The Business of Sports

The Super Bowl’s Real ROI


Each year, it seems the Super Bowl gets further hyped and inflated. Witness the 7,200 fans who paid $25 just to observe Super Bowl XLVI’s Media Day on Jan. 31—an event for which NFL Network provided “nearly five hours of coverage,” to cite USA Today. Through Sunday, host city Indianapolis expects to receive up to 150,000 celebrities, corporate executives, and well-to-do football fans, with an estimated economic impact of $150 million, according to the Indianapolis Convention and Visitors Assn. The U.S. TV audience is forecast to exceed 175 million viewers and global viewership will reach up to 1 billion people, estimates Nielsen.

Often lost in this shuffle, however, is the return on investment for key Super Bowl stakeholders, including the host city and advertisers. Hosting the Super Bowl may be considered a jackpot, but the Indianapolis 500 that is held every Memorial Day weekend regularly draws over 300,000 motor sports fans to the city.

Consider ROI in two categories: advertising and consumer spending.

Super Bowl Advertisers

We don’t know which team will triumph, the New England Patriots or the New York Giants, but it’s possible that the biggest winner of Sunday’s Super Bowl game will be NBC (CMCSA), which sold out its ad inventory early, averaging a record $3.5 million per 30-second spot (17 percent more than Fox charged on average last year), with some spots going for as much as $4 million. NBC will also stream the game for the first time, via NBC.com and Verizon mobile devices.
This year, instead of waiting for Super Bowl Sunday, more advertising agencies are opting to premiere ads online in the week leading up to the game in order to increase the number of placements and generate social media buzz.

At $3.5 million for 30 seconds (which doesn’t even count the cost to create the ad, which can easily run into the millions), you’d better have a good idea of the ad return on investment going in. The real question is: After the final down has been played, what will companies such as 2012 Super Bowl advertisers Kia Motors, Samsung, Bridgestone, and Volkswagen (VOW:GR) have gotten out of the game?

In a survey by the Retail Advertising and Marketing Association (RAMA, a division of the National Retail Federation), 73 percent of respondents said they view Super Bowl commercials as part of the entertainment, with only 8.4 percent saying the commercials influence them to buy products.

While many brands are lured by the sheer numbers of eyeballs associated with the Super Bowl, top sports marketing executives often advise clients to sprint the other way. “I always counsel companies to view Super Bowl advertising the same way they view sports sponsorships—as a platform which must be activated in order to generate enough ROI to justify the premium being paid,” says Ray Katz, managing partner of Source1Sports, a sports marketing agency. “Social media is the logical way to best capitalize on the convergence of sports engagement, the Super Bowl, and the desire of viewers to share their views on the game and the commercials in real time.

“The Super Bowl is a major gamble—the only sure thing is delivering your message to at least half of America, so it better be right … and entertaining,” Katz concludes. “ Whether you nail one, it may well be an accident.”

Consumption in Host City and Beyond

In and around Lucas Oil Stadium, Indy’s visitors will be able to sample the usual attractions, from the NFL Experience at the Indiana Convention Center to the downtown Super Bowl Village, a three block-long “festival of football.” Other attractions include zip lines strung high above Capitol Avenue, rides on a street version of an IndyCar, free performances by more than 80 bands, and a retail and late-night entertainment spot called “The Huddle,” brought to life in a vacant downtown Nordstrom store.

Bryan Trubey, principal with HKS Sports and Entertainment Group, who designed domed Lucas Oil Stadium, as well as Cowboys Stadium in Arlington, Tex., says: “What you’ve got is one of the greatest urban environments ever for the Super Bowl in a close connection with the convention center and the stadium and the downtown mall, which is hugely popular. You have one of the best outdoor and indoor environments, all woven together.”
After some glitches last year in Dallas, including problems with temporary stadium bleachers that left many fans without a seat, the NFL partnered with the Disney Institute, the external training arm of Walt Disney (DIS), to ensure the most fan-friendly game possible. This year, all of the NFL’s part-time workers and volunteers received special Disney training.

Outside of Indianapolis, retailers are gearing up for record sales. Super Bowl XLVI spending in the U.S. should reach an all-time high of $11 billion. The average consumer is expected to spend $63.87 on football-themed merchandise, apparel, and snacks, up from $59.33 last year, according to the RAMA survey.

The RAMA survey indicates that 63.6 million Americans will go to a Super Bowl party, where food will not be in short supply. Super Bowl Sunday is the second-biggest eating day of the year after Thanksgiving, according to NPD Group. During the game, 48 million Americans will order takeout or delivery food, estimates the National Restaurant Assn.; an additional 12 million are expected to visit a restaurant or bar to watch. Americans will consume 100 million pounds of chicken wings, 4.4 million pizzas, 71.4 million lbs. of avocados, and 43.2 million lbs. of tortilla chips, the Wall Street Journal reports.

Fans in New York should easily find a party: The city has hundreds of sports bars. Last year, the East Village Pourhouse ranked on Foursquare as the most popular sports bar in the U.S. to watch Super Bowl XLV.

Rick_horrow
Rick Horrow is a leading expert in the business of sports. As chief executive officer of Horrow Sports Ventures, he has been the architect of 103 deals worth more than $13 billion in sports and urban infrastructure projects. He is also the sports business analyst for CNN, Fox Sports, and the Fox Business Channel. Karla Swatek is vice-president of Horrow Sports Ventures and co-author of Beyond the Box Score: An Insider's Guide to the $750 Billion Business of Sports (2010). Horrow is also the host of Sportfolio, a new program on Bloomberg TV that airs Wednesday nights at 9 pm ET.

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