College Football to Experience Dramatic Rise in Naming Rights Deals

Carrier Dome

The value of college football stadium naming rights deals has skyrocketed over the last 3 years, with the average annual fee now exceeding $1 million. Several deals have re-set the market. Back in ’15, American Airlines started the trend, agreeing to a 10-year $41 million pact with the University of Washington (Husky Stadium). United Airlines followed, agreeing to a 16-year deal worth $69 million, to put its name on the Los Angeles Coliseum; home of USC Trojans. The shifting landscape has programs across the country considering the adoption of corporate names for their athletic buildings. Colorado Chief Revenue Officer Matt Biggers explained his school had explored naming rights sponsorships “over the past few years”, but said now for the first time there seems a universal understanding (from administrators and alumni) “from a cost and revenue standpoint” that “we have to generate revenue to compete.”

Howie Long-Short: College football is in an arms race and naming rights are just one of many revenue streams that allow athletic departments to stockpile artillery. Back in May ’17, Kentucky became the first SEC school to add a naming rights sponsor (on a football stadium), agreeing to a 12-year $22 million deal with Kroger. I would expect the remainder of the conference to follow in short order. Programs in the football crazed SEC can’t be perceived as falling behind asset-wise.

The first stadium naming rights deal in college athletics was signed nearly 40 years ago when the Carrier Corporation gifted a one-time $2.75 million donation to Syracuse athletics in exchange for the naming rights in perpetuity to the Carrier Dome; home to both Syracuse football and men’s basketball. Considering the teams still play there today, one could certainly argue that deal ranks among the best in sports history (see: St. Louis ABA, Bobby Bonilla). Carrier Corporation is a subsidiary of United Technologies Corporation, which trades under the symbol UTX.

Fan Marino: Back in ’07, “Papa John” Schnatter agreed to pay the University of Louisville $6 million over 10 years to brand the school’s football stadium Papa John’s Cardinal Stadium. While Schnatter holds those rights until ’40, the school was quick to strip the brand name off the stadium after it was revealed the company founder had made racially insensitive remarks on a corporate conference call. Expect a settlement, the value of those rights is too lucrative for the building to sit without a sponsor for too long.

Speaking of Papa John’s (PZZA), more than a half dozen MLB teams have quietly restored their partnerships with the company just a month after cutting ties. The Yankees said their decision was made in support of the +/- 120 tri-state area franchise owners suffering from declining sales, but that had nothing to do with the racist comments. Papa John’s has said it will lower franchise fees to help offset the revenue lost due to the controversy. Major League Baseball has not yet reinstated the Papa Slam promotion, but is reportedly considering it.

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MLB Suspends “Papa Slam” Promotion, Stock Spikes +11% Following Papa John’s Resignation

Papa John's

Less than 24 hours after Papa John’s Founder John Schnatter admitted to using a racial epithet (and spewing other offensive comments) during a corporate training exercise, Major League Baseball announced it had indefinitely suspended its league-wide “Papa Slam” promotion with Papa John’s Pizza (PZZA). The suspension will not impact individual team promotions with the national pizza chain, though some (see: Marlins, Royals) have moved to follow the league’s decision. The “Papa Slam” promotion entitles baseball fans to 40% off their next order at Papa John’s for each grand slam (aka Papa Slam) hit; Greg Byrd’s grand slam on Wednesday evening was not acknowledged by MLB as a “Papa Slam”. Schnatter has since stepped down from his role as Chairman, he’s also resigned his seat on the Board of Trustees at the University of Louisville.

Howie Long-Short: This isn’t the first time Schnatter has made headlines for the wrong reasons. He stepped down from his role as CEO last fall after blaming lagging sales on declining NFL viewership and the league’s handling of player protests. PZZA shareholders are clearly relieved he’s no longer running the company because aside from being a liability, North American same store sales (-5.3% YoY) and revenue (-4.9%) declined for the 2nd consecutive quarter in Q1 ‘18. Shares soared +11% on news of his resignation Thursday, closing at $53.67. Even with Thursday’s spike, the stock price is down is down 28% over the last 12 months; Pizza Hut shares are up 31% over the same period. That’s because despite PZZA’s tumultuous year, pizza remains a “strong growth category within the food and beverage industry.

Fan Marino: Did you know? According to, Papa John’s has the 2nd most locations (14) amongst food chains in U.S. pro sports venues; Dippin Dots has 21 locations. 4 of the 14 venues are NFL stadiums.

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Peyton Manning Sells Stake in 31 Papa John’s Franchise Locations

Papa John's

Two days before the NFL and Papa John’s (PZZA) agreed to part ways, Peyton Manning chose to do the same with his stake in 31 Papa John’s franchise locations. Manning, who acquired the Denver area stores when he signed with the Broncos in ’12, will remain a company spokesperson and ambassador. The league has since announced Pizza Hut (YUM) will become the Official Pizza of the NFL, signing a 4-year deal (PZZA had 3 left on theirs) with an annual value exceeding the amount PZZA was schedule to pay. Papa John’s will retain an affiliation with the league through its 22 team sponsorship deals.

Howie Long-Short: It’s unclear just how much equity Manning had in each location, as his stake was tied up in a joint venture with Papa John’s International. What is clear, are the costs (and requirements) associated with opening a PZZA location. Franchisees must have a minimum net worth of $250,000 (for one store), with at least $75,000 in liquid assets. The franchise fee is just $25,000, but there is a 5% royalty fee on monthly net sales. Franchisees are also expected to invest 8% of monthly sales back into marketing and advertising their location. In all, the investment required to open a 1,200-1,400 SF location is estimated at $300,000. As of 2016, the company’s sales to investment ratio was $879,794.

Fan Marino: Mike and the Mad Dog set the bar for modern sports talk radio (and created radio row, if you ask Mike), hosting afternoon drive on WFAN (NYC) for more than 20 years. The pair broke up in 2008, though Mike remained on the station until late 2017. While Mike became a caricature of himself late in his career, he delivered one of his most epic monologues following Super Bowl 50. It’s an all-time favorite among the Mongos (his fanatical fan base, proud Mongo here). You MUST listen (Skip to 11:15, make sure you listen through at least 11:50).

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Papa John’s Out as NFL’s Official Pizza Sponsor

Papa Johns

The NFL and Papa John’s (PZZA) have agreed to mutually terminate a partnership that made PZZA the league’s Official Pizza Sponsor. Papa John’s CEO Steve Ritchie (replaced founder John Schnatter on Jan. 1) said the company will reallocate marketing dollars towards the league’s star players and its 22 partner teams. The announcement comes less than 6 months after former PZZA CEO John Schnatter criticized the NFL’s handling of player protests; blaming the company’s poor 3rd quarter on the failure of NFL leadership to resolve the controversy. The league expects to have a new Official Pizza Sponsor before the ’18 season kicks off.

Howie Long-Short: The announcement comes along with Papa John’s release of Q4 ’17 financials. Earnings declined 12.5% YOY (to $28.5 million) as North American same-store sales dropped 3.9% YOY; with negative consumer sentiment to blame. The company is projecting 2018 North American comparable sales to be flat to -3%. Following the less than stellar news, PZZA shares declined 7.59% in after-hours trading on Tuesday. The stock is down more than 17% (to $56.36) since Schnatter made his initial comments critical of the league.

Fan Marino: Many believe Jerry Jones, who owns stake in more than 100 Papa John’s stores, was behind Schnatter’s comments critical of Commissioner Goodell. It’s certainly no secret that like Schnatter, Jones believes players should stand for the national anthem. While Jones won’t be pleased about PZZA’s Q4 ‘17 performance, he’s likely far more annoyed with the $2 million the league wants reimbursed for legal expenses; related to his challenges of the proposed contract extension for Commissioner Goodell and the 6-game suspension issued to Ezekiel Elliot. He’s has already requested a meeting with the Commissioner to appeal the penalty.

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Papa John’s Blames NFL for “Polarizing Customer”, Pizza Hut Says NFL Has No Impact on Business

Papa John’s Pizza slashed full-year revenue and profit forecasts and blamed same store sales missing analyst estimates, on the company’s association with the NFL. PZZA CEO John Schnatter believes the political controversy that has engulfed the league this season has had a negative effect on ratings (down 7.5% from ‘16). Schnatter was quoted saying “NFL leadership has hurt Papa John’s shareholders. The controversy is polarizing the customer, polarizing the country.” PZZA shares are down 8% since the announcement. The company has pulled all advertising associated with the NFL.

Howie Long Short: Not all NFL sponsors feel the way Schnatter does. Kohl’s (KSS) is said to be working with the league on a holiday ad campaign, Buffalo Wild Wings (BWLD) recently went on the record stating that they do not anticipate any decline in key sales figures because of their relationship with the NFL and Pizza Hut (YUM) CEO Greg Creed said the company isn’t seeing any impact on their business. PZZA blaming poor sales on the NFL, is like the NFL blaming declining television ratings on hurricane coverage; perhaps it’s had a slight impact, but to place the sole blame there belies the fundamental issues with the business. The stock is down more than 26% this year.

Fan Marino: I always wonder why people in New York and New Jersey order from Domino’s (DPZ), Pizza Hut (YUM) or Pappa John’s (PZZA), when there are so many better local options. In NYC for a few days and not sure where to find the best slice? Barstool founder Dave Portnoy has a “pizza review” series to help you out. Here is a link to an episode he did with Bryce Harper.

Papa John’s Blames the NFL for Hurting Pizza Sales

Editor Note: The summary for this story was co-written by our friends at The Water Coolest. Check out for the latest market news and professional advice.

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Several NFL sponsors have contacted the league’s front office to express their concerns with declining TV ratings and the political unrest that has engulfed the league, for the first 7 weeks of the season. Long-time sponsor Papa John’s (PZZA) has told the league that in-game sales have fallen, since President Trump’s first comments on NFL player protests, back on September 22nd. USAA, another official league sponsor, has confirmed that it too has been in contact with the league office about the issues. Despite 45’s call for the league to suspend players that fail to stand for the national anthem, the NFL has taken the position that it will allow its players to freely express their beliefs as they see fit.

Howie Long-Short: According to a new Harris Poll, PZZA has surpassed Pizza Hut (YUM) as the most popular pizza chain brand; but that popularity isn’t correlating with revenue growth. While YUM is up 17% this year, PZZA is down 21% YTD. Analysts expect PZZA to report Q3 revenues have grown 1.5% (to $428.73 million) YOY; with Pizza Hut (YUM) expected to report 10.5% growth (to $626.42 million) over the same period. Unfortunately for PZZA shareholders, popularity doesn’t guarantee success.

Fan Marino: League sponsors are contractually bound, so there is no immediate threat of revenue loss for the NFL. Any existing concerns are related to a potentially negative financial impact on future negotiations. The current collective bargaining agreement runs through the 2020 season, so the league isn’t going to be able to force players to stand before that. To be clear, there are some billionaire owners who defend the player’s right to protest. 49ers Owner Jed York was quoted as saying “Our country is more important than a slight economic impact.” At least one of these guys has his priorities in line.

NFL concedes that national anthem protests are hurting business

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