The Business of the Super Bowl
Super Bowl XLVII will be played on February 3 in the Mercedes-Benz Superdome in New Orleans. It will mark the tenth time the "Big Easy" hosted the event. The last one was in 2002. It could mean as much as $450 million in business for the city.
Now, that would only be half as much as New Orleans has spent preparing for the game. The city spent more than $1 billion on infrastructure improvements, including renovations at the airport, a new streetcar line, and enhancements to the Superdome itself. After the devastation of Katrina, New Orleans needed to rebuild and have used a number of major sporting events, including the NCAA men's basketball Final Four in 2012, a couple of BCS National Championship Games and the NBA All-Star Game in 2008 to do just that. But the Super Bowl is the big jambalaya in the menu of possible events.
Experts say that for every $100 spent in the city, about 50-70% remains there, while the rest leaks out into other surrounding locales. New Orleans, like other cities who have hosted the event, is hoping that by putting their best foot forward, they will convince some of the attendees to remain and even establish businesses in the areas.
Given that the attendance at the Super Bowl is largely a corporate event, businesses get first choice of rooms, flights, special events and just about everything else involved in the Super Bowl and the days surrounding it. The chance to shine cannot be underestimated and the city fathers know it.
For those of us unable to attend the live event, all is not lost. We can look forward to countless parties (either at home or your favorite bar or café), root for your favorite team, dance to the half-time show (Beyoncé will man the stage this year) and, of course, watch the commercials.
Americans continue to watch the Super Bowl in record numbers. Over 46% of TV households watched last year's game, according to Nielsen, which makes it just about the most watched broadcast in U.S. history. And the wealthier you are, the more likely you are to tune in. For advertisers, who strive to reach the age demographic of 18-49 age demographic years old, the Super Bowl is the best game in town.
It is probably why Super Bowl ads keep climbing in cost. Ad slots for this year's game sold out at the asking price of $3.5 million per 30-second spot by December. That is up from $3 million/spot last year. But corporations will pay it because there is a gold mine for those who can come up with the right ad.
This year, viewers will see some big names populating the ads. Singer Beyoncé, Hip-Hopper Jay-Z, Supermodels Catrinel Menghia, Bar Refaeli and Kate Upton. And that is only a taste of the lineup. Personally, I will be looking forward to the return of the French Bull dog, Mr. Quiggly, (which replaced Kim Kardashian in a Skechers'ad). Last year he captured the hearts, minds and pocketbooks of many of us.
There will also be a number of new ad sponsors this year including Oreos. For me, the day after the event will be as much about my favorite commercial then it is the game. That's why the Super Bowl has become such a business generator for corporations.
Given that the ads are 58% more memorable than your average TV commercial, I can see why. If you doubt that, just recall the little boy dressed as Darth Vader ad. I bet you can even remember what auto manufacturer sponsored it. That company reaped a cool $100 million in free publicity from the spot, which is not bad for $3.5 million investment. When it comes to the Super Bowl, what is good for business, is also good for America, so let the games begin and the cashier register ring!
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires.
TALK TO US
If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.