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As NFL players take a knee, Papa John's says its pizza sales are taking a hit.

The national chain, the official pizza sponsor of the National Football League, is blaming its declining sales on the league, saying it's failing to handle the ongoing protests by football players who kneel during the national anthem to protest racial injustice.

"The NFL leadership has hurt Papa John's shareholders," CEO John Schnatter said during an analyst call on Wednesday.

"The NFL has been a long and valued partner over the years. But we're certainly disappointed that the NFL and its leadership did not resolve the ongoing situation to the satisfaction of all parties long ago. This should've been nipped in the bud a year and half ago."

Papa John's has complained directly to the NFL about its decreased in-game pizza sales, according to the New York Business Journal.

Fewer people are watching NFL games. Nielsen ratings were down 5% for the first eight weeks of the current season from the same period in 2016, and down 18.7% from 2015.

The declining NFL viewership stems not only from some people being upset about the national anthem protests, but also from those concerned about concussions.

NFL representatives could not immediately be reached for comment about Schnatter's criticisms.

On Wednesday, the Louisville-based company reported a 1.6% increase in third-quarter profit. Net income totaled $21.8 million for the three-month period ended Sept. 24, compared with $21.5 million in the same stretch a year earlier. Earnings per share were 60 cents in the latest quarter on revenue of nearly $432 million.

In a research note subtitled "Sponsorship of NFL = No Free Lunch," Nomura Instinet analyst Mark Kalinowski wrote, "It indeed appears that National Football League strife may be weighing on same-store sales to some degree."

But not everyone was buying the league as a scapegoat.

"The NFL was a factor, but not the only factor. Severe weather had an impact in the quarter as well as some industry-wide challenges," said CFRA equity analyst Efraim Levy.

Papa John's is the NFL's most recognized sponsor for the second year in a row, according to an annual survey by SportsBusiness Journal and Turnkey Intelligence.

The pizza chain runs ads during the games and uses NFL logos and in its advertising and integrated marketing campaigns. In addition, the company has local tie-ins, like offering free toppings in the Washington, D.C., area for touchdowns the Redskins score.

Papa John's is the world's third-largest pizza delivery company and has more than 5,000 locations, according to the company website.

The national anthem controversy began in August 2016 when San Francisco 49ers quarterback Colin Kaepernick chose to not stand when The Star-Spangled Banner played, and instead dropped to one knee. As news of what he did spread, more players began to protest the same way. By the 2017 season, as many as 250 were kneeling for the anthem.

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November 2, 2017
 
 
 

 

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