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The Entertainment World Is Changing, and Papa John Can’t Keep Up

With the landscape of television shifting, advertisers will need to learn how to better spend their money. Instead, Papa John is pointing fingers at all of the wrong people.

Getty Images/Ringer illustration

My threshold for hypocrisy is high these days, but Papa John Schnatter has crossed it. Last week the pizza magnate used his company’s quarterly earnings call to blame the business’s weak sales on declining interest in the NFL, whose games are jam-packed with Papa John’s ads. Specifically, he took issue with the league’s response to players kneeling during the national anthem:

“By not resolving the current debacle to the [players’ and owners’] satisfaction … the NFL has hurt Papa John’s shareholders,” Schnatter said. “Leadership starts at the top, and this is an example of poor leadership.”

Papa John is the founder, principal owner, and CEO of Papa John’s, a company Papa John named after himself. Papa John is also the primary spokesman of Papa John’s, appearing in the company’s ads and even on its pizza boxes. He is always depicted wearing chef’s gear, as if to imply that if you call up your local Papa John’s, Papa John himself will be involved in the kneading of your pizza’s dough and the process of shoveling it into the oven. It’s hard to find another example of a person who is so inextricably linked with his company. Even Colonel Sanders didn’t name the damn business after himself. The only other person I can think of who so consistently plastered his name and image across his business is, well, this guy.

If you are the principal owner, operator, and public face of a company with your name on it, you can’t use the phrase “leadership starts at the top” to blame anybody but yourself for that company’s failings. I, Rodger Sherman, vow to accept full responsibility for any failings of Rodger Sherman Enterprises.

But I must say Papa John has something resembling a point. Like so many businesses, Papa John’s invests heavily in advertising during sporting events, presuming that live, televised sports are a firehose of American eyeballs that will never turn off. But the past two years have seen a steady decline in viewership for even the healthiest sports. Everybody involved in sports, including the NFL and advertisers like Papa John, should be asking what happens next — although that isn’t quite the question Papa John chose to ask.

Over the last week, the Papa Saga has unfolded strangely. First, some realized that Papa John’s comments about the NFL sounded an awful lot like Cowboys owner Jerry Jones’s comments about the NFL, and that Jones is a Papa John’s franchisee who has appeared in Texas-area Papa John’s commercials. As Jones actively tries to unseat NFL commissioner Roger Goodell, perhaps he turned to a league advertiser to express disappointment in Goodell’s leadership. Secondly, the alt-right has seized on Papa John’s comments about protesting players and adopted his company as part of its movement. There was an alt-right rehearsal dinner catered by Papa John’s, and a neo-Nazi website endorsed Papa John’s with a graphic of a pizza that had a pepperoni swastika, prompting Papa John’s to condemn Nazis. Third, other pizza chains mocked Papa John’s by pointing out that its sales hadn’t been hurt by the NFL’s ratings.

Of course, other pizza companies don’t advertise with the NFL as fiercely as Papa John’s does. There is a logic to Papa John’s argument: If fewer people are watching football, the huge swath of money that his company spends on NFL ads is being wasted.

But Papa John’s is not addressing that problem. The company is not pulling advertisements from NFL games, but merely airing ads that don’t feature the NFL logo or note that Papa John’s is the official pizza of the NFL. The company apparently still believes that advertising during NFL games is an effective way to reach customers, but worries that those customers might decide not to purchase pizza from Papa John’s if they closely associate the pizza brand with the league.

That claim seems shaky, especially coming from somebody who has a history of publicly arguing with little evidence that certain political issues will negatively affect his company’s bottom line. Surely, some fans upset with protesting players are no longer watching football. (It’s also possible that fans upset at the league’s lack of support for protesting players are no longer watching football.) But according to a J.D. Power poll of sports fans, only a small number of people say they’re avoiding the NFL because of this — not nearly enough to account for the league’s downturn in ratings.

NFL ratings are declining, but so are the ratings of virtually every sport, including ones that have had no or limited player protests. Baseball ratings are down. Local NBA ratings are down (although the NBA playoffs and World Series did spectacularly well). NHL ratings are way down. NASCAR ratings are way, way, way down. American viewership of the Premier League is down. Ratings of the 2016 Olympics were down. In Canada, CFL ratings are down. This is not all happening because of athletes protesting racial inequality during the national anthem; suffice it to say, NASCAR and the Olympics do not lack for patriotic symbolism. And this isn’t exclusively a sports issue: TV ratings are down in general, regardless of the content or network. People simply don’t consume television in the same way that they used to, and that is showing in ratings data across the board.

A not-insignificant portion of the American economy is tied to the premise that live, televised sporting events draw a consistently huge audience. Television rights deals are the largest source of income for leagues, providing the lion’s share of money that ends up in the hands of both owners and players. Networks pay massive fees for broadcasting rights because they know they can bank on televised sports to be their most-watched programs. That allows networks to make money by charging premiums to advertisers, who know that the commercial breaks in sporting events give them the best chance to reach as many potential consumers as possible.

Television ratings even dictate the competitive structure of sports. Take Thursday Night Football, games played on short rest that put players’ health at increased risk and feature a lower quality of play because the league apparently feels it can rely on high ratings for stand-alone games. Or consider the MLB wild-card playoff games, or the NBA’s switch to a best-of-seven first-round series format in the postseason. Or look at almost every aspect of college football, from the conferences — often assembled for the sake of cable subscriptions — to the postseason — bowl games owned by ESPN, played in random cities, that help the network fill stand-alone television windows.

Papa John and those like him do have a genuine reason to be concerned about this. His business has invested heavily in the promise that people will always watch sports, and will always see his smiling face hawking pizzas. He isn’t just invested in the NFL — my Knicks have a 50 percent off deal with Papa John’s if they score 100 points in a win, but last week when the Knicks lost to the Magic, Orlando fans got the same deal. Even my beloved and extremely unpopular Northwestern Wildcats are in on it.

As ratings decline, Papa John’s return on investment will diminish. He will be spending the same advertising dollars to reach fewer people. Everybody in sports should be working on how to better spend advertising dollars.

Executives can address this problem, or they can be like Papa John, who is using the declining ratings of a league with which he advertises as a prop, ignoring a larger issue to make a political point, putting his company’s well-being at risk, and failing to back up his words with any sort of financial action. I wish I were rich enough that I could afford to be so stupid.