UPDATE 5-MasterCard and FIFA settle World Cup sponsor fight

(Adds FIFA confirming set to implement Visa contract)

By Martha Graybow

NEW YORK, June 21 (Reuters) - MasterCard will drop a legal fight to get sponsorship rights for the next two World Cups under a $90 million settlement with soccer's governing body announced on Thursday.

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. FIFA confirmed in a statement it was set to implement a contract with Visa.

FIFA "has, first of all, resolved a problem, and, secondly

-- much more importantly -- has paved the way to a good, new -- much more importantly -- has paved the way to a good, new partner that will support it and its manifold activities efficiently all around the world," said FIFA President Sepp Blatter.

MasterCard said it decided to settle the case for business reasons and that it no longer wanted to work with FIFA.

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.

U.S. 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 settlement reflected half of the sponsorship amount that was entered into in the original negotiations with FIFA.

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

The 2010 World Cup will be held in South Africa.

((Reporting by Martha Graybow, editing by Gerald E. McCormick and Gunna Dickson; Reuters Messaging: martha.graybow.reuters.com@reuters.net; +1-646-223-6133)) Keywords: SOCCER/MASTERCARD FIFA

(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nL21901097