With the National Retail Federation [NRF] estimating that $10.1 billion would be spent on Super Bowl XLVI (up from $8.87 billion in 2010) and companies saving a significant percentage of their yearly advertising budgets to allot for the $3.5 million they will spend on their 30-second commercial spots, to hotels in host cities increasing bringing in major profits from increased room rates, the financial impact of the Big Game is “super†indeed. Since the merger of the National Football League [NFL] and the American Football League in 1967, the Super Bowl (officially called such beginning in 1961) has emerged as not only the most watched broadcast in America each year, but also arguably the most highly anticipated sporting event in the country.
Though Indianapolis, Indiana is not new to hosting large events–being that it is the home of the largest single-day sporting event in the world, the Indianapolis 500–the city has been preparing for Super Bowl Sunday extensively and are ready to give their “Hoosier hospitality†to the influx of visitors. Reports show that since 2008, Indianapolis spent $3 billion on hospitality.
In addition to the fans with tickets to the game, on average another 50,000 people flock into host cities where the championship is being played, just to take part in the array of festivities sponsored by the NFL, the town, and other brands. Generally, the League hires 6,000 volunteers to help out with all of the local festivities associated with the event.
With the New York Giants set to face the New England Patriots this Sunday, February 5 at Lucas Oil Stadium, Super Bowl XLVI is estimated to draw in more viewers than the record-breaking average audience of 111 million viewers last year. With all the money pouring in and out of Indianapolis this weekend, BlackEnterprise.com Decodes the financial impact of the Super Bowl and what impact this yearly sporting event can have on the economy of a city.
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THE HOST CITY WITH THE MOST
With thousands of people coming into a city during Super Bowl weekend–eating in restaurants and staying in hotels, adding up to about $5,000 per visitor–the assumption is that this activity would give a healthy boost to the respective city’s economy. However, there have been debates on the true financial impact of the Super Bowl for more than 20 years.
On one side, host committees who conduct studies surrounding the game report numbers between $200 and $500 million. On the other side are experts in sports economics, such as those in “Super Bowl or Super (Hyper)bole,†who claim that the average impact is closer to $92 million. These economists believe that the host committees and the NFL inflate the numbers in order to entice cities to build new stadiums and make their city more likely to win the bid to host future NFL championships.
Meanwhile, host committees state that the economists lack the necessary information to come up with numbers closer to the actual figures of the net economic gain. Though the economic gain of each city varies, according to the host committee, Green Bay saw the highest amount brought in at $500 million.
Lucas Oil Stadium, where this year’s Super Bowl XLVI will be held, was built three years ago and is valued at $720 million. The Colts contributed $100 million while the city of Indianapolis, the state of Indiana and Lucas Oil–who paid $122 million for naming rights over the next 20 years–contributed to the rest to the project.
The downtown area contains about 7,100 hotel rooms, but the Indianapolis host committee secured approximately 18,300 hotel rooms within a 45-mile radius for those attending Super Bowl festivities. Along with that citywide reservation comes stiffer prices. To put the increase in hotel rooms in perspective, as of January 24th a room at Super 8 Indianapolis on the Saturday before Super Bowl XLVI would cost $500 a night. Meanwhile the same room the following weekend would run for just $55 per night.
Even the parking at the stadium for game day can range from $55 to almost $1,000. These are only a few factors, nonetheless, restaurants, retailers and all local businesses may be happy for the extra foot traffic associated with the Super Bowl coming to town. The only downside is their usual customers generally avoid the stores during this weekend since they know they will be overcrowded.
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SUPER BOWL SIZED AD SALES
With rates of over $100,000 per second, companies spend a great amount of money and time–many up to a year in advance–planning concepts for the advertisements that will air on the “big day.†According to NBC spokesperson Christopher McCloskey
, the average cost of a 30-second slot during the game this year is $3.5 million with some key spots being sold for as high as $4 million. The price is 17 percent higher than those sold to Fox last year.When NBC broadcast the Super Bowl in 2009 the numbers were an average of $2.8 million each. Those prices didn’t include the pre-game, halftime and post-game spots, which are less expensive, since they’re not watched in as high density. While NBC reps could not disclose how much is made from advertising during the Super Bowl production, the network did sell 70 30-second slots.
The price of the spot depends on a number of variables, including whether or not the company does other business with NBC; how many spots they buy; the amount of time taken to purchase their spots (rates go up closer to the game), among other factors. According to McCloskey, though marketers usually put an emphasis on the “pod position†(the first commercial in or the last before the game comes back on), there is no added value on the timing of an advertisement. The viewership is usually about the same throughout the broadcast.
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GEARING UP FOR PROFITS
Each year, Reebok, the NFL’s official apparel and uniform provider, delivers 300 world championship hats and T-shirts for each of the competing Super Bowl teams to the stadium. The losing team’s merchandise gets donated to a different pre-selected non-profit organization, usually outside of the United States.
Though it depends on the size of the winning team’s city, according to NFL spokesperson Brian McCarthy, the average amount that retailers make on sales of merchandise is $100 million. The team that saw the highest profit was the Green Bay Packers, whose last year jersey sales reached the $130 million mark. They also held the previous record of $125 million, set in 1997. As the winners of the first two Super Bowls and a team with a history of having many fan favorites on its roster, the Packers will likely draw a huge amount of purchases from their dedicated fan base any year they win. Even with their large fan base, Green Bay comes in at a close second to the Steelers when it comes to overall best merchandise sellers.
As one of only five official on-site Super Bowl related merchandise retailers of the NFL, Sports Fan Marketing had 16 stores set up during last year’s game in Dallas. According to the company’s president Steve Sodell, set up for the 2011 competition between the Pittsburgh Steelers and the Green Bay Packers began in mid-November of 2010. Sodell shared that though he sells at several major sporting events year-round, the Super Bowl makes up about 60 percent of his annual income.
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GAINING YARDAGE & PROFITS
In addition to the stadium, the NFL, the networks and retailers, several businesses, large and small, see major profit come Super Bowl Sunday. The book value of the 100% sterling silver Vince Lombardi trophy–which was named after the first coach to win the Super Bowl following his passing in 1970–is said to be worth well over $20,000. It’s produced by Tiffany & Co. each year and takes approximately four months to make.
Though Super Bowl performers are usually some of the most popular musicians and can receive over $100,000 for performing anywhere else, acts for the halftime show are actually not paid monetarily. With an estimated 111 million people watching, they couldn’t buy that kind of exposure. Further, artists are often called on to headline elite Super Bowl parties that take place during the course of the weekend. The parties, hosted by companies like ESPN, DIRECTV, and Maxim magazine, are the place to be for celebrities and VIP’s in town for the weekend’s events. This year, tickets to the hottest Super Bowl parties range from about $800 to $2,000 for “regular†admission.
In addition to the game, a big part of Super Bowl Sunday is the food. With loads of snacks and beverages on the menu, the big game often ranks as the second highest food consumption event after Thanksgiving, so supermarkets certainly cash in on this American “holiday.†Party retailers such as Party City and online sellers like Party411.com see one of their highest profit periods during this time of year as well. With party planners seeking to give their guests a unique experience, novelty stores carrying Super Bowl related decorations and specialty items, often see a large increase in sales and visibility as well
Actual tickets to the game range from a little over $2,000 for the nosebleed section to as much as $645,000 for a 35-seat suite along with full service, and amenities. On the more “affordable†end of the spectrum, diehard fans can watch the game on the big screen outside the stadium for $200.
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SOCIAL MEDIA SACKS
With the rise of the influence of social media on consumer practices over the last five years, brands can’t ignore the implications of what fans say online in relation to their products. Many companies use studies such as the ones done by MCL to influence their business practices. Though there were no social media outlets when the Super Bowl was first seen as a place that millions of viewers could be reached, it’s emergence certainly cannot be ignored.
Colle + McVoy did an analysis called Super Chatter that looked at how people shared their Super Bowl experiences across social media via tweets, Facebook updates, blog posts and more. They found the top 10 most posted topics and categories in social media and sold the data to companies that may want to alter their practices for more ad sentiment. Although there are no conclusive stats on how many people who tweet or fan a company actually go out and buy the product, brands are able to reach consumers via social media who may have not seen their traditional commercials.
One of interesting bits of information that came out of last year’s Super Chatter Experience during the Super Bowl was that although the Packers won more people talked about the losing Pittsburg Steelers on social media. In terms of advertising, Justin Bieber was talked about twice as much as Eminem (both artists had a role in major Super Bowl-premiered spots). As a result of the data, Super Chatter received coverage from several top publications and became the top organic search result on Google.