Posted by John Vrooman on Sunday, September 21, 2014 in National Football League.

Interview with CBC.

1. So far, the actions sponsors have taken seem to be pretty tame and largely confined to statements or directed at individual players rather than entire teams (aside from Radisson) or the league. Do you foresee advertisers taking stronger action or actually pulling ads from game telecasts over the domestic abuse issue?

Yes the current public posturing and indignant statements against spousal and child abuse by the NFL and its sponsors will become real and contagious collective action if it is revealed that Roger Goodell and other NFL executives have engaged in obstruction and covering up misconduct on their own part on the part of players.

 The current chaos has called into question the entire governance of the League.  The US Courts (even the US Supreme Court)have generated confusion on whether the League is the firm or the League head of a collective of several and separate firms. As a result the random League discipline from player misconduct seems reactionary because the teams are meting out capricious punishment that widely fluctuates from team to team and there is no coherent or cohesive control from the League central office.

 As a result the now strangely silent ostrich like Commissioner seems clueless to inconsistent discipline at the franchise level.  The clubs have an obvious disincentive to discipline their players when faced against another club with different rules. The inconsistency is predictable at the club level but what is confusing is the inconsistency at the League level. If the current confusion is really designed obfuscation then the NFL will have lost its credibility, and the sponsors will bail and if one major sponsor bolts competition to get distance will cause the disaffection to spread.

2. Do the kind of player contract terminations/suspensions Nike, Castrol and EA have done in the Peterson and Rice cases cause significant damage to player and league image or are they largely symbolic?

No the individual player suspensions are largely symbolic and serve as evidence that NFL players are effectively powerless.

 The NFL is economically bulletproof from political scandal and misconduct from players to owners. NFL players have zero power individually and collectively. Threats of political and social scandal concerning players in the NFL can easily be deflected by owners and the League by first ignoring the problem, doing nothing and then reacting selectively and apologetically to any social blowback.  The same is true for the indignant sponsors who are self-protectively throwing their respective endorsers under the NFL bus.

 So in economic reality, NFL players are not guilty until proven guilty in the court of public opinion after which they are punished arbitrarily by an owner-elected Commissioner without recourse to arbitration. Meanwhile NFL owners remain untouched and almost untouchable, protected by the NFL Shield and their $44 million per year Commissioner,

This also relates to the structural governance problem endemic to a sports league like the NFL. Sponsorships are present on at least three levels: the player, the Club and the League. The League is largely unaffected by the disaffection that takes place at the lower player (Nike) and Club (Radisson) levels. It is entirely possible if not common for Clubs and the League to cross sponsors. For example Budweiser may be widely viewed as the chosen beer of the NFL but Miller Lite is the chosen sponsor of the Dallas Cowboys. The maverick ambush sponsorships spread crisscross the entire League.

 The League is also protected by a bullet-proof shield with the new 9-year $59 billion TV deal through 2022 and the 10-year labor deal that caps the players’ share of revenue at less than 50 percent through 2020. Under these conditions the NFL clubs will be sharing almost 75 percent of their revenues projected to top $25 billion by 2027. The NFL is a well-oiled perfectly diversified recession and bullet-proof legalized cartel.

3. Are advertisers taking a ‘wait and see’ approach and waiting to see if this scandal snowballs even more or affects actual viewing numbers before they take further action? Has there been much actual consumer pressure on sponsor to do something?

Although the ultimate economic legitimacy of any effective  boycott must be ultimately fan based, the current wait and see caution by the sponsors is probably self-imposed righteous indigence.  But there is a scenario where Radisson’s suspension of their deal with the Viking could spread the Marriott’s much larger sponsorship deal with the league. There a was an obvious impact over the weekend against cover-girl’s get you game face on campaign when a photo-shopped pic of an embattled woman went viral (attached).

4. Why were sponsors so quick to act in the Clippers case but are more hesitant now – even though this involves actual criminal wrongdoing? I know racism is a huge hot button issue, but it seems that sponsors’ decision to distance themselves should be even more clear cut in this case where there are allegations of actual bodily arm and cases before the courts, no? Is the amount of money in play just that much larger?

The Clipper’s case is somewhat different in that the scandal centered around an owner with a well-known history of covert racism, and the real underlying boycott threat during the lucrative playoffs was from the black NBA players who comprise 75% of the League compared to black owners who comprise 25% of league ownership. So in the Clippers case it was an outcast owner against the players and the quick-to-act League. This was probably the cause for the decisive if not preemptive moves in the NBA compared to the chaotic reactionary moves by the NFL at all levels.

 In the case of the NFL the League financial stakes are significantly higher than for the individual Clippers and even for the NBA.  Unfortunately, it would be a much deeper indictment of our sports culture if league sponsors and league reactions appear to be not only more about the money than justice, but also more revealing about an apparent underlying inconsistency between the pure economics of race and gender.

5. How much is the NFL worth to advertisers like Nike, Pepsi and Annheuser-Busch? Is it possible to put a figure on how much they make from NFL ads and sponsorships?

The NFL sponsors reflect more of a gentlemen’s club with the League than a customary financial contractual relationship. It is important to realize than NFL games last week were 3 of the top rated prime time shows in the US. The NFL is also the last is a dying breed of live television broadcasts. The viewer demographic is affluent and a perfect fit for the NFL sponsors. Annheuser-Busch pays about $200 million per season to the NFL about $30 million for the Super Bowl and Pepsi rights  are around $100 annually. My guess is that as an investment the payout return on these rights fees is modest break-even at the best. There is probably  a premium paid by sponsors as well as networks for broadcast rights fees just to be associated with the most powerful sports league in the world. One fourth of the tickets to the Super Bowl go to the NFL family of sponsors compared to 17.5% for the fans of each of the participating team.

 The NFL deal doesn’t include sponsorship of the league’s 32 individual teams, nor does it include rights to sell soft drinks at individual stadiums. Coke sponsors probably two-thirds of the teams and has exclusive right at their stadiums . Pepsi sponsors probably the remaining third. The same is true for the competing sponsorships for pouring rights for competing brewing companies beers.

6. Are there other companies that advertise heavily in the NFL that haven’t so far spoken out on this issue but that we should be looking at in terms of gauging how important this issue is to the big sponsors. I know that the car companies and Verizon advertise heavily in NFL telecasts, but I haven’t seen them come out with statements or take action – how significant is that?

The NFL’s current silence at the League level speaks volumes for the chaotic incompetence of their self-governance. The current silence by major sponsors perhaps speaks to their ambivalence but it would probably only take one leading sponsor to shift the weight.  The major player in the Minnesota Vikings case with Adrian Peterson was the Governor’s admonition. In the US the public  sector has a legitimate stake in the game because the State of Minnesota and the City of Minneapolis paid for 51% of the new $975 million stadium for the Vikings. In the past 20 years 26 other luxury NFL stadiums have been built for a total cost of about $9 billion and the public has been leveraged into financing almost two thirds of that amount.  It is time for the NFL to realize that heavy public subsidy also means a heavy public hand and voice in the greater ethic by which a League and its quasi-public Clubs are  run.

 Ultimately In this NFL case the governance and credibility of the entire League could be under indictment. Violence against women problem is not new to the NFL, nor is the League’s ambivalence. This unique in-our-face episode is perhaps the beginning of a deeper accountability. Commissioner Goodell is just the messenger who carries a message of the hubris and unassailable arrogance that hides behind the NFL shield that he has sworn to protect.

V