Will McDonald’s Quit NFL Over CTE Scandal?

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The NFL has 32 sponsors that pay tens of millions of dollars for industry exclusive league-wide marketing rights. Some have questioned their deals due to domestic violence problems. The NFL now faces another scandal over chronic traumatic encephalopathy (CTE), which appears to be a byproduct of the battering of player’s heads during practices and games. Few of the brands have tens of thousands of retail outlets, which makes it harder for a major protest to affect a sponsor’s sales quickly. One exception is McDonald’s Corp. (NYSE: MCD), which has over 14,000 locations.

McDonald’s already has weathered the huge issue of the effect its food has on its customers. This has caused it to shift to some menu items that are considered “healthy.” And the trouble over its menu has not entirely abated.

Many sponsors offer products via stores that sell many other products. This includes PepsiCo Inc. (NYSE: PEP) (which has NFL deals for Pepsi, Frito Lay, Gatorade and Quaker Oats), Anheuser-Busch InBev S.A./N.V. (NYSE: BUD) and Campbell’s Soup Co. (NYSE: CPB). Others, which include Visa Inc. (NYSE: V), have no outlets of their own and count on banks for distribution. Consumers can mount protests against the brands, but it is difficult to take them on in a way that hurts sales much.

One issue with the NFL’s treatment of CTE problems is that the league denied the issue for some time. Another is criticism over the size of a fund to help players who suffered from concussions. The amount was $765 million. Another was a New York Times story about “flawed concussion research.” And finally, Jeff Miller, the NFL’s senior vice president for health and safety policy, admitted the link between football and head injuries.

At some point, sponsors will be affected by all of the extremely negative press, and their PR executives and senior managements look carefully at whether the exposure given them by NFL sponsorships is offset by the exposure of the toll professional football takes on its players. This has only gotten worse with revelations of the debilitating health issues that have destroyed the lives some of the NFL’s most famous players.

Who leaves the NFL, if any sponsor leaves at all? Among those most at risk is a company that touches millions of customers via its own outlets every day. That would be McDonald’s above all others, along with the franchisees who own most of its U.S. locations. Protesters can block entrances to its stores in attempt to put pressure on NFL owners. All of this endangers sales.