Firm Sponsors Push NFL to Stronger Action on Athlete Scandals

NEW YORK (TheStreet) -- National Football League Commissioner Roger Goodell's extraordinary press conference Friday showed clearly that Anheuser-Busch InBev (BUD) , PepsiCo  (PEP) and Radisson Hotels are successfully doing to the NFL what petitions, banner planes, columns, television commentators and online comments couldn't: Getting the league's attention and forcing them to serious action in response to scandals involving the league's athletes.

In the press conference, Goodell accepted responsibility for a combination of poor administrative decisions and poor NFL policies and suggested clear changes to try to correct the problems.

"We've seen all too much of the NFL doing wrong. That starts with me," Goodell said. "I got it wrong in the handling of the Ray Rice matter. And I'm sorry for that. I got it wrong on a number of levels. From the process that I led to the decision that I reached."

Sponsors have loudly criticized the NFL for the handling of two recent incidents. The first was a video that showed Baltimore Ravens running back Ray Rice knocking out his wife in an Atlantic City casino elevator. The second was news that Minnesota Vikings running back Adrian Peterson beat his 4-year-old son with a switch and was later accused of beating another of his children.

Rice was initially suspended for only two games before the league responded to public outcry and reversed course, suspending him indefinitely. 

Peterson, after being indicted on Sept. 12 in Montgomery County, Texas, was suspended from a Vikings game the following Sunday against the New England Patriots. By Monday, Vikings management said Peterson would be permitted to practice and play with the team for game the following weekend. Vikings sponsor Radisson, whose logo took the unfortunate position as the backdrop for the team's announcements related to Peterson, suspended its sponsorship to "evaluate the facts and circumstances."

Other sponsor rebukes followed immediately. League pizza sponsor Papa John's  (PZZA) and Vikings/Adrian Peterson sponsors Catholic Charities, Castrol Motor Oil, Special Olympics Minnesota and health care company Mylan (MYL) all dropped Peterson. Nike (NKE) stores in the Minneapolis area pulled Peterson's jersey from shelves, while General Mills (GIS) pulled Peterson's image from its Wheaties Web site.

League sponsors jumped into the fray on Tuesday. Anheuser-Busch InBev, which paid the league $1.2 billion to wrest its official beer sponsorship away from MolsonCoors and to give it beer brand exclusivity during the Super Bowl, issued an official statement earlier this week saying it was "disappointed and increasingly concerned by" the NFL's recent string of domestic violence incidents and "are not yet satisfied with the league's handling of behaviors that so clearly go against our own company culture and moral code."

"I like the approach that A-B is taking where they publicly acknowledge the issue and want to work with the NFL to help drive productive change," says Russell Scibetti, founding editor of sports business site TheBusinessOfSports.com "That approach generates the most value for all parties involved."

Since the Anheuser-Busch and Radisson announcements, NFL sponsors Visa (V) , McDonald's (MCD) and Campbell Soup (CPB) and Procter & Gamble (PG) have issued statements similarly critical of the league's handing of domestic violence cases -- with Procter & Gamble forced into action by an altered CoverGirl ad featuring a woman with a black eye.

On Wednesday, the Vikings announced that they had changed course: Peterson would sit indefinitely as part of a league exemption "allowing him to take care of his personal situation until the legal proceedings are resolved."

The Vikings' public responses to criticism is significant in light of the NFL's multiple days of near-silence. Before his most recent press conference on Friday, NFL Commissioner Roger Goodell hadn't spoken publicly since Sept. 9, with NFL spokesman Greg Aiello telling ESPN earlier this week, "He's been working every day (and much of the night) in the office this week on these issues."

Sponsors were not impressed. PepsiCo chief executive Indra Nooyi, who oversees both the NFL's official soft drink sponsor Pepsi and its official snack sponsor Frito-Lay, on Wednesday issued a blunt statement condemning the league's handling of both the Rice and Peterson cases.

I am a mother, a wife, and a passionate football fan. I am deeply disturbed that the repugnant behavior of a few players and the NFL's acknowledged mishandling of these issues, is casting a cloud over the integrity of the league and the reputations of the majority of players who've dedicated their lives to a career they love. When it comes to child abuse and domestic violence, there is no middle ground. The behaviors are disgusting, absolutely unacceptable, and completely fly in the face of the values we at PepsiCo believe in and cherish.


Other player-related domestic violence incidents involving San Francisco 49ers defensive end Ray McDonald, Carolina Panthers defensive end Greg Hardy and Arizona Cardinals running back Jonathan Dwyer that have taken place before, during and after the Rice and Peterson incidents haven't helped the league's case. Sponsors realize that the NFL is one of the few big draws left in the media landscape and pay large sums not only for sponsorship, but to buy up tickets and prevent television blackouts in teams' home markets.

"The very public nature of the criticism by sponsors like Anheuser-Busch is unprecedented, and speaks volumes as to the extent of the real risk to the league's reputation, and how much work it will take to recover," says Bill Wohl, vice chairman of the U.S. Reputation Leaders Network, part of the Reputation Institute, a research and advisory firm focused on corporate reputation.

It was bad enough to get the attention of the White House, which issued a statement early Friday demanding that the league "get a handle on" its domestic violence problems.

The NFL has an obligation not only to their fans but to the American people to properly discipline anyone involved in domestic violence or child abuse and more broadly, gain control of the situation.

Also on Friday, Procter & Gamble  (PG) pulled out of its partnership with the NFL for Breast Cancer Awareness Month in October, citing the league's off-field issues. 

Later Friday, Goodell issued a memo to teams and staffers announcing "long-term partnerships to provide financial, operational and promotional support" to both The National Domestic Violence Hotilne and the National Sexual Violence Resource Center. Additionally, the NFL will require "education programs" on both domestic violence and sexual assault beginning in the next month.

Finally, Goodell ended the week with a press conference addressing the recent spate of incidents. He took blame for mishandling Rice's suspension, vowed to cooperate with former FBI director Robert Muller during an investigation of his actions and mentioned forming a new "conduct committee" with the help of outside consultants and the NFL players' union. Though he didn't offer his resignation, he did address his dealings with sponsors this week.

"They're not looking for talk, they want to see action," Goodell said. "They want to see us make that difference. That's up to us to deliver on."

It's an example of what sponsor pressure can do, but there was already precedent for brands to prod a sports league toward reform after fans and potential customers voice their displeasure. Back in April, when then-Los Angeles Clippers owner Donald Sterling was recorded making racist comments to his mistress, Clippers sponsors Anheuser-Busch InBev, Sprint (S) , CarMax  (KMX) and Virgin America -- among others -- suspended their sponsorship until the National Basketball Association took action and ousted Sterling in favor of former Microsoft chief executive Steve Ballmer.

"There is no question that the NFL has been dealt very strong body blows to its reputation," Wohl says. "When business partners begin to openly criticize in such public fashion, there is little doubt real harm has been done."

Wohl notes the NFL has an opportunity to improve its public image and make amends with sponsors, but the continuing string of domestic violence incidents within the league and the pace of the news cycle are going to make that extremely difficult. The league has to focus and be consistent in its message, but Wohl notes that the league's current stance of waiting for an investigation to be completed won't take the pressure off of the NFL, its teams or its sponsors. Scibetti from The Business of Sports agrees that the NFL may be able to recover, but it won't be easy.

"Essentially this comes down to a lack of preparation and policy on how to handle this level of conduct issue, and it probably could have happened to any league, as you now see MLB and others working to build their own domestic violence policies," he says. "Through collaboration with the NFL Players Association, I'm confident they can create a sound policy that works both in the league's and the public's best interests, but clearly more transparency from the league office is needed as they work on these issues."

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Follow @notteham

At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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