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NFL may lose big due to recent controversies

Milanee Kapadia

Recent controversies surrounding NFL athletes are keeping the organization on the defensive. First, there was Baltimore Ravens’ running back Ray Rice and his domestic abuse video making headlines. This was followed by the indictment of Minnesota Vikings’ star running back Adrian Peterson for child abuse. On Tuesday, Anheuser-Busch (BUD) expressed deep concern about the recent incidents and the NFL's handling of the situations.

In a statement released Tuesday afternoon, the company's spokesperson wrote:

"We are disappointed and increasingly concerned by the recent incidents that have overshadowed this NFL season. We are not yet satisfied with the league's handling of behaviors that so clearly go against our own company culture and moral code. We have shared our concerns and expectations with the league."

Anheuser-Busch is a major sponsor of the NFL. The company has been the official beer sponsor since 2011, and CNBC reported that the company sponsors 88% of the NFL's teams, second only to Gatorade. If Anheuser-Busch were to cutback or pull its sponsorship, that would be by far the boldest statement by any of the NFL's major corporate sponsors to date.

So far, other sponsors have taken some specific, player or team-related action in response to recent incidents. On Monday night, the Radisson hotel chain announced it is suspending its sponsorship of the Vikings. The company issued a statement saying, "We are closely following the situation and effective immediately, Radisson is suspending its limited sponsorship of the Minnesota Vikings while we evaluate the facts and circumstances." The hotel logo appeared on the backdrop at the team’s news conferences.

The Associated Press reported that some Nike stores in the Minneapolis area had pulled merchandise with Adrian Peterson's name and number from the shelves.

Yahoo Finance Columnist Michael Santoli says that the NFL has not yet felt the fallout because corporate sponsors are still trying to figure out if they should distance themselves from the league. The key metric, according to Santoli, is the order book for Super Bowl Sunday. NBC has the broadcast rights to the game this year and they are charging a stupendous $4.5 million for a 30 second spot. “To me it’s telling to monitor just exactly how much the order book is being filled-- it’s largely filled already even before the season really starts. I think you want to see exactly whether the big companies pay up for that in an aggressive way…and we’ll know in the next couple of months,” he says.  

Santoli thinks corporate sponsors won’t stay away from the Super Bowl in droves but they may not be willing to shell out huge sums of money to place ads on the network if the scandals don’t die down.

Sports analysts say it’s not good business sense for companies to cut ties with the NFL now and then come back later to negotiate on even more expensive terms.

Instead it’s much easier for companies to cut ties with individual players such as Ray Rice. Electronic Arts Sports (EA) and Nike (NKE) have dropped him completely. "With Ray Rice's indefinite suspension from the NFL, he will be removed from 'Madden NFL 15,'" EA Sports announced.

Nike rarely cuts contracts completely with the athletes it endorses. Sometimes an athlete gets a second life with the brand after the scandal dies down. Santoli says he doesn’t see that being the case with Rice, “This athlete’s personal brand is permanently impaired; you really can’t see it coming back,” he says.

Adrian Peterson, who has appeared on Wheaties boxes, was removed from the cereal maker's website Monday. Meanwhile, major league-wide sponsors such as Anheuser-Busch and PepsiCo (PEP) are sticking by the league, for now.

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