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Pizza Hut tapped as new NFL sponsor after Papa John's fallout

  • Yum! Brands' Pizza Hut will be the new official pizza sponsor of the NFL.
  • The announcement comes a day after Papa John's severed ties with the league to focus on deals with specific teams and players.
  • Pizza Hut has been aggressively discounting its pizzas, rolling out contests and offering new rewards this year.

Yum Brands' Pizza Hut will be the new official pizza sponsor of the NFL.

The announcement comes a day after Papa John's severed its ties with the league to focus on deals with specific teams and players. In a joint statement, Papa John's and the NFL said the decision to end the eight-year partnership was mutual.

"There's so many things that we are excited about," Artie Starrs, the president of Pizza Hut's U.S. division, told CNBC. "At our core we are an innovative, entertaining brand and I think that's what the NFL is too."

With the NFL partnership, the pizza chain will be able to work with the league on local deals with the teams, including fan experiences and game tickets. Pizza Hut may use all 32 of the team marks in its marketing.

The sponsorship will begin with the 2018 NFL Draft, which will be held near Pizza Hut's headquarters in North Dallas. Financial terms were not disclosed.

In November, Papa John's founder and then-CEO John Schnatter on a call with investors blamed the National Football League for the company's poor performance. He said the NFL had not resolved the ongoing controversy over players kneeling in protest during the National Anthem, and TV ratings slumped as a result.

The TV audience is only one aspect of the partnership, according to Pizza Hut.

"The TV ratings are what they are," Starrs told CNBC. "We think TV is an important place for us to play but we look at a lot of the things that the NFL is doing in terms of their mobile partnerships … we are going to go where the consumer goes. I think the NFL is committed to doing the same."

Pizza Hut expects the deal will be help it to expand to new markets and bolster its digital and delivery initiatives at its 7,500 restaurants in the U.S., Starrs said.

"There is opportunity for us in some markets where we can build some more restaurants," Starrs said. "You think, New York and Boston and San Francisco where the NFL has a presence and Pizza Hut has an opportunity to grow."

Pizza Hut could use this boost. Its parent company Yum Brands has been working hard to revitalize the brand over the last year since it has been a major drag on Yum's earnings. Some have even suggested executives should divest the brand.

Instead, in April 2017, the company invested $130 million toward upgrading equipment, improving restaurant technology and boosting advertising at its Pizza Hut restaurants. It also launched a loyalty program and hired 14,000 delivery drivers throughout the year.

These strides have helped to improve Pizza Hut's performance. In February, the company posted its sixth consecutive quarter of positive same-store sales growth. However, it noted that their pizza demand had softened during the fourth quarter.

Since the beginning of the year, Pizza Hut has been been aggressively discounting its pizzas, rolling out contests and offering new rewards in an effort to gain market share from competitors.

"Pizza Hut was more challenged and lost revenue in 2017, and I think the speed with which they took over the NFL sponsorship when Papa John's decided to step away shows that they want to invest in ways to stay relevant," David Henkes, principal at Technomic, told CNBC via email.

"The NFL is still the most popular sport in the U.S., and Pizza Hut obviously sees tremendous upside to partnering with them in hopes of getting a boost in 2018 and beyond," Henkes said.

Meanwhile, Starrs is optimistic that this partnership with the NFL will continue to help transform the company.

"If you stay tuned to things like the NFL draft and certainly the start of next season you are going to see some things that you've never seen from a pizza partner before," Starrs said.