Author: Jeremy Bowman | January 31, 2018
A huge event produces huge numbers
The Super Bowl isn’t just the big game -- it’s big business. Cities across the country jockey to host the NFL’s championship game each year for the prestige and the economic infusion it brings. The host television network reaps the benefits of hosting the most watched event of the year in the U.S., as advertising spots during the Super Bowl are more coveted than any other. And the winning team can expect a spike in merchandise sales and ticket sales for the following year in addition to the glory of being Super Bowl champions.
With Super Bowl LII now in the books, here are a few big money numbers you probably didn’t know about the unofficial American holiday.
It cost a pretty penny to see Super Bowl LII in Minneapolis. According to StubHub, the cheapest tickets for the game were $3,249, while some other ticket resale sites listed even higher starting prices. Based on trends from the day after the Patriots and Eagles punched their tickets to the Super Bowl, ticket prices were set to be their most expensive ever, averaging $9,000, up from $5,976 the year before. Considering that the Patriots and Eagles represent two of the biggest metro areas in the country -- and that the Eagles, known for their rabid fan base, have never won a Super Bowl -- it isn’t surprising that Super Bowl tickets are at their most expensive.
2. $500 million
That’s the expected revenue TV host NBC expects to bring in from ads during the game, which follows a similar figure from Fox last year. More than 100 million Americans were expected to tune in to watch the game this year, making it a marketing bonanza. NBC, Fox, and CBS rotate hosting the Super Bowl, and NBC pays $1.05 billion a year to the NFL for a package that includes airing the Sunday Night Football game each week and the Super Bowl once every three years. Considering the $500 million in ad sales, the Super Bowl is the big prize here.
3. $5 million
The Super Bowl is no bargain for advertisers either. The cost for a 30-second spot during Super Bowl LII is $5 million, or more than $150,000 per second, the same as the year before. Of course, marketers know there’s no bigger stage than the Super Bowl, and a breakthrough ad can drive brand value and stay in the public consciousness for years, as Apple did with its famous 1984 Macintosh commercial. Among the marquee advertisers this year are Budweiser, Amazon, Pringles, M&M’s, and Procter & Gamble’s Tide.
4. $407 million
Minnesotans are surely disappointed that their Vikings didn’t make it to the Super Bowl, but Twin Cities residents look set to win in a different way. Consulting firm Rockport Analytics estimated that SBLII would bring $407 million in new spending into the Minneapolis-St. Paul area, Rockport predicted 125,000 visitors to the area and $122 million in local game/event expenditures. The event was also expected to support 5,000 jobs and generate $242 million in wages, as well as $29 million in state and local taxes and $51 million in federal taxes.
5. $200 million
You can’t go the game without a shirt or a hat to support your team, and plenty of fans at home will don similar gear. Super Bowl LII was expected to generate around $200 million in merchandise sales as it has in past Super Bowls. Local retailers in Pennsylvania have said that Eagles gear has been flying off the shelves, and Patriots’ quarterback Tom Brady has often had the top-selling jersey in recent years, after leading the Patriots to a record eight Super Bowls.
While the winning team has yet to get their hands on their Super Bowl rings, as those take about six to eight weeks to design and produce, they can expect them to be worth around $37,000 as that has been the cost of recent rings. With around 150 rings made for players, coaches, and assistants, the total cost adds up to more than $5 million. However, the NFL foots the bill for the bling as a gift to the winning team.
It’s not all fun and games for the players. There’s real money at stake here. Players from the winning team will take home a bonus of $112,000. The losing team won’t go home empty-handed, however, as they’ll get $56,000 for their efforts. Players on both teams have already earned $79,000 in bonus money from winning previous rounds of the playoffs, meaning a total of $191,000 will to the Super Bowl winners.
8. $138 million
The Super Bowl isn’t just a big event in the host city or for the cities that are playing. Las Vegas always draws a big crowd for the biggest sporting event of the year. This year Vegas casinos expect to take $138.5 million in bets on the big game, in line with what they received last year. However, the American Gaming Association estimates that the vast majority of gambling on the Super Bowl will take place outside of Vegas, with $4.6 billion in wagers being placed illegally in informal betting circles.
In 1994, Robert Kraft bought the New England Patriots for $172 million. Nine super bowl appearances later the franchise is worth $3.7 billion, more than any other sports team in the world except for the Dallas Cowboys. For Kraft, that’s a return of 2,050% on his original investment, easily outperforming the 500% gain he would have gotten from the S&P 500. Eagles owner Jeffrey Lurie hasn’t done so bad either. He bought the team the same year for $185 million and has seen it appreciate 1,330% to $2.65 billion, making it the tenth most valuable NFL team today.
Tickets aren’t the only thing that will lighten fans’ wallets. Concessions will also cost a pretty penny. At last year’s Super Bowl, a 32-ounce soda cost $11, while a hot dog set you back $8. A soda-and-pretzel combo, meanwhile, rang up for $17. Though concession prices at regular-season games are already high, Super Bowl prices are even more ridiculous, sometimes double what they would be at a normal game. Considering Aramark is running the concessions again this year, prices are expected to be the same.
In recent years, the Super Bowl itself has been outdone by another spectacle -- the halftime show. Viewership has actually risen to watch performers like Katy Perry and Beyonce take the stage while the players are in the locker room. However, this year’s halftime performer, Justin Timberlake, like others before him won’t get paid for his performance. Still, there is some financial benefit for the star performers. They tend to see a spike in sales and downloads following their Super Bowl halftime show, which receives more than 100 million viewers.
The Super Bowl used to be a relative bargain. Fans who saw the Green Bay Packers beat the Kansas City Chiefs at Super Bowl I in 1967 paid at most $12 for their tickets. For Super Bowl LII, the face value for the most expensive tickets is $5,000, 400 times more than they were when the first Super Bowl was played 51 years ago. Considering the demand on the secondary market, face value ticket prices are only likely to climb over the coming years.
It’s hard to enjoy the game at home without a big-screen TV. If you’re thinking about buying one and returning it after the game, you’re not alone. According to B-stock, a company that helps big-box retailers liquidate returns and excessive inventory, the number of returned TVs at major retailers jumped 217% from the fourth quarter (October- December) to the first quarter (January-March). The company found that return rates double in February and March, the months that follow the Super Bowl. Vizio was the most returned brand.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns shares of Apple. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.