Papa John's CEO blames NFL for declining sales due to player protests

Papa John's says the NFL is to blame for declining sales. (Photo: Spencer Platt, Getty Images)
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As NFL players take a knee, Papa John's 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.

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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. Plus, a growing number of football fans are opting to watch the games online instead of on television.

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

On Wednesday, the Louisville, Ky.-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 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.

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 to take a stance about racial injustice and police violence.

In September, the debate leaped from living rooms and bars to the White House, with President Donald Trump advising team owners to fire players who failed to stand for the song. In the weeks since then, he's slammed NFL leadership for not stopping the player protests.

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

Papa John's stock was down $5.94, or 9%, to $62.11 in early afternoon trading.

Follow USA TODAY reporter Zlati Meyer on Twitter: @ZlatiMeyer