(Bloomberg) -- Pizza Hut will take over the NFL pizza-sponsorship deal abandoned by Papa John’s International Inc., betting that it can revive its allure by teaming up with the increasingly controversial league.
Pizza Hut’s multiyear deal gives it collective use of all 32 teams logos, and the NFL will work closely with the chain on local team partnerships, according to a joint statement Wednesday.
Papa John’s -- unhappy over declining ratings and the handling of players’ national anthem protests -- said Tuesday it was ending its deal across the whole league that had been in place since 2010, and would focus on marketing with 22 specific teams. The opening provides an opportunity for Pizza Hut’s parent, Yum! Brands Inc., which has sought to burnish the pizza chain’s image after years of sluggish sales.
“The capacity for what’s possible is endless, and that’s going to make this league partnership great fun for Pizza Hut, the NFL and everyone who loves pizza and football,” said Artie Starrs, Pizza Hut’s U.S. president. NFL Commissioner Roger Goodell said the league is “thrilled to have Pizza Hut.”
The NFL’s relationship with Papa John’s had been strained since the chain’s founder John Schnatter slammed the league in November, saying that declining ratings had hurt sales. He also said Goodell mishandled a controversy over NFL players kneeling during the national anthem. Last year, the league generated about $14 billion in revenue.
Investors signaled the deal may help the struggling chain: Yum shares rose as much as 2.8 percent to $82.46 in the wake of the announcement. The agreement also reflects the NFL’s enduring power as a marketing tool. The league will get more money from Pizza Hut under the terms of the four-year deal than it got from Papa John’s, SportsBusiness Daily reported.
The NFL remains the most-watched sports league in the U.S., and one of the few places were marketers can be sure to reach tens of millions of Americans. The league and its 32 teams made $1.32 billion in sponsorship revenue last season, according to ESP research, up from $1.07 billion five years ago.
But there are risks. The anthem kneeling, part of a broader commentary on race relations in the U.S., drew criticism from President Donald Trump, and the fallout angered fans on both sides of the political sphere. Growing awareness over the physical dangers of the sport, including concussions, have led to decreased participation at the younger levels, and other major leagues like the NBA have used progressive leadership to claw into NFL market share.
For Papa John’s, the end of the partnership removes a distraction at a time of sputtering results: On Tuesday, it reported a decline in North American comparable sales. The chain also said that it’s perceived as too expensive, especially as fast-food restaurants such as McDonald’s Corp., Taco Bell and Wendy’s Co. step up their promotions.
It plans to focus more on its loyalty program and other advertising avenues, though Papa John’s will still continue marketing with specific NFL teams.
On Wednesday, the company’s stock rose as much as 4.7 percent to $59. Papa John’s last year lost 34 percent.
“We’ll continue to be very prominent on NFL game days as we move forward,” said Chief Executive Officer Steve Ritchie, who took over earlier this year from Schnatter. It will “just be in a different way.”
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