The Super Bowl Economy

Super Sunday generates major bucks for all involved, from its host network to snackmakers, HDTV sellers, and especially the game's host city

by Douglas MacMillan and Paula Lehman

• View Slide Show

For entrepreneur Steve Sodell, the Super Bowl started in late October. That's when he and his staff of 12 began renting retail space in shopping malls and hotels across the Phoenix metro area—stuffing shelves with NFL-licensed T-shirts, hats, and other collectibles emblazoned with this year's Super Bowl XLII logo. By the day of the big game on Feb. 3, his makeshift merchandise empire will comprise 24 stores and 42 employees. Ten days later, business shuts down and Sodell starts planning for next year's Super Bowl in Tampa, Fla. "We have a very short window of opportunity to make our money," he says.

The race for Super Bowl profits is on. While the New England Patriots attempt to become the first team in the National Football League to achieve a perfect 19-0 record, businesses across the country are banking on this game to be a bigger economic driver than any single sporting event in history.

Some records have already been set: The cost of a 30-second commercial during Fox's broadcast, $2.7 million, is the highest ever. So is the price tailgaters will pay to get inside University of Phoenix Stadium, between $700 and $900. But the cavalcade of businesses and entrepreneurs that have come to surround the Super Bowl—from snackmakers and electronics retailers to the bookies in Vegas and the hotel operators in Phoenix—are gearing up and holding onto hope that consumers will put aside concerns of a tightening economy and indulge in this Super Sunday with extravagant parties, big-ticket purchases, and vacations to Arizona.

Surprisingly, the NFL and the athletes on the field are not the richest beneficiaries of the big game. Players on the winning team each take home $78,000; on the losing team, each player gets $40,000. The league's biggest take is from merchandise hawked at the game venue, at the online NFL shop, as well as at retail stores across the country. The sales record for such merchandise was set in 1997, at around $125 million, and sales have hovered just below that amount in the years since.

The league also reaps a majority of the proceeds from ticket sales, which will amount to around $57.6 million this year, given a sellout crowd of 72,000 and an average ticket price of $800.

Super Ad Sunday

That's peanuts compared with what's at stake for some companies. Broadcasting fees from TV networks account for about half of the NFL's revenue during the regular season, but come Super Bowl time, all of the earnings from high-priced ads go to one host network. This year, that's News Corp.'s (NWS) Fox.

The Super Bowl has become one of the few remaining must-see TV events for tens of millions of U.S. viewers. For many fans, the high-budget ads are part of the draw: According to a survey recently conducted by the Retail Advertising & Marketing Assn., 36.3% of consumers will tune in primarily to watch the commercials.

Last year, host network CBS (CBS) charged Super Bowl advertisers an average of $2.4 million per 30-second commercial, contributing to total ad revenue of $243.6 million, including the network's pregame and postgame coverage, according to marketing researcher TNS Media Intelligence. Fox has reportedly ratcheted up the cost of a 30-second commercial to $2.7 million. Total ad spending on the game and surrounding coverage could reach $275 million.

The Big TV Huddle

Electronics retailers may even be able to top that. According to a recent survey conducted by the Arlington (Va.)-based Consumer Electronics Assn., 48% of high-definition TV owners who call themselves sports fans purchased their set to watch a specific sporting event. Not surprisingly, the Super Bowl was cited most frequently. Last year, the CEA estimates the Super Bowl drove some $2.2 billion in sales of HDTVs.