Here's our weekly look at the intersection of business and sports. This week, we bring you an all-Super Bowl edition of our weekly offering.
The Pre-Super Bowl Winner and the Loser
The Patriots and Giants are two of the NFL’s most popular teams, hailing from two of the country’s biggest media markets and ranking as two of the most valuable franchises in all of sports. Add it all up and Sunday’s game will be a great one.
Particularly happy with the match up are corporate sponsors, as the game’s two quarterbacks are amongst the most prominent product spokesmen in all of sports.
Patriots QB Tom Brady ranked 3rd overall in the Bloomberg/Horrow Sports Ventures Power 100 and endorses Under Armour, Audi and Movado.
Unfortunately, not everyone can be a winner. The organization that manages Lucas Oil Stadium expects to lose money from hosting the Super Bowl!
Indianapolis’s Capital Improvement Board is budgeting for $7.2 million in revenues against expenses of $8 million. The biggest expense is $4 million for extra police.
Of course, that’s a small price to pay relative to the expected $150 million in economic impact.
Super Bowl Firsts
Every Super Bowl is special, but Sunday’s broadcast from Indianapolis will be unique for a few different reasons. For the first time ever, the Super Bowl will be available for streaming through Verizon mobile devices and online, where viewers will have access to multiple camera angles, live stats, and replays of Super Bowl ads.
Another first for NFL, the Disney Institute is training all volunteers in Indianapolis to ensure the customer service at the Super Bowl is flawless.
The Disney partnership aligns with the league’s “Fans First” initiative. Last year’s game in Dallas was plagued with problems.
Even the ads are setting milestones and making headlines.
NBC has sold out of its ad inventory for the game broadcast, averaging a record $3.5 million per 30-second spot.
Incredibly, some ads sold for as much as $4 million. The average cost for a 30-second commercial in Super Bowl I was $42,000, or adjusted for inflation, $266,500.
Super Bowl Advertisers Beware
With more than 100 million people expected to watch live, the Super Bowl presents an incredible opportunity for marketers. With that opportunity, however, comes a tremendous cost.
The multimillion-dollar question is are the ads worth it?
From a stock market perspective, the answer is yes. Super Bowl advertisers from 1996 to 2010 outperformed the S&P 500 by more than 1% on average in the week before and after the game, according to a study by the University of Wisconsin-Eau Claire.
The boost in share price is attributed to the hype associated with advertising in the Super Bowl. It also explains why more than 50% of ads this year already are available online. Public companies advertising in this year’s game include Best Buy, Coca-Cola and GM.
Given how critical fans are of the ads, corporations need to make sure they can afford to fall flat. $4 million for 30 seconds is more than some companies’ entire ad budgets.
One of the most prominent examples of a Super Bowl ad gone bad was Just For Feet. The shoe retailer aired a racially insensitive ad during the 1999 game and filed for bankruptcy by the end of the same year. Advertiser beware…
Rick Horrow is the "Sports Professor," and is the Sports Business Analyst for Fox Sports. He has been the Visiting Expert on Sports Law at the Harvard Law School, and has authored "When the Game Is on the Line" and "Beyond the Scoreboard: An Insider's Guide to the Business of Sports." His show "Beyond the Box Score" is posted on a weekly basis on FoxSports.com, and the latest emerging trends in sports business can be found at www.horrowsports.com.
Brian Finkel is Creative Director for Horrow Sports Ventures. You can follow him on Twitter @TheFinkTank.