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Will The NFL's Domestic Violence Scandal Hurt Its Bottom Line?

NPR, September 29, 2014

By Uri Berliner

The NFL has become a $10 billion financial juggernaut by attracting new fans and devising new ways to make money. Now, the NFL confronts what may be its most serious image problem ever.

AUDIE CORNISH, HOST: The $10 billion National Football League has a serious image problem. The problem threatens the most successful sports league in America, with the most fans and the richest TV deals. And now the conversation in the NFL is all about domestic violence. NPR's Uri Berliner reports on what that means for the bottom line.

URI BERLINER, BYLINE: There's a kind of awe that creeps into people's voices when they talk about the NFL's financial power.

JIM ANDREWS: Oh, gosh, it's very successful. They are clearly the gold standard.

MICHAEL NATHANSON: The NFL is the single most important program there is in television.

BERLINER: That's Jim Andrews from the sponsorship firm IEG and Michael Nathanson, a media analyst with MoffetNathanson. To understand the economic might of the NFL, it helps to look at two things - numbers and devotion. First, the numbers - television viewing is getting DVR'd, Hulu'd and Netflixed. So nowadays it's only live events, especially the NFL, that can capture truly large audiences. Thirty-four of the 35 most viewed TV shows last fall weren't even shows. They were NFL games.

UNIDENTIFIED ANNOUNCER: Today's game on Fox is sponsored by Bud Light, official beer sponsor of the NFL.

BERLINER: Nathanson says the momentum that makes the NFL dominant in TV just keeps growing.

NATHANSON: Five years ago, six years ago, the average NFL game was four times the average rating of a broadcast show. Now five, six years later, it's eight times the rating, meaning that the rest of the world has shrunk, and people have actually grown in viewership.

BERLINER: From broadcast rights alone, the NFL takes in around $5 billion a year, about half the league's annual revenues. All those eyeballs - as the media people like to say - those eyeballs make corporate America weak in the knees. Jim Andrews says most organizations make aggressive sales pitches just to get corporate sponsors listening, not the NFL.

ANDREWS: The NFL literally is in a position where they have people coming to them saying, please take our money.

BERLINER: And the league obliges. Companies pay for the privilege of being called the official beer, pizza or phone company of the NFL, about a billion dollars a year in total. The cascade of cash doesn't end there. Humberto Barreto is an economist at DePauw University who's written about the NFL.

HUMBERTO BARRETO: Their ability to monetize apparel and licensing fees and the growth of fantasy sports all sort of contributed into some kind of a perfect storm so that they really are an amazing business model right now.

BERLINER: The NFL seems unstoppable with so much money rolling in and so many passionate fans. But what happens when football success machine collides with this...

UNIDENTIFIED MAN: Since the horrible tape surfaced yesterday of Baltimore Ravens running back Ray Rice beating his then fiancee...

UNIDENTIFIED WOMAN: A Texas grand jury believes Vikings star Adrian Peterson went beyond reasonable discipline in the way he punished 4-year-old son.

BERLINER: With the season just getting underway, the league found itself in a PR crisis over its handling of allegations of domestic violence and child abuse. The story wouldn't go away. Instead of breaking down games like she normally does, ESPN anchor Hannah Storm talked about the Ray Rice video and her three daughters.

HANNAH STORM: I spent this week answering seemly impossible questions about the league's biggest stars. Mom, why did he do that? Why isn't he in jail? Why didn't he get fired? And yesterday, why don't they even have control of their own players?

BERLINER: Darlan Monterisi is an NFL fan and former captain in the Marines who's also a managing director at the public relations firm Porter Novelli. She says the NFL could've acted decisively with a clear policy on domestic violence but is fumbling that chance away.

DARLAN MONTERISIS: I don't think just slapping a Band-Aid on this is the right way to go.

BERLINER: While the league's image is suffering, there's no evidence yet the NFL is paying a financial price. Sponsors are staying put. Ratings remain strong. And this is where the matter of devotion comes into play. If you think of fans as customers, the NFL has an extraordinary level of brand loyalty. Being troubled by player conduct or the league's leadership doesn't mean you've stopped watching. As Jim Andrews, the sponsorship guy, points out, if you're a professional football fan, where else are you going to go?

ANDREWS: Without that alternative, the alternative is to say I'm giving up this thing that I love, this activity that I have been involved in, you know, all my life.

BERLINER: But even if the NFL gets past this moment without financial damage there's the matter of player health - concussions. Lost in the uproar over Ray Rice and the other arrests were court documents filed on behalf of the league saying almost a third of retired players are expected to suffer from long-term cognitive problems. Humberto Barreto, the economist, says that's ultimately what will keep NFL executives up at night.

BARRETO: When the NFL thinks about big-picture kind of existential kind of questions, I think the health aspects - the concussion stuff and, you know, will mom let her child play football - that's a much, much bigger issue.

BERLINER: So it may be something right in the game itself, something raising these serious health questions, that finally slows the growth of the NFL. Uri Berliner, NPR News.