Amid Ray Rice investigation, odds of NFL losing sponsors remain slim
What would it take for sponsors to cut ties with the NFL?
That was the question posed to executives at two companies who have done business with NFL teams and to marketing experts who closely track the relationship between the league and its corporate partners.
Their answers varied, but most felt that nothing that has happened with regards to the NFL’s handling of Ray Rice’s domestic assault incident imperils the league’s lucrative arrangements with FedEx, Marriott, Proctor & Gamble and other companies. And, even if NFL commissioner Roger Goodell were to be fired or resign because of his mismanagement of the investigation into Rice’s actions, few believe sponsors would flee.
"The NFL is usually considered untouchable, and the demand for sponsorship rights deals is highly inelastic with respect to scandal and gross misconduct," says John Vrooman, a sports economist and professor at Vanderbilt. "Sponsors feel fortunate to just hang with the league."
FedEx and Marriott have issued statements saying that they are monitoring the Rice affair, but added that they had confidence the NFL would "address the matter" and "take the appropriate steps." A spokesperson for the American Cancer Society also said that the league’s annual breast cancer awareness month would proceed, as the organization doesn’t see the Rice affair related to its cause.
That is a far different stance than the one taken by some advertisers following the most recent sports scandal of this magnitude: The racist remarks by then-Los Angeles Clippers owner Donald Sterling, which came to light earlier this year.
"With Sterling, you had sponsors bailing on the Clippers immediately, but that has not happened with the Ravens," says Richard Sheehan, a Notre Dame economics professor. "With Sterling, you had the potential for it to be a league-wide problem, with players refusing to play for or against the Clippers. But what has happened with Rice is viewed as a different kind of dilemma and the sponsors are acting differently. Sterling was an owner; this is a player, and player misconduct is not something that in the past sponsors have responded to."
Vrooman was the rare marketing expert who believed a scenario existed in which sponsors would discontinue their business with the league.
"If it can be shown that the league and any of its executives or owners knowingly covered up or had previous knowledge of the second video that actually shows Rice's left hook, then the sponsors will abandon ship, and when the ship begins to take on water other sponsors will bail out," he says.
Others disagreed, noting that sponsors could always claim that whatever action the league takes in that scenario could be called "appropriate steps" and be cited as a reason not to break ties with the league. Even the NFL’s toughening of its penalties for players accused of domestic violence, as reactionary as that looks now, could be used to justify sticking with the league.
A senior vice president at a middle-market retailer that has done business with NFL teams told Sports Illustrated that the league is simply too good at delivering what companies want for businesses to jump ship.
"The NFL’s reach is unprecedented," he says. "So you stick it out ... Now, if it comes out that 50 guys did what Rice did and the league covered it up, and then suddenly viewership drops, then you could see some companies cut ties. But short of that, the NFL is just too much of a powerhouse. Yeah, they royally screwed up how they handled it, and it taints the NFL brand, but it doesn’t really taint your brand.”
Another executive who has worked with an NFL team wondered if some sponsors might use this moment to go to the league and demand concessions, "something to take the shine off the black eye." But he conceded that probably wouldn’t work.
"Any good negotiator is going to play that card, but the NFL will counter that this is a blip and will be gone by the next media cycle," he said. "Plus, you play that card now, and the league will make you pay later when this all dies down and your deal is up."
Vrooman cited another motivation for companies to stick with the league: They love feeling connected to the teams and the players. "The league and its sponsors are a uniquely elite gentlemen's club, and the Super Bowl has become a year-end gala for all insiders to celebrate. All of its inside sponsors enjoy the simple association with the most powerful league in the world."
He says that sponsors will eventually find a way to use the Rice scandal to burnish their brands.
"Soon we will be barraged with feel-good sponsor ads touting a deeper respect for women and celebrating their clever acumen as NFL fans, but the NFL shield is now transparent, and the powerful league and its owners have lost something more important in this episode that they may not ever recover," Vrooman says. "We have all been diminished in the process."