Big Sponsors May Find It Hard To Break Up With The NFL

Sep 23, 2014
Originally published on September 24, 2014 11:44 am

NFL sponsors are not just advertisers; they're a select group of companies that together pay more than $1 billion a year to wrap their own brands in the NFL's aura.

But domestic violence cases involving several NFL players have drawn outrage from many big sponsors, including Verizon, Anheuser-Busch and Visa.

These sponsors, whose brands are closely identified with the NFL, have a lot at stake. Verizon's four-year contract, for instance, which allows the NFL to stream games through its cellular network, costs the phone company a quarter-billion dollars a year.

A number of major NFL sponsors issued public statements after the release of a video showing the Baltimore Ravens' Ray Rice knocking his then-fiancee unconscious, and the announcement of child abuse charges against Minnesota Vikings star Adrian Peterson.

Most echoed this one, from Visa: "Domestic violence in any form is unacceptable. It has no place in the NFL or our society more broadly."

But it's likely there's a lot more than that going on behind the scenes, says Larry Chiagouris, professor of marketing at Pace University in New York.

"There are phone calls being made," Chiagouris says, "meetings being held, in which people are saying, flat-out, in much more direct and colorful language, 'Get your act together. We don't want our brand associated with a problem.' "

Chiagouris, who spent 25 years in the marketing business, says these are calls the NFL needs to listen to.

"Basically, the NFL survives mostly — thrives — on the sponsorships and advertising, much more than, say, ticket sales or other such things," he says. "Without sponsors, there's no NFL."

Last Friday, NFL Commissioner Roger Goodell said the league is listening.

"We've been in contact with our sponsors," he said. "What we said is: We're going to clean up our house, we're going to get this straight, and we're going to make a difference."

Goodell said the league is developing a new, tougher policy on domestic abuse, and will implement educational programs on domestic violence for league and team personnel.

But how much leverage do sponsors really have to ensure the NFL does clean up its act? After all, the league delivers them a massive audience — and it does that in the last three months of the year, just when advertisers want to reach consumers most, says Stephen Greyser, a professor of marketing at Harvard.

"If we look at the fourth calendar quarter of the year, what do we see?" Geyser says. "We see Thanksgiving; we see Christmas. We see a lot of consumer purchasing."

So, even though the last thing sponsors want is to be associated with controversy, they're hesitant to walk away from the NFL, says William Chipps, of the consulting firm IEG.

"These companies that sponsor the NFL, needless to say, are huge Fortune 50 companies," Chipps says. "The risk there is if they step away, there's a good chance their competitor is going to fill their shoes."

But the calculation about whether to stay or walk away from the NFL is different for each business, Chiagouris says.

"The brands that clearly have a very clear linkage to the NFL, based upon the audience — and that would be the beer brands and the soda brands and such — they'll probably stay," he says. "But there are brands — you mentioned Cover Girl — there are brands that you wonder, do they really have to ... spend their money on the NFL?"

Chipps says that so far the vast majority of sponsors are staying put. After all, they signed contracts committing hundreds of millions of dollars, which they might not be able to recover.

"It's not a situation where they can just kind of say, 'OK, we're not happy; we're going to just walk away right now,' " Chipps says.

Unless the situation deteriorates further, he says, next year at this time, most major sponsors will still be with the NFL.

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Transcript

MELISSA BLOCK, HOST:

The NFL's handling of players involved in domestic violence cases has drawn widespread criticism. And its big-name sponsors, including Verizon, Anheuser-Busch, and Visa, are playing close attention. As NPR's John Ydstie reports, they have a lot at stake.

JOHN YDSTIE, BYLINE: Sponsors are not just advertisers. They're a select group of companies who, together, pay more than a billion dollars a year to wrap their own brand in the NFL's aura.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN: NFL Thursday night football sponsored by Verizon XLTE.

YDSTIE: Verizon's four-year contract with the NFL - which allows it to stream games through its cellular network - costs the phone company a quarter of a billion dollars a year. A number of major NFL sponsors issued concerned, public statements after the release of a video showing Baltimore's Ray Rice knocking his fiancée unconscious; and child abuse charges against Minnesota star Adrian Peterson. Most of those statements echoed this one from Visa, which said domestic violence, in any form, is unacceptable. It has no place in the NFL or our society more broadly. But it's likely there's a lot more than that going on behind the scenes says Larry Chiagouris, Professor of Marketing at Pace University in New York City.

LARRY CHIAGOURIS: There are phone calls being made - meetings being held - in which people are saying flat out in much more direct and colorful language get your act together. We don't want our brand associated with a problem.

YDSTIE: Chiagouris, who spent 25 years in the marketing business, says these are calls the NFL needs to listen to.

CHIAGOURIS: Basically, the NFL survives - mostly thrives - on the sponsorships and advertising much more than, let's say, ticket sales or other such things. Without sponsors there's no NFL.

YDSTIE: And last Friday, NFL Commissioner Roger Goodell said the league is listening.

(SOUNDBITE OF ARCHIVED RECORDING)

ROGER GOODELL: We've been in contact with our sponsors and what we've said is we're going to clean up our house. We're going to get this straight and were going to make a difference.

YDSTIE: Goodell said the league is developing a new, tougher policy on domestic abuse and will implement educational programs on domestic violence for league and team personnel. But how much leverage do sponsors really have to ensure the NFL does clean up its act? After all, the league delivers them a massive audience - and does it in the last three months of the year, just when advertisers want to reach consumers most, says Stephen Greyser, Professor of Marketing at Harvard.

STEPHEN GREYSER: If we look at the fourth calendar quarter of the year what do we see? We see Thanksgiving. We see Christmas. We see a lot of consumer purchasing.

YDSTIE: So even though the last thing a sponsor wants is to be associated with controversy, they're hesitant to walk away from the NFL, says William Chipps, of the consulting firm I.E.G.

WILLIAM CHIPPS: These companies that sponsor the NFL are - you know, needless to say - are huge Fortune 50 companies and kind of the risk there is if they step away there's a good chance their competitor is going to fill their shoes.

YDSTIE: But the calculation about whether to stay or walk away from the NFL is different for each business, says Larry Chiagouris.

CHIAGOURIS: The brands that, clearly, have a very clear linkage to the NFL based upon the audience - and that would be the beer brands and the soda brands and such - they'll probably stay. But there are brands - you mention Cover Girl - there are brands that you wonder did they really have to be there? Do they have to spend their money on the NFL?

YDSTIE: William Chipps says so far the vast majority of sponsors is staying put. After all, they signed contracts committing hundreds of millions of dollars, which they might not be able to recover.

CHIPPS: So it's not a situation where they can kind of just say OK we're not happy, we're going to just walk away right now.

YDSTIE: Chipps says he thinks, unless the situation deteriorates further, next year at this time most major sponsors will still be with the NFL. John Ydstie. It's the NPR News, Washington. Transcript provided by NPR, Copyright NPR.