"People look at certain institutions, like the NFL, as being infallible when they're not."-- Donald J. Trump in 1984 as New Jersey Generals team owner (USFL)

Facing the Music

Something happens to me when I see "Old Glory" go by at a parade. Same thing that happens when I hear the playing of "The Star-Spangled Banner". I shut my pie-hole. I snap to attention. I face the music. If covered, I render a hand salute, and then I try to simply not weep as the song plays out. I love that flag, and I love that song. The playing of this song is such an emotional event for me, that it almost makes the playing of a sporting event in its aftermath irrelevant. Almost. Now, I get that not everyone understands nationhood or unity the same way, or has had the same personal experience. I will not vilify those who feel differently than I. The football players who have taken a knee during the playing of the national anthem do have the right to do so. They are not breaking any law. Now, on the other hand, when you are paid a salary by an employer, and wear that employer's uniform, I doubt too many would ever tolerate any kind of public demonstration while wearing their uniform, and while on their dime.

The protesting players, some of whom have spoken, have indicated that they kneel in order to draw attention to racial inequality, that their intent is not to disrespect our flag, or our anthem. I don't really watch the National Football League all that much. As a child, my favorite player was Joe Namath. He wasn't my hero, though. My heroes walked infantry patrols in Vietnam, and some of them, including my next door neighbor at the time, never came home. Football is fun. Football is entertainment. Never lose sight of that. Like all professional sports, the popularity of the NFL has waned in recent years. It really is difficult to ascertain the financial impact of the public demonstration made by some of the players, though the prospect of lower TV ratings, emptier stadiums, and lesser product sales (all realities) certainly has ownership rattled. It just dawned on me that I can only name five or six players across the league.

Last Stand of the USFL

The week before the president of the United States took issue with the players kneeling during the anthem, only six players did so; the next week, about 250 did so, though that number is again dwindling. This is in a league with more than 1,600 players. There is no doubt that the president made the issue worse by politicizing it, and the issue now becomes that much more complex.

Ownership will meet next week, and a strengthening of the language in the player manual that states that players should stand for the anthem is expected. Then what? Do you punish the few who still kneel at that point? Is there a difference between kneeling, which is in religion and in some cultures a show of respect, and sitting, which is obviously an intentional show of disrespect?

Dallas Cowboy owner Jerry Jones has stated that players can stand for the anthem, or they can sit for the game. Just as the players have the legal right to protest, he has the right to demand a certain code of conduct from his employees, while on the clock and in uniform. Jones made a show of compromising on the issue by kneeling with his entire team prior to the anthem two weeks ago, and then rising for the song. I thought that was creative. Was it good enough for the players? This is a divisive problem that the league wants to wish away and plays directly to the president's populist base.

In 1986, the USFL (United States Football League) "mostly" lost its case against the NFL. I won't go into the proceedings here, but that lawsuit was the end of the line for the USFL. Our current president, if you recall, had purchased the New Jersey Generals franchise in 1984, and had been the league's lead proponent of head-to-head competition against the NFL at the time that the league ceased operations. The USFL, for those of you too young to remember, was the last serious attempt to put a major league American football product on the field as an alternative to the National Football League.

Trump vs. the NFL.
Trump vs. the NFL.

.... and Furthermore

The president apparently was not satisfied with tweeting in opposition to the on-field protests made by some of the players. On Tuesday, the president tweeted "Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag, and Country?" The president certainly has a way of applying pressure, doesn't he?

The league had in the past enjoyed (absurdly) non-profit status, which they renounced themselves two years ago, so it's unlikely that President Trump is referring to that. However, the president is correct if he is referring to the billions of taxpayer dollars that subsidize the construction and renovation of the stadiums that the teams play in. Many cities and states issue tax-free bonds to pay for these stadiums just to keep their teams, or attract teams from other localities.

The idea of pulling the rug out from under the NFL on this particular front is not new to Donald Trump. The administration of President Obama had proposed repealing tax breaks for pro sports stadiums that were projected in 2016 to raise $542 million over a decade. Last year, the Brookings Institution estimated that subsidies for these stadiums ended up costing the federal government $3.7 billion since the turn of the millennium.

So, there is at least some meat on the bone if the president wants to go after the ownership of a league that put his team and his league out of business more than 30 years ago. By the way, I thought the USFL put a really good product on the field. Just sayin'.

TheStreet's Pigskin Porfolio

  1. Anheuser Busch Inbev (BUD)
  2. Buffalo Wild Wings (BWLD)
  3. CBS (CBS)
  4. Coca-Cola (KO)
  5. Domino's Pizza (DPZ)
  6. Papa John's International (PZZA)
  7. Pepsico (PEP) (Pepsi, Lay's, Fritos)
  8. Twenty-First Century Fox (FOX)
  9. Twitter (TWTR) (streams some NFL games)
  10. Under Armour (UAA)
  11. Walt Disney Co. (DIS) (i.e., ABC and ESPN)
  12. Wingstop (WING)
  13. Yum Brands (YUM) (Pizza Hut, KFC, Taco Bell)

What does most of this NFL-related portfolio have in common? Underperformance, if you ask me. In fact, just taking a quick look at six-month charts across all 13 of these names, it quickly becomes apparent that BWLD, CBS, PZZA, FOX, TWTR, UAA, DIS, and WING all have rather unimpressive looking charts, making it difficult to find something constructive to say about these names, at least technically.

There are four names that interest me, however. From looking at that same six-month snapshot, you can find something positive to say about BUD, DPZ, YUM, and PEP. Let's quench our thirst for knowledge and take a gander at BUD and PEP, shall we?

Notice the trending higher highs, the trending higher lows, extremely impressive relative strength index (RSI), the bullish Moving Average Convergence Divergence (MACD), and a Chaikin Money Flow indicative of institutional investment inflows. I am no Bruce Kamich (resident technical analyst over at Real Money), but I see $126 as critical resistance for this name. A take and hold of that level allows for a movement to levels around $131. A failure in spot, and you regroup at $119.50.

Let's look at the chart of PEP next.

PepsiCo -- which is a holding in the Action Alerts Plus charity portfolio that Jim Cramer co-manages -- is interesting for different reasons. Obviously, this name does not scream victory at you the same way that BUD does. That said, this chart implies some optimism that could allow an aggressive investor to get in closer to the bottom than the top. What you see here is a name that has come off the floor. PEP still displays an unimpressive RSI, as well as an equally disturbing Chaikin Money Flow. See that MACD? Looks like the worm could turn here, though even with the bullish crossover that appears imminent, I'd still like to see positive digits. Still, is PEP worth a fifth of an investment here? Maybe you could be looking at more than 10% of upside. Set your panic point (stop order) at $109, kiddies.

Sarge's Trading Levels

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2570, 2561, 2551, 2544, 2535, 2529
RUT: 1527, 1520, 1512, 1505, 1499, 1491

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (OZRK) ($0.74), (BLK) ($5.53), (DAL) ($1.54), (FAST) ($0.50)

After the Close: (HAWK) ($0.11)

____________________________

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At the time of publication, Stephen Guilfoyle was long DIS equity, short DIS out-of-the-money calls, although positions may change at any time.

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