NEW YORK, June 21 - MasterCard will drop its sponsorship of the next two World Cups under a $90 million settlement with FIFA announced on Thursday.

The agreement ends a legal dispute between the credit card issuer, which had sponsored the tournament for 16 years, and soccer's world governing body.

The ruling paves the way for FIFA to proceed with a corporate sponsorship arrangement with Visa International, MasterCard's larger rival, although FIFA did not provide details on a future sponsorship on Thursday.

A Visa representative was not immediately available for comment.

Under the settlement, MasterCard will drop its claims that it should be awarded corporate sponsorship of the World Cup -- the world's most watched sports event -- in 2010 and 2014.

"We have made a decision after taking a hard look at the facts and circumstances, 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 credit card issuer's general counsel, Noah Hanft, said on a conference call.

FIRST REFUSAL

MasterCard, based in Purchase, New York, sued FIFA in April 2006 after the governing body awarded the coveted sponsorship for the next two World Cups to rival Visa. MasterCard claimed it had right of first refusal on future sponsorship pacts.

U.S. District Judge Loretta Preska in New York sided with MasterCard in December, ruling 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.

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

Hanft said the $90 million settlement reflected half the sponsorship amount 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 in the third quarter.

The 2010 World Cup will be held in South Africa, while the venue for the 2014 tournament has not been decided although Brazil has been officially named as the only bidder.