When Gift Tickets for Soccer Games are Too Expensive to be Considered Harmless

Baiting prohibited: Gifts of expensive soccer tickets to business partners getting too delicate for both sponsors and invitees

It's good for promotions when professional players of the football club FC Bayern München drive their sports cars with the popular four rings on the hood through Munich; and for one year already, Audi is holding even a ten percent investment in the record champion. Chairman of the Board Rupert Stadler had recently been flown from the Oldtimer Grand Prix in Monaco to the cup final in Berlin. And in Munich's Allianz-Arena, the soccer club's own stadium, Audi has a generously sized VIP box to which business partners are regularly invited to the matches. Yet, the Audi management at Ingolstadt headquarters has mixed feelings about the European championships in Poland and the Ukraine – but not because they are worried about the German team's winning chances: "This summer", so the succinct information from Ingolstadt, "we will not invite to any football event."

Fear of being liable to prosecution

Audi is not alone with its cautious stance: Until a few years ago, generous invitations had been regularly extended – for dining at top restaurants, for concerts, formula-1 events, or football matches. Hardly anything is left of the former generosity. Both the party inviting and the invitee are running the risk of being guilty of breach of trust and of accepting benefits, or of breaching internal corporate rules. "Companies and their customers and clients increasingly refrain from extending or accepting invitations", confirms Josef Stadtfeld, Managing Director of the S20 Sponsoring Association which also includes Coca-Cola, Siemens, Allianz, Telekom and McDonalds: "They are all unsure of how to behave now because both sides are at risk and may become liable to prosecution." This spring, for instance, the sponsor Hyundai, found no takers for their European championship tickets.

No acceptance of gifts

Buyers should refuse to accept gift tickets from suppliers and other business partners for the European football championships or for the Olympic Games in London. Otherwise they might be liable to prosecution for accepting benefits, warns the Bundesverband Materialwirtschaft, Einkauf und Logistik (BME – Federal Association of Materials Management, Purchasing and Logistics). "Invitations to such coveted events where tickets are very expensive or can no longer be obtained actually are to provide a basis of trust between the inviting party and the invitee. And then the conflict of interest is obvious", says Sebastian Schröder, Chief Counsel of BME.

Nobody was concerned about such things in the past, but today it's a sensitive subject: Companies have become much more aware of things since Utz Claassen, former CEO of energy company EnBW, had to answer to the Federal Court of Justice (Bundesgerichtshof) after having sent tickets to seven top politicians in Berlin and Stuttgart for the 2006 World Football Championship. The corruption cases at Siemens and Daimler serve as a warning example at least for DAX-listed companies. And the bribery affair of the former German federal President Christian Wulff finally woke up even the last.

"Nobody can still safely invite anybody to a VIP-lounge for the European football cup. Not even the owner of a company because even somebody who is apparently the sole owner of a family-owned enterprise may actually be just part of a complicated shareholder structure", explains Tim Wybitul from the law firm Hogan Lovells. "And you just can't look behind the scenes of every company.

In any event: "The more an invitee earns, the less likely he will be bribed or sweet talked for mere peanuts", outlines the lawyer. A board member can thus more likely be invited to a European cup match than an employee – if it's not in connection with a concrete contract order, says Wybitul. "But today, even board members will usually just refuse."

After a corruption affair, the truck manufacturer MAN has not only become very careful but also publicity-minded: Since tickets for the UEFA champions league finals in Munich were supposed to cost EUR 3,650 per ticket, MAN did not invite either guest or employees to any of its twelve VIP box seats.

Not saying anything due to insecurity – instead of demonstrating transparency

Major sports sponsors are reacting already: They do remain sponsors and continue to support their clubs. "But quite a few companies no longer lease any VIP boxes in stadiums because they can practically no longer invite anybody to them. Even if they don't communicate it in public", reports Schröder, Chief Counsel of the Association. Even Josef Stadtfeld, Managing Director of the S20 Sponsoring Association whose members are major sponsors like Coca-Cola, Bayer, Siemens, Allianz, Telekom or McDonalds, made the following observation: "Companies clam up, they are all uncertain of how to act now." And further: "Sponsors are bungling and losing money because they no longer call the tickets from their sponsorship allotments. "All the more so since both parties are at risk and may be liable to prosecution: the inviting party as well as the invitee", warns Stadtfeld.

In addition to breaching criminal-law regulations, the employees of major companies are also running the risk of breaching corporate rules. In recent years, major companies in particular established compliance departments and sometimes even created compliance executive board positions – as Daimler had done for Christine Hohmann-Dennhardt. At one of the four major banks, hundreds of employees are dealing with compliance. If one of their bankers is invited to any corporate event, the compliance colleagues will look at every individual case three times and additionally even coordinate things with their legal department.

Baiting prohibited

In recent years, major companies established mostly rigid corporate rules – according to which employees cannot even accept expensive football tickets. The de minimus rule for gifts is mostly EUR 20, as the lawyer Markgraf knows. "But if somebody gets such a gift once a week from a company, that is called baiting and isn't allowed either", the lawyer from Düsseldorf states.

The majority of companies has not yet established their own compliance rules

Surprisingly many companies have no such guidelines: 69 percent of the companies with sales of under EUR 250 millions have no internal corporate compliance code – that was the recent result of research done by the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach on behalf of the consultancy Kerkhoff Consulting. More than half of these companies shy away from making the effort. And for many of them it's too expensive anyway. Gerd Kerkhoff, owner of the consultancy, describes the consequences: "Sometimes, managers and buyers don't even know which legal regulation they are just breaching."

Jochen Markgraf, lawyer with Glade Michel Wirtz in Düsseldorf, describes one way out of the current dilemma which some companies have taken. "Sponsors give tickets from their allotments at cost price to their business partners – and even that may easily amount to EUR 1,000 per ticket." But if a company offers its business partners tickets at the price printed on them and these are tickets not released for sale, that might also be risky, qualifies lawyer Wybitul. Because of all these uncertainties, some companies like the advertising agency Jung von Matt only invite their own employees to their VIP box at the football club FC St. Pauli in Hamburg  – to be on the safe side, so they say.

In any event, civil servants are a definite no-go on invitation lists for expensive football events. And that sometimes includes professions which do not come readily to mind in this respect: Editors at public broadcasting services or those having an executive function in a pension fund like that for attorneys-at-law. In 2009 already, both these cases had already been prosecuted accordingly by the Federal Court of Justice for criminal matters.

Secretiveness is just damaging

It's important for companies to provide transparency so they won't be vulnerable. The risk: Even if initial suspicions against an employee later prove to be unjustified and are dropped by the district attorney, it's damaging to the company's reputation one way or the other because the media had shown it as corrupt. That's why invitations should always be sent only to the office address. Those who are invited should first ask the compliance department and have everything approved. "Some companies even make contribution lists public on the Internet", tells Wybitul. The pharmaceuticals manufacturer Böhringer Ingelheim is one of them, although, of course, there are no names of individual guests to the events but at least which organizations receive how much in donations.

Tight-lipped corporations

In contrast to what normally happens, companies are currently tight-lipped when it comes to the subject of sponsoring. Commerzbank, for instance, provides just about that much in the way of information: As brand name sponsor of the Commerzbank Arena in Frankfurt and as a premium partner of the German Football Association (Deutsche Fußball-Bund), the bank said that it had "corresponding ticket allotments which are used for invitations of customers and business partners" but would not comment "on a detailed utilization of the tickets". And that, in any event, the bank were no sponsor of the UEFA European football championship. Daimler also merely makes reference to its "very strict compliance regulations" and only concedes that "ticket allotments are made available to departments with direct customer contacts and sales organizations". They would select those to be invited on the basis of the compliance guidelines and "take care of the taxation of the benefits in money's worth". And they would have "nothing more to add".

Adidas is an exception. The sporting goods conglomerate continues to invite external guests to major football events because they claim to be an exception among sponsors. They also claim that the Adidas business is actually just about sports. And invitees would also come from that same business.

Compliance lawyer Jochen Markgraf explains what both the inviting party and the invitees should absolutely take into account from a legal point of view:

The do's and don'ts of behavior at the European football championship:

» Claudia Tödtmann 02 June 2012, 17:41