Papa John’s Blames NFL National Anthem Controversy and Commissioner Roger Goodell for Weak Outlook

Credit: istockphoto.com/tiero

Papa John’s Int’l, Inc. (NASDAQ:PZZA) found and CEO John Schnatter knows who to blame for his company’s disappointing outlook: NFL Commissioner Roger Goodell. Schnatter blamed Goodell for “poor leadership” and said the NFL national anthem controversy has hurt Papa John’s sales and shareholders.

In the third quarter, Papa John’s announced that third-quarter revenue increased 2.2% to $431.7 million. Third-quarter earnings were up 5.3% at $0.60. The company’s 2017 North American sales outlook was revised lower, though, to 1.5% from the previous range of one percent to four percent. The company also revised its diluted earnings per share growth lower, to three percent to seven percent from a previous range of eight percent to 12%.

In a conference call with investors, Schnatter said, “Leadership starts at the top, and this is an example of poor leadership.” The pizza company is an official sponsor of the NFL and said Goodell’s lack of leadership has hurt Papa John’s shareholders.

Since the start of the year, Papa John’s share price has fallen more than 27%. That’s significantly more than NFL viewership, which is down five percent from the same time last year. That might sound dire, but viewership at the four major networks is down an average eight percent.

So fewer people are watching NFL games, but there’s still a huge number tuning in. Around 15-million people on average watch an NFL game this season.

The ratings slump is being blamed on the national anthem controversy with players kneeling to protest police violence. President Donald Trump has asked fans to boycott the NFL if players continue to “disrespect veterans.” In October, Vice President Mike Pence left a game in Indianapolis after members of the San Francisco 49ers took a knee during the national anthem.

And, in a move that clearly irked Schnatter, Goodell and NFL owners decided not to force players to stand during the playing of the “Star Spangled Banner.”

While some Americans may choose not to watch the NFL because of the national anthem controversy, there may be more at play to sagging viewership–namely, changing viewer habits.

TV viewership is down slightly, but ticket sales to actual NFL games have not been hurt by Trump’s attack on the NFL. Moreover, with so much college and professional football to watch, some viewers are dealing with football fatigue.

The way we watch TV is also changing. Fewer people watch cable TV, instead opting to watch the NFL on streaming channels. Why does this matter? Because NFL ratings do not take into account viewership on most streaming services.

So, Papa John’s might be blaming Trump and Goodell for lowered North American guidance in the fourth quarter, but the issue might be closer to home. Sure, the restaurant industry as a whole continues to struggle, but even Domino’s Pizza, Inc. (NYSE:DPZ) (its stock is up more than 12% in 2017) is doing well in spite of Trump and Goodell.

Sources

Papa John’s Announces Third Quarter 2017 Results,” Papa John’s Int’l, Inc., October 31, 2017.

Papa John’s Third Quarter Conference Call & Webcast,” Papa John’s Int’l, Inc., November 1, 2017.

NFL TV Ratings Down 7.5 Percent,” Sports Illustrated, October 18, 2017.

NFL doesn’t alter national anthem policy, but Roger Goodell says, ‘We believe everyone should stand’,” The Washington Post, October 18, 2017.

Trump’s attack on NFL players seems to have no effect on ticket sales, despite reports to the contrary,” Seattle Times, October 2, 2017.

 

 

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