sponsorship structure (consisting of three "Tiers" of sponsorship), the expected length of sponsors' commitments (eight years) and the expected cost of the sponsorship ($225 million over eight years). (Lampman Tr. 94/25-95/9, 95/22-96/15; Pl. Ex. 142).
52. Mr. Shepard stated that VISA had been "burnt" in the past when pursuing sponsorship of the FIFA World Cup and asked the FIFA representatives, "[w]hy VISA, why now?" (Pl. Ex. 142). He told the FIFA team that FIFA should not pursue a relationship with VISA unless there is a genuine opportunity for VISA to acquire the sponsorship. (Pl. Ex. 142; Lampman Tr. 96/25-97/11, 124/5-124/11). Mr. Shepard specifically asked the FIFA representatives whether MasterCard had any incumbency rights of which VISA should be aware. (Lampman Tr. 190/23-191/7).
53. Mr. Valcke and his colleagues assured Mr. Shepard that "FIFA [is] free to engage in any commercial relationship it desires post 2006 for [television] and sponsorship" and that VISA would have a "genuine opportunity" to acquire the sponsorship. (Pl. Ex. 142; Lampman Tr. 98/7-98/14). They made no mention, even generally, of MasterCard's "first right to acquire," although they well understood that section 9.2 of the 2006 World Cup Sponsorship Agreement posed a legal impediment to FIFA's granting rights to VISA. (Lampman Tr. 98/11-98/14, 98/21-100/2, 100/15-100/25, 101/15-101/22). Mr. Lampman, who admitted that the FIFA team "misrepresented the truth" to Mr. Shepard, explained that he and his colleagues were "interested in ensuring that Mr. Shepard was interested in pursuing a partnership with FIFA" and thus "were not about to tell Mr. Shepard that MasterCard had any rights with respect to future sponsorship." (Lampman Tr. 127/4-127/25, 190/23-191/8). According to Mr. Valcke, telling VISA that "FIFA was free to engage in any commercial relationship it desired" was a "commercial lie" that enabled FIFA to "keep the door open" with VISA. (Valcke Tr. 73/3-73/23).
54. Mr. Lampman followed up the Athens meeting with an e-mail three days later, thanking Mr. Shepard for meeting him and his colleagues in Athens and, on the assumption that VISA has "an appetite to further pursue a relationship with FIFA," proposing that their two teams meet in San Francisco the last week of November or first week of December. (Pl. Ex. 53). FIFA "Offers" Sponsorship in the "Financial Services" Category to VISA -- December 2004
55. On December 9, 2004, Mr. Valcke (Director of FIFA Marketing & TV), Mr. Lampman (then Sales Director of FIFA Marketing & TV) and Stefan Schuster (then also FIFA Marketing & TV Sales Director and now co-Head of Business Development & Sales for FIFA) met at VISA's offices in San Francisco with Mr. Shepard, Mr. Lynch and several other VISA representatives. (Lampman Tr. 160/22-163/13; Schuster Tr. 92/23-94/3; Pl. Ex. 69).
56. During the meeting, the FIFA team made a slide and video presentation promoting the benefits of sponsoring the FIFA World Cup, in general, and the 2010 FIFA World Cup in South Africa, in particular. (Schuster Tr. 94/4-94/25; Pl. Ex. 67). The FIFA representatives also presented to VISA the package of World Cup sponsorship rights in the "financial services" category for the next eight years. (Lampman Tr. 172/19-173/6; Schuster Tr. 95/7-95/14; Pl. Ex. 68). The presentation, as FIFA co-Head of Business Development & Sales, Mr. Schuster, admitted in testimony, was an "offer" by FIFA to VISA to be the "Tier 1" World Cup sponsor in the "financial services" category for the period 2007 to 2014 at a price of $225 million. (Schuster Tr. 95/18-95/23). In his direct written trial testimony, Mr. Schuster testified that "FIFA's negotiation team traveled to San Francisco to present FIFA's sponsorship strategy to VISA," (Declaration of Stefan Schuster, executed on September 21, 2006 ("Schuster Decl.), ¶ 39), not to make an offer. On cross-examination at trial, he was evasive but, after being confronted with his deposition testimony, finally admitted that an offer had been made to VISA on December 9, 2004. (Trial Tr. p. 110, l. 12 -- p. 115, l. 13).*fn3
57. In view of MasterCard's "first right to acquire," the Head of FIFA's Commercial Legal Department, Tom Houseman, conceded under oath that it was a "mistake" for FIFA to have offered the financial services category to VISA before FIFA offered it to MasterCard. (Houseman Tr. 108/13-108/16, 109/4-109/8, 109/22-110/2).
58. Nevertheless, at no point during the meeting did anyone from FIFA alert the VISA team to MasterCard's "first right to acquire" and the impediment such right imposed on FIFA's ability to deliver the package of rights being offered to VISA. (Lampman Tr. 174/13-175/11; Schuster Tr. 96/3-96/6; Pl. Ex. 67).
FIFA Misrepresents to VISA the Nature of MasterCard's Rights --Early January 2005
59. Following the meeting on December 9, 2004, the parties arranged to meet again in mid-January at VISA's offices in San Francisco.
60. In advance of that meeting, on January 6, 2005, Christopher McCleary, an in-house attorney at VISA and one of the attendees at the December 9, 2004 meeting, called Robert Lampman, then Sales Director of FIFA, to assure himself that FIFA had no contractual obligations to MasterCard that might impede FIFA's ability to do a deal with VISA. (Lampman Tr. 178/10-178/17; Pl. Ex. 26).
61. As reflected in an e-mail that Mr. Lampman wrote the same day in which he recounted the conversation, Mr. McCleary directly asked Mr. Lampman what incumbency rights MasterCard had in its contract with FIFA and whether there were any rights of which VISA should be aware. (Pl. Ex. 26). Mr. Lampman responded: "Our partner agreements do not provide for incumbency rights. We have an obligation to present to MasterCard and we will, but there is nothing in our agreement with MasterCard that would prohibit us from doing a deal with VISA should we choose to do so." (Pl. Ex. 26; Lampman Tr. 181/10-183/7, 192/4-192/21).
62. As FIFA's representatives readily admitted under questioning, Mr. Lampman's statements to Mr. McCleary were simply false. (Houseman Tr. 103/13-104/3; Lampman Tr. 181/10-183/7). At trial, Mr. Schuster characterized the statements as a "white lie," (Trial Tr. p. 130, l. 3-11) adding that, in his opinion, "VISA does not even want . . . to know the exact truth" because "if we tell him that there are incumbent rights and what it is, then he will never get approval from any of his boss[es] to talk to us." (Trial Tr. p. 130, l. 17 -- p. 131, l. 5). In any event, Mr. Schuster testified that "we wouldn't have told him anyways." (Trial Tr. p. 131, l. 11). 63. Yet at no time did any of FIFA's representatives -- Mr. Valcke, Mr. Houseman or Mr. Schuster, who were recipients of Mr. Lampman's e-mail recounting the conversation and who all were in frequent contact with VISA in the following days and months -- ever disabuse VISA of the false impression that nothing in FIFA's agreement with MasterCard constrained FIFA's ability to grant sponsorship rights to VISA. (Houseman Tr. 96/21-98/23). When asked why he "misrepresent[ed] the truth to Mr. McCleary," Mr. Lampman testified: "it was because it was beneficial to my commercial cause at that point in time." (Lampman Tr. 183/17-183/21). At trial, Mr. Valcke conceded that he never instructed Mr. Lampman to correct the falsehood because "it was the game." (Trial Tr. p. 385, l. 13-24).
FIFA Foresees No "Roadblocks" to Signing a Binding Letter of Intent with VISA -- Mid-January 2005
64. On January 14, 2005, the FIFA and VISA negotiating teams met again to discuss FIFA World Cup sponsorship in the financial services category. (Houseman Tr. 187/12-187/25; Schuster Tr. 96/19-97/14). Messrs. Valcke, Schuster and Houseman, for FIFA, and Messrs. Shepard, McCleary and Christopher Katsuleres, for VISA, attended the meeting. (Houseman Tr. 187/12-187/25; Schuster Tr. 96/19-97/14).
65. According to "minutes" of the meeting taken by Mr. Schuster, the "meeting was held in a very good atmosphere and with a positive and productive spirit" and "[d]iscussions about key matters . . . showed a very good common understanding on both sides." (Pl. Ex. 70; Schuster Tr. 98/18-99/8). Based on the "positive and productive" discussions, Mr. Schuster concluded that he foresaw no "major roadblocks to possibly concluding a deal with VISA" -- notwithstanding that FIFA had yet to even offer the "financial services" package of rights to MasterCard, as required under section 9.2. (Schuster Tr. 100/2-100/16, 101/7-101/12). When asked whether "by the end of your meeting with VISA on January 14th 2005, you saw no obstacles to doing a deal with VISA before you ever even presented the Financial Services category to MasterCard," Mr. Schuster testified: "Yeah. Absolutely correct." (Schuster Tr. 101/7-101/12).
66. In fact, the FIFA representatives told the VISA representatives that their objective was to have a "binding letter of intent signed" with VISA by June 2005. (Houseman Tr. 189/1-189/4; Schuster Tr. 99/9-99/18; Pl. Ex. 70).
67. As was the case in each of the prior meetings with VISA, no one from FIFA disclosed the fact that MasterCard had a "first right to acquire" the sponsorship rights that FIFA was seemingly committing to VISA. (Schuster Tr. 101/24-102/2, 102/20-102/23).
68. At the request of Mr. Shepard of VISA, the two teams agreed to arrange a meeting between FIFA's President, Joseph S. Blatter, and VISA's President, Christopher Rodrigues, in the near future. (Schuster Tr. 102/20-104/5; Pl. Ex. 70).
FIFA's and VISA's Top Executives Meet -- Late January 2005
69. Mr. Blatter and Mr. Rodrigues met in late January 2005 in Zurich around the time of the World Economic Forum in Davos, Switzerland. (Blatter Tr. 26/7-28/23; Schuster Tr. 104/6-104/16, 105/3-105/6; Pl. Exs. 145 & 400). The two executives had long known each other through activities with the Olympic Games. Mr. Blatter is a member of the International Olympic Committee, and VISA has been a long-standing Olympics sponsor. (Blatter Tr. 23/17-24/12).
70. The two executives, joined by their respective senior sponsorship executives, Messrs. Valcke and Shepard, met over dinner. (Blatter Tr. 26/7-28/23, 35/2-35/6, 36/5-36/21; Valcke Tr. 114/22-115/3, 115/23-116/6; See alsoShepard Tr. 61/24-63; Pl. Ex. 400). They met for about two hours to discuss their mutual interest in a partnership. (Pl. Ex. 145). Toward the end of the dinner, Mr. Blatter "expressed support" for the parties' discussions and "said that the potential of VISA being a partner would be welcomed." (Shepard Tr. 63/22-63/7).
71. Following the meeting, Mr. Valcke wrote to Mr. Shepard that he believed the meeting "went well" and expressed his "hope" that "we share the same wish, to be partners soon!" (Pl. Ex. 145; Valcke Tr. 122/12-122/23, 123-5-123/8). It was clear, as Mr. Valcke admitted, that "things were falling into place between VISA and FIFA." (Valcke Tr. 126/2-126/4).
FIFA "Offers" Sponsorship in the "Financial Services" Category to MasterCard -- February 2005
72. After FIFA gave notice to MasterCard in July 2004 of its intent to make an offer, representatives of FIFA, from time to time, provided MasterCard with a "few details" about the new FIFA sponsorship structure, but did not present, as it had done to VISA, the package of rights. (Valcke Tr. 87/10-87/20).
73. In early February, 2005, more than 210 days after FIFA gave notice of its intent to make an offer to MasterCard and after FIFA had had at least five meetings with VISA, FIFA sent its sponsorship team to MasterCard's offices in Purchase, New York to present the "financial services" package of rights.
74. On February 8, 2005, Messrs. Valcke, Schuster, Lampman and van der Noll met with John Stuart, Senior Vice President, Global Sponsorships of MasterCard, and his colleagues in the Global Sponsorship group, Deborah Hughes and Geraldine Cooper, to unveil officially FIFA's revised sponsorship structure and to "offer" sponsorship of the next two World Cups in the "financial services" category to MasterCard. (Stuart Decl. ¶¶ 1, 28; Schuster Tr. 86/12-86/16).
75. The meeting was similar in substance to FIFA's meeting with VISA in December 2004. The FIFA representatives presented largely the same multi-media presentation highlighting the benefits of sponsoring the FIFA World Cup, in general, and the 2010 FIFA World Cup in South Africa, in particular, that FIFA had presented to VISA. (Schuster Tr. 88/22-89/5, 89/14-89/15, 89/17-89/21, 90/3-90/10, 90/22-90/24, 94/4-94/10; comparePl. Ex. 65, withPl. Ex. 67; Stuart Decl. ¶¶ 29-30). They then presented to the MasterCard team the same package of sponsorship rights in the "financial services" category that they earlier had presented to VISA. (Schuster Tr. 91/12-92/5, 95/7-95/14; compare Pl. Ex. 66,with Pl. Ex. 68; Stuart Decl. ¶ 31).
76. The rights package was presented in the form of a document entitled "The FIFA Sponsorship Program 2007-2014," which, following a lengthy introduction, broadly outlined the "tangible benefits delivered by the FIFA Partnership, intended for inclusion in the FIFA Partnership Agreement." (Pl. Ex. 66, § 5.2). A copy of the FIFA Partnership Agreement was not attached. Nor was any such agreement provided to the MasterCard representatives at or following the meeting. (Schuster Tr. 92/6-92/10). The document that the FIFA representatives did provide, "The FIFA Sponsorship Program 2007-2014," was not denominated an "offer," was not signed by anyone at FIFA and contained no signature line for acceptance by anyone at MasterCard. Nor did it even outline such basic items as the definition of the "financial services" category for which the sponsorship opportunity was being presented.
77. Nevertheless, the combination of the FIFA representatives' oral presentation, coupled with their written materials, made clear that the package of sponsorship rights that was being presented at the meeting differed significantly from the sponsorship rights that had been granted to MasterCard in the 2006 World Cup Sponsorship Agreement. (Stuart Decl. ¶¶ 31-32).
78. The product category of "financial services" was far broader than the product category of "real and/or virtual payment and/or account access systems" in which MasterCard was sponsoring the 2006 FIFA World Cup. The "financial services" category included not only payment cards but also core banking services, such as current accounts and commercial and mortgage lending, which were outside MasterCard's line of business. (Stuart Decl. ¶ 31). The length of the sponsorship commitment (eight years) was twice the length of the commitment for the 2006 FIFA World Cup. (Stuart Decl. ¶¶ 31-32). And, as a result of the broadening of the product category and lengthening of the term, the fee being sought, $225 million, was more than four times the amount that MasterCard agreed to pay in the 2006 World Cup Sponsorship Agreement. (Stuart Decl. ¶¶ 31-32). The rights being offered were also somewhat expanded in that, for example, they included certain rights to use FIFA's logo.*fn4
79. At some point during the course of the meeting, the FIFA representatives suggested that MasterCard would have 90 days to make its decision regarding the sponsorship package. (Stuart Decl. ¶ 33). The MasterCard representatives resisted that suggestion, telling the FIFA team that, because of the expanded scope, length and price of the proposed sponsorship, the MasterCard team would have to undergo a substantial amount of work to analyze the proposal and could not be expected to receive a signed contract within 90 days. In response, the FIFA representatives assured them that FIFA did not expect a signed contract within 90 days, but needed only an indication of MasterCard's assent to the proposal and its willingness to enter into good faith contract negotiations within the 90-day timeframe. (Stuart Decl. ¶ 33).
80. At no time during the meeting did anyone on the FIFA team disclose that they earlier had met with, let alone presented the "financial services" package to, VISA. (Schuster Tr. 44/12-44/14, 199/11-199/15; Valcke Tr. 145/9-145/18).
FIFA Specifically Invokes MasterCard's 90-Day Exercise Period Under Section 9.2
81. Prior to the February 8 meeting with MasterCard, FIFA's team gave careful consideration to section 9.2 and what FIFA was obliged to do under the clause in order trigger MasterCard's 90-day exercise period in connection with the "financial services" package.
82. On the one hand, Mr. Valcke and his team wanted to "make it clear" to MasterCard, so that there would be "no confusion in MasterCard's mind," that the "clock would start to run on the 90 days" for MasterCard to exercise its right to acquire the "financial services" package. (Valcke Tr. 146/2-147/2, 147/13-147/24). Mr. Houseman thus advised Mr. Valcke that, at the meeting, the FIFA representatives should provide a "leave behind" that specifically "use[s] the word 'offer.'" (Pl. Ex. 146). Mr. Houseman explained that this step was "important because we needed MasterCard . . . to understand that the process we were pursuing was as defined in the contract." (Houseman Tr. 342/25-343/11).
83. On the other hand, there was concern within Mr. Valcke's group that if FIFA "explicitly reference[s] the word 'offer' on the leave behind, and MC [MasterCard] accept[s] the 'offer,' what MC will be accepting is what is set out in the leave behind, and, accordingly, the leave behind as a whole will become a binding contract between FIFA and MC." (Pl. Ex. 147). As Mr. Valcke admitted, he and his team did not want the "leave behind" to be "legally binding on FIFA." (Valcke Tr. 448/8-448/16; See alsoPl. Ex. 147). One of Mr. Valcke's team members thus advised that the "way forward in this instance . . . [should be] to write a letter to MC making them an offer in accordance with clause 9.2 of the current Agreement which would . . . set out the 'terms' and 'consideration' of the package of rights" to thus start the clock ticking. (Pl. Ex. 147).
84. As a result of these internal deliberations, and in an effort to make it clear to MasterCard that its rights were being triggered, about a week after the February 8 meeting, FIFA delivered a letter to MasterCard notifying it that the presentation of the rights package at the meeting constituted an "offer" and that, under section 9.2 of the Agreement, MasterCard would have 90 days from the date of the meeting to acquire the package of rights.
85. The letter, from Jérôme Valcke to John Stuart dated February 14, 2005, acknowledged that "[i]n accordance with Section 9.2 of our existing agreement, FIFA must give MasterCard notice of its offer, setting out the terms and consideration payable in relation to the package of rights to be offered to MasterCard, for its product category, for the Partnership Agreement beyond the 2006 FIFA World Cup" and that "MasterCard shall have 90 days, from the date of the offer, to exercise its right to acquire the rights offered by FIFA." (Pl. Ex. 27). It then stated: "This letter is therefore intended to provide MasterCard with written confirmation of FIFA's offer, as presented to MasterCard on the 8th February 2005 in Purchase. MasterCard's right to acquire the relevant rights expires on 8th May 2005." (Pl. Ex. 27).
86. Consistent with what the FIFA representatives told the MasterCard representatives during the February 8 meeting, Mr. Valcke's letter made clear that acceptance of the "offer" did not require the execution of a long-form contract. Rather, the letter indicated that the rights being offered would be more specifically set out in a long-form agreement "should MasterCard accept FIFA's offer set out herein." The letter did not specify, however, by what means MasterCard could "accept" FIFA's offer. (Pl. Ex. 27).
87. Mr. Houseman testified with respect to the February 14, 2005 letter that "it was important for MasterCard to understand that FIFA was pursuing the process under Section 9.2, that he "wanted to be clear that MasterCard would have 90 days from receipt of an offer to exercise its rights," that it was "important that both sides understood that [they] were operating under Section 9.2" and that he "wanted there to be no mistakes about it." (Trial Tr. p. 313, l. 13-23).
88. Internally, FIFA's team kept careful track of the 90-day period. Messrs. Schuster and Lampman, then the two Sales Directors handling the negotiations, recorded the 90-day period in a "progress chart" they maintained concerning their dealings with MasterCard. (Pl. Ex. 96; Lampman Tr. 231/19-232/23; Schuster Tr. 291/16-291/18, 293/15-293/22). Next to the date, "8 February 2005," they noted: "The 90 days notice of FIFA's offer in relation to the Tier 1 FIFA Partner rights package for the period 2007-2014 was given to MC orally on the date of the presentation." (Pl. Ex. 96). Across from the date, "14 February 2005," they wrote: "Offer open for 90 days." (Pl. Ex. 96).
89. In fact, so closely did they follow the 90-day period that Messrs. Schuster and Lampman were able to recall at their depositions, without any refreshment of their recollections, the precise date (May 8, 2005) and day of the week (Sunday) on which the 90-day period was set to expire. (Lampman Tr. 232/11-232/18; Schuster Tr. 31/17-31/24).
FIFA Negotiates Along Two Tracks with VISA and MasterCard, Yet Misleads MasterCard Into Believing that MasterCard Had an "Exclusive Negotiation" Period -- February to May 2005
90. During the weeks following the February 8 meeting in Purchase, the FIFA sponsorship team of Messrs. Valcke, Schuster, Lampman and Houseman proceeded on two fronts. (Valcke Tr. 144/3-144/20).
91. Negotiations progressed rapidly with VISA, such that, on February 17, 2005, less than ten days after MasterCard was first presented with the "financial services" package, Mr. Valcke wrote to Mr. Shepard of VISA that "[s]hould negotiations continue along the lines as they have until now I could expect, and strongly recommend, that VISA and FIFA enter into an agreement." (Pl. Ex. 415). On February 25, Mr. Valcke followed up with Mr. Shepard: "Waiting to receive your confirmation we have a deal!!!!" (Pl. Ex. 149). To his colleagues at FIFA, Mr. Valcke trumpeted: "Soon we will receive a call asking for a signature date!!!!" (Pl. Ex. 150; See also Schuster Tr. 123/19-123/25). At the same time, Mr. Valcke cautioned: "But a deal is not done or can collapse before, so yes we have to play careful with MC [MasterCard]." (Pl. Ex. 150). Mr. Valcke explained that what he meant was, "we have to be careful in the way we are dealing with VISA to make sure that if MasterCard finally say: no, we have no interest, VISA will not use that fact we are pushing away the date of the signature to say: oh guys, sorry but the deal is over." (Valcke Tr. 144/3-144/15).
92. Meanwhile, consistent with Mr. Valcke's direction to "play careful with" MasterCard until "a deal is . . . done" with VISA, FIFA's representatives responded to the ongoing inquiries of MasterCard concerning the specifics of the sponsorship proposal, while MasterCard -- completely unaware of FIFA's negotiations with VISA -- engaged in the process of internally analyzing and reviewing with the financial institutions in its network, the new "financial services" package. (Stuart Decl. ¶ 36).
93. Not once during this time did any of the FIFA representatives disclose to their counterparts at MasterCard that FIFA had offered and was negotiating with VISA over the same rights package that FIFA had presented to MasterCard. (Schuster Tr. 199/11-199/15).
94. Instead, FIFA's negotiating team misled Mr. Stuart and his team into believing that MasterCard was in a 90-day "exclusive negotiation period" with FIFA. Mindful of the 90-day exercise period that FIFA had invoked in Mr. Valcke's February 14, 2005 letter and that the deadline FIFA imposed was a Sunday, May 8, 2005, Mr. Stuart requested that the 90-day "exclusive negotiation" period be extended by three days, until May 11, 2005, so that MasterCard could respond to the "financial services" package during a business day. (Stuart Decl. ¶ 37; Houseman Tr. 154/19-155/2, 156/13-157/3; Schuster Tr. 31/17-31/22, 253/25-253/254/8). FIFA's response to this request was to send a letter -- prepared by Mr. Houseman, signed by Mr. Valcke and transmitted by Mr. Schuster -- under the subject heading "Exclusive Negotiation Period," stating that "FIFA agrees to your request to extend MasterCard's exclusive negotiation period under our current agreement." (Pl. Ex. 28; Pl. Ex. 76; Houseman Tr. 155/3-155/13; Schuster Tr. 131/15-132/12; see alsoPl. Ex. 79 (referring to "an exclusive negotiation period over the last three months")).
95. In fact, as FIFA's representatives admitted, MasterCard was not in any "exclusive negotiation period" because FIFA was simultaneously and aggressively negotiating with VISA. (Schuster Tr. 132/13-132/15, 148/1-148/13; Houseman Tr. 155/7-155/9; Valcke Tr. 466/8-467/5). Nevertheless, the FIFA negotiators referred to the period as such because they did not want to disabuse Mr. Stuart of the "error of his ways" in believing that MasterCard was enjoying "exclusive" negotiations with FIFA. (Houseman Tr. 155/18-155/22).
96. In contrast to what Mr. Stuart was led to believe, the reality was that during the 90-day period from February 8 to May 8, 2005 when MasterCard was contractually entitled to a "first right to acquire" the "financial services" package, Mr. Valcke "had two negotiations to run." (Valcke Tr. 144/3-144/20). His goal, he admitted, was "to go to the [FIFA Marketing & TV] Board with two signed agreements" from VISA and MasterCard and enable the Board to choose which agreement to accept. (Valcke Tr. 135/18-137/14). Mr. Valcke conceded, however, that he would be unable to achieve that goal during MasterCard's 90-day exercise period. (Valcke Tr. 136/20-137/14). So he and his team, as he admitted, "wanted to stall everything until the 90 days had run." (Valcke Tr. 136/13-136/15; see alsoPl. Ex. 291). In the case of VISA, with which negotiations were proceeding rapidly, Mr. Valcke admitted that he wanted to "keep them hot, keep them interested, keep them enthusiastic, be encouraging, but slow them down until the 90 days expired." (Valcke Tr. 145/3-145/8; see alsoPl. Ex. 148("Let's hope VISA . . . will not speed up their internal process")).
Both VISA and MasterCard Reject the "Financial Services" Package; So FIFA Revises the Package -- May 2005
97. On May 11, 2005, the date to which MasterCard's response period had been extended, Mr. Stuart and Ms. Hughes of MasterCard met in Zurich with Messrs. Valcke, Schuster, Houseman and Lampman to discuss MasterCard's response to the 'financial services" proposal. (Stuart Decl. ¶ 37; Lampman Tr. 207/10-208/10; Schuster Tr. 124/4-124/20).
98. Mr. Stuart explained that the combination of doubling the term of the sponsorship from four to eight years and expanding the scope of the product category to "financial services," which included products and services not offered by MasterCard, had made MasterCard's task in evaluating the sponsorship proposal more difficult and time-consuming than in years past. (Stuart Decl. ¶ 31; Lampman Tr. 208/11-208/19). He related that the new structure effectively required MasterCard to syndicate the banking services component of the sponsorship to its associated banks and that, therefore, MasterCard had devoted almost the entire 90-day period to discussions with banks. (Stuart Decl. ¶ 31; Lampman Tr. 208/11-208/19). The problem with syndication, he explained, is that MasterCard could "pass through" rights to some, but not all, of its member banks. (Pl. Ex. 79).
99. Mr. Stuart told the FIFA representatives that, after undertaking an extensive evaluation, MasterCard determined that it could not adequately exploit the "financial services" category to justify the price of the sponsorship. (Stuart Decl. ¶ 31; Lampman Tr. 208/11-208/19). Accordingly, Mr. Stuart informed the FIFA team that MasterCard was rejecting the "financial services" proposal. (Lampman Tr. 208/20-208/24, 209/14-209/18; Schuster Tr. 124/21-124/24, 125/3-125/11). Thus, MasterCard requested the extension in the response period in order to reject the offer in a timely manner. (See Trial Tr. p. 138, l. 8 (Mr. Schuster so acknowledging)).
100. Nevertheless, Mr. Stuart made it clear to Messrs. Valcke, Schuster, Houseman and Lampman that MasterCard was still interested in continuing its relationship with FIFA. (Stuart Decl. ¶ 37). He suggested that the parties arrange to meet again to discuss an alternative proposal that would exclude banking services from MasterCard's category and thus would allow MasterCard to buy only that which it could use, while, at the same time, enabling FIFA to exploit separately, on a region by region basis, the banking services sub-category. (Stuart Decl. ¶ 37).
101. Both sides agree in this proceeding, and understood at the time, that once MasterCard rejected the "financial services" package of rights, FIFA was free, at that point, to grant the rights on comparable terms to another party. (Stuart Decl. ¶ 40; Houseman Tr. 145/10-145/14; Schuster Tr. 125/25-126/3). By that time, however, the only other party to which the "financial services" package had been presented, VISA, also had rejected the proposal, for the same reasons as MasterCard. (Pl. Ex. 77; Lampman Tr. 210/6-210/24; Schuster Tr. 129/5-129/13, 130/4-130/8).
102. In light of the rejections from both VISA and MasterCard, FIFA's sponsorship team determined to "refine [its] approach to the Financial Services category." (Pl. Ex. 77; Schuster Tr. 135/10-135/20). They explored a number of options. (Pl. Ex. 77). Within a matter of days, Mr. Valcke's team decided that the best approach would be to restructure the rights package, such that FIFA would retain the right to exploit banking services in the country hosting the FIFA World Cup. By restructuring the package, which they denominated "financial services light," FIFA was able to reduce significantly the rights fee being sought from the category sponsor to $180 million from $225 million, eliminate the sponsor's responsibility to syndicate host country banking rights and give FIFA the ability to exploit the host country banking rights separately. (Schuster Tr. 145/12-146/4; Pl. Ex. 77). Mr. Valcke's team decided to present the revised package, which drew largely upon Mr. Stuart's comments, to both VISA and MasterCard.
Section 9.2's Applicability to the "Financial Services Light" Package
103. Both parties agree in this proceeding that the "financial services light" package was a "new offer" or "second offer." (Stuart Decl. ¶ 41; Houseman Tr. 145/22-145/24; Schuster Tr. 22/6-24/8, 145/1-145/3). They also agree that because it was a new offer, MasterCard's rights, and FIFA's obligations, under section 9.2 were re-triggered, including FIFA's obligation to give MasterCard 90 days written notice of its intent to make a new offer. (Stuart Decl. ...