If you’ve been following the NFL, Twitter, or the national news, there’s no doubt you’re aware of the current controversy brewing around the national anthem at football games. But while the spotlight has been on the president, the owners, and the players – the most consequential fallout of the controversy so far has been its effect on major NFL sponsorships. And, as you’ll see, the impact of this controversy could drag on for several years.
The controversy originated in San Francisco, when quarterback Colin Kaepernick began sitting down or kneeling, rather than standing, for the national anthem during the 2016 preseason. At the time, he stated that the reason for his protest was to show support for oppressed people of color. He succeeded in generating some buzz, and over the course of the season several players around the league joined him by taking a knee, locking arms, or raising fists during the national anthem. The trend started by Kaepernick also spread to other professional and amateur sports leagues.
Things heated up when President Trump began calling attention to the protests this fall, criticizing the players who take part and the owners who allow the protests to continue. Many players and teams joined the protests in the wake of President Trump’s remarks. And the expanded protests in turn led many fans to begin calling for a boycott of the league.
What NFL Owners are Saying
Some owners have been outspoken in their defense of the protesting players. 49ers owner Jed York has said, “Our country is more important than a slight economic impact.” Other owners, like the Cowboys’ Jerry Jones, have voiced their opposition and have publicly questioned the relevance of political protests during NFL games.
The concern for owners and league administrators is that the economic impact may be more serious over the long run. Television ratings are down considerably from two seasons ago, and viewership of national games is falling week over week. In many NFL cities, average attendance is down from last season – with some cities like Jacksonville and Los Angeles experiencing major drops.
While many owners around the league have avoided going on record with their thoughts about the protests, The Wall Street Journal reported that owners engaged in bitter debates on the subject behind closed doors during their fall meetings. Owners butted heads about television ratings, attendance, and NFL sponsorships. During those debates, at least one owner voiced concerns about sponsorships that his team has already lost.
The Morals Clause in NFL Sponsorships
When a major brand signs up for NFL sponsorships, its primary motivation is typically exposure – and increased revenues as a result of that exposure. Brands also weigh the “halo effect” that comes with sponsorship of a team or player. The favorable and desirable image a team enjoys amongst its fans is often shared by association with the team’s sponsors. The halo effect can become negative, however, if fans begin to have a derogatory view of the team or player.
Following fiascos around several highly-sponsored players over the past few decades (think Tiger Woods), brands began inserting a “morals clause” into their NFL sponsorship contracts. The morals clause does not release a sponsor from its contractual obligations, but instead triggers an arbitration process if the team or player being sponsored undertakes behavior that the sponsor finds to be detrimental to its brand image. With some Americans taking offense at protests during the national anthem, some of the biggest NFL sponsorships are already being evaluated to determine if the morals clause has been violated.
Big Sponsors with Growing Concerns
Papa John’s has been an NFL sponsor since 2010, and recently voiced concerns about in-game sales declining in the weeks since the protests intensified. The NFL publicly acknowledged Papa John’s concerns, and shared that they are not the only major sponsor to have approached the league about the protests.
USAA is another major sponsor that has been with the NFL for years. As a financial services firm that strictly caters to veterans and their families, USAA appears to have exceptionally high risk associated with the current protests. Representatives from the firm have confirmed that they have been in touch with the NFL about the situation.
Some sponsors have already taken steps beyond talking to the league, and have begun taking the matter into their own hands. AT&T’s DirecTV is offering refunds for subscribers to its NFL Sunday Ticket product who are offended by the protests. Bud Light set up a hotline for fans to call in and share their thoughts and feelings. And Dannon Yogurt recently decided to start pulling advertisements that feature NFL quarterback Cam Newton.
Changes in NFL Sponsorships for Years to Come
We have yet to see the full impact of the national anthem protests on NFL sponsorships. But based on lessons learned in the past, we certainly expect there to be some major fallout. When the conduct of individual players presented ethical dilemmas for sponsoring brands – those sponsors reacted by creating the morals clause that we discussed earlier. Many brands also shifted their NFL sponsorships to entire teams rather than particular players.
The current situation in the league will almost certainly bring an end to a few NFL sponsorships. But the long-term question is about how sponsors will shift their strategies and legal obligations for new sponsorship contracts in the years to come.