I'm not watching Super Bowl XLVII today even though I'd like to see the San Francisco 49ers win. I'm a casual fan of my hometown sports teams because they make The City look good. Anyway, instead of watching the big game, I'd rather blog about its economic effects.
Consider the impact on the city that hosts the game. One economist uses very odd reasoning to argue that the host city suffers economically from a Super Bowl. Common sense tells me he's wrong, and hard evidence shows local businesses reaping windfall profits after months of preparation. The Super Bowl crowds out conventions? Yes, but all of the hotels are filled with people who came to see the Super Bowl! Locals don't come downtown because it's crowded? Yes, but all those huge pressing crowds are spending money in bars and restaurants! I think some economists just don't like big success stories. They'd prefer we all downsize to medieval hamlets. They're free to do so while the rest of us enjoy economies of scale.
TV ad spending is another big financial story with this super sports event. You can get a 30-second spot for about $3.75M. The buyers are almost all consumer products makers or downscale automotive brands. Seeing Mercedes-Benz is a surprise, so I guess they're going for the aspirational demographic. The record numbers of women who now watch the game pay more attention to the ads than men do. Ladies, if you want to understand men, you need to at least try to follow the game. Super Bowl ad spending has a demonstrated ability to drive increases in web traffic. The best ads generate high Ace Scores for effectively connecting consumers with a brand. The ultimate purpose of ads is to drive top-line revenue. Surveying consumers on their predictions of Super Bowl ad impact is less useful than actual sales. Companies probably keep their real tracking data private, so it's worth revisiting the next quarter's income statements of Super Bowl advertisers to see whether their sales increased.
What about the game's players? Do Super Bowl athletes get a payoff from more lucrative team contracts or endorsement deals? The players get a nice five-figure bonus whether they win or lose. If the winner's payout in 2013 is $83,000, it amounts to 4.4% of the average NFL salary of $1.9M. That average is skewed much higher than the $770K median because the superstar player salaries are huge outliers, like quarterbacks making eight figures. The big winners from post-Bowl endorsement deals seem to be the few players who went into the game with existing superstar status, and the NFL is the big winner from ticket sales and television broadcast rights.
The people who benefit financially from the Super Bowl are the shareholders of the most effective advertisers, the world's largest ad agencies, the superstar athletes, the League and its franchise owners, and many local concessionaires. Have fun watching the game.
