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How scandals could change the business of football

Some sponsors of the NFL have started to complain publicly about the league's handling of the cases involving players and domestic abuse of spouses and children. Despite extra scrutiny, ratings and fan attendance have held. Hari Sreenivasan talks to Andrew Zimbalist of Smith College and Gregg Easterbrook, author of “The King of Sports: Football's Impact on America” about the economic consequences.

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  • Editor’s Note:

    Due to rights restrictions, the online version of this segment has been edited from its original broadcast version.


    Meanwhile, there's been a new development in the Ray Rice domestic violence case. The NFL Players Union filed an appeal last night for the former Baltimore Ravens running back. He's been suspended indefinitely by the league for punching the woman who's now his wife.

    Two other NFL players are also facing domestic violence cases. Carolina Panthers defensive end Greg Hardy played in week one, but not last weekend. Today, he was taken off the active roster while he appeals his conviction for domestic assault. And San Francisco 49ers defensive end Ray McDonald has played in both his team's games so far.

    Minority Leader Nancy Pelosi, a California Democrat, said today that was the wrong call. Even so, the 49ers' Sunday night game with the Chicago Bears drew one of the largest TV audiences ever for a regular season game. Chicago won that 28-20.

    What kind of threats do these stories pose to the future of the game as a business? And is the business itself showing any cracks?

    We check in with two who have a good lens onto all of this.

    Gregg Easterbrook is the author of "The King of Sports: Football's Impact on America." He's a contributing editor to "The Atlantic" and a columnist for ESPN and NFL.com. And Andrew Zimbalist is an economist at Smith College who specializes in the business of sports. He has consulted in the past for players unions, teams and sports leagues, including football.

    Andrew Zimbalist, let me start with you first.

    Over the past couple weeks, has this made a dent in the business of football?

  • ANDREW ZIMBALIST, Smith College:

    I don't think so, not yet.

    I mean, you have sponsors complaining and a few sponsors leaving. Those sponsors will come back as soon as this uproar blows over. As you just pointed out, ratings on the television games are going up. Attendance is fine. So I think this would have to drag on for a good deal longer, and there would have to be more and more bungling by the commission, by Roger Goodell, for it to have a real business impact.

    Football is very, very strong. It's very resilient. And I think that the front office is now mobilized, and they are going to do things that will I think at least lower the uproar a little bit.


    Gregg Easterbrook, what's the threshold that has to be crossed where there are serious financial consequences?

    GREGG EASTERBROOK, Author, "The King of Sports: Football's Impact on America": Well, since most of the NFL's money comes from television contracts, they're not going to change year to year.

    You ask yourself, how will the perception of football change over the course of the next few years? The game itself has never been better. The games are fabulous. NFL games, college games are all great to watch.

    But if people begin to say that football is the new cigarettes, and you're starting to hear that, if people begin to think that football isn't just tax subsidies — the governor of Minnesota says he's embarrassed by the Vikings' treatment of Adrian Peterson.

    What you should really be embarrassed about a half-a-billion dollars of taxpayers' money that the governor of Minnesota gave to the Wilf brothers to build the stadium in which they will keep all of the profits. If people become more aware of those issues, if football becomes perceived as a woman's issue — nobody saw that coming — and especially if football — people turn their attention to the fact that the vast majority of football is played at the youth and high school level by people who legally are children, that's where the health harm of football is done.

    If public high schools begin to drop out of playing football — and there is some indication they will — that over a period of years could change the NFL's economics very radically.


    Andrew, when you were mentioning the sponsors, have any of the actions that the Radisson or Nike have taken, are they significant? Are they likely to win more support?


    Not yet. Not yet.

    They're drops in the bucket. And, You know, the Nike is a deal that they have with Peterson. It's not a deal they have with the Vikings or a deal they have with the NFL. And I think any sponsors that do drop the NFL will come right back, because they don't have better alternatives. This is a game that — a sport that produces ratings of 8 and 10 on a typical Sunday. So you have eight million households watching the football games.

    And this is a game where you have tens of millions of Americans involved in fantasy football. They have a very strong foothold in America. And I think Gregg is right. There are a lot of ifs, though, in what he said. If the perception of all of those things begins to change over time, then, yes, football can be hurt — hurt in its business dealings, but that's not about to happen.


    Gregg, what about the fact that these ratings are at historic highs for football, that we might be privately or even semi-publicly opposed to what's happening with a few specific players, but we're still going to the games or we're certainly watching them more often than we used to?


    Oh, football is the 800-pound gorilla of television, NBC's "Sunday Night Football" the number one show on network TV, not the number one sport, the number one show, ESPN's "Monday Night Football," the number one show on cable, not the number one sport, the number one show.

    Football, as I said, the games have never been better. It's the perfect game for the United States. I call it the king of sports because it expresses what we are as a nation. It's too loud, it's too crazy, it's too violent. It's the perfect game. And it's a fascinating game to watch. I love it.

    But when you add the sociological impact, the distorting effect that it has on high school education, mainly for boys, for a few girls, but mainly for boys, the distorting effect that it has, the fact that NCAA football has at big public universities, and then add in that the public subsidizes the production of NFL profit — roughly a billion dollars a year goes to subsidize the construction and operation of NFL stadiums — where almost all the revenue generated is kept by the super rich, you have these sociological impacts.

    And, suddenly, the fact that the game is a fabulous game doesn't seem so great anymore.


    Andrew, what about — speaking of subsidies, this has also called into question the tax status of the NFL. And people have tried to take it on before, and there's now possibly pieces of legislation that may make their way to the floor.


    Oh, frankly, I like Cory Booker, but I think he's grandstanding here.

    Look, what — what this tax exemption is, is an exemption for the front office of the National Football League. It's not an exemption for the teams. The teams still pay profit taxes. The owners pay profit taxes. The players pay income taxes.

    The front office is a pass-through organization. They get revenue from television. They get revenue from licensing. They get revenue from sponsorships. They keep some of that to fund the front office, and then they give the rest to the teams. They can manipulate all those numbers any way they want.

    If — if the IRS all of a sudden said, we're going the tax you, they can make all of their income disappear, and the taxes would amount to nothing anyway. So, I think it's a red herring.



    Gregg, what about the idea that the NFL has really sparked conversations in America in the past few years? We're talking now about concussions. We were talking about bullying. And here we are talking about domestic violence and a national conversation on corporal punishment.


    Well, everything about the NFL is outsized. That's one of the interesting things about it.

    And it holds up a mirror to society in many ways. As recently as five years ago, concussions were a forbidden subject, totally verboten. You never heard it mentioned on the air on ESPN, CBS, NBC. Now it's discussed constantly. That's a healthy development — healthy literally, because it helps boys and youth players to understand how to protect their heads.

    A year ago, the Miami Dolphins' bullying controversy — Jonathan Martin, a huge, muscular man who could lift a 10-ton weight above his head, stopped playing football because he was being bullied. And that reflected — a generation ago, we would have laughed about that, but it reflected the fact that our social understanding of bullying has changed from being not just bad manners, from being an ethical problem.

    And now we're using the NFL as a lens through which to see domestic violence. It's the NFL holding up a mirror to American society.


    Andrew, the NFL has weathered a lot of these things before. How do you think it will deal with this?


    Yes, I think it's going to weather it. You know, they have a very effective public relations office. They have done it before.

    They — people said that the concussion scandal and the litigations were going to unseat Goodell several years ago. They said when there was the issue with the New Orleans Saints a few years ago that that was — that they were getting bounties for injuring other players on the other teams.

    These scandals have come to the surface practically every year, and there's always an uproar about it, and the media is always on top of it and people are speculating about how fragile the NFL is.




    And it always bounces back. And that's what I predict will happen in this case.


    All right, Andrew Zimbalist, Gregg Easterbrook, thanks so much for your time.


    Thank you.


    Thank you.

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