Football is ideally suited for TV – 60 minutes of playing time and four quarters spread over three hours, creating lots of ad slots. This year, a 30-second slot sells for as much as $2.6 million, up from $2.5 million last year and $600,000 20 years ago.
That’s stunning because cable and satellite TV as well as the Internet continue to fragment broadcast TV’s audience.
"The NFL has lined up phenomenal corporate sponsors,” says Shawn Bradley, vice president and chief operating officer of Bonham Group, a global market research company based in Denver. “Advertisers understand the platform the NFL represents and the league’s sophistication makes it a marketing juggernaut. Anyone who advertises during the Super Bowl is considered a major player, making it important for companies to be linked with the largest sports property in the U.S.”
Parity (And Profits) By Design
Seven different teams have won the Super Bowl in the last ten years, underscoring the NFL’s business model and validating its tagline that “on any given Sunday” all teams have a shot at winning. That’s an improvement over the ten-year period prior to 1997 when four different teams won the championship. Chicago last won the Super Bowl in 1986 while Indianapolis has never won it.
The NFL, with about $6 billion in annual revenue, shares 80% of income from broadcast rights, sponsorships and a portion of ticket sales with its 32 teams, in an effort to create a level playing field for each squad. Each NFL team sets its concession prices, parking fees and retains revenue from local broadcast rights and advertising. The teams have wide discretion in presenting an image to the public. The Dallas Cowboys are well known for its cheerleaders, but ten teams don’t have pep squads.
The NFL’s revenue sharing model has prevented Major League Baseball’s problem where big market teams in New York and Los Angeles regularly have more money to spend on top players than small market teams such as Milwaukee or Cincinnati. NFL teams have agreed to spend a maximum of $102 million a year on player salaries.
In the NFL, small market teams such as Green Bay are successful. In baseball, the Montreal Expos withered in Canada and were transplanted to Washington, D.C. In addition, the NFL has avoided crippling player strikes that hammer revenue and erode fan support.
The NFL doesn't breakout what the Super Bowl adds to the league's bottom line, but Brian McCarthy, a league spokesman, estimated that the game generates 1% or 2% of total revenue.
The NFL’s Advertising Muscle
Some of the game's biggest fans are its corporate sponsors. This year’s Super Bowl advertisers include FedEx, Pepsi, Taco Bell, a division of YUM Foods, General Motors and GoDaddy.com, an Internet domain registration site. Anheuser-Busch, famous for philosophical frogs and the Bud Bowl, returns with NASCAR driver Dale Earnhardt Jr. and rapper Jay-Z. Snapple will run its first ad. Coca-Cola returns to the Super Bowl for the first time since 1998. Chevrolet and Doritos plan to run ads made by customers.
YouTube, acquired by Google in late 2006, will create an online gallery where Super Bowl ads can be viewed after the game, giving added life to the pitches. Internet users will be able to rank the ads and discuss them with other viewers. The top-ranked commercial will be featured on YouTube’s homepage two days after the game.
“That’s Shangri-la for advertisers,” says the University of Oregon’s Swangard. “It’s a great thing when people seek out your advertising and watch it again. That’s what advertisers strive for – stickiness.”
A few Super Bowl ads have become legends, building the event’s reputation as a prime advertising vehicle. Perhaps the best known is Apple Computer’s 1984 spot where a lone woman throws a sledgehammer at a TV image of Big Brother, shattering enforced conformity and bathing former slaves cowering before him with the light of freedom. The ad, directed by Ridley Scott, who had recently launched the now classic science fiction thriller Blade Runner, plays off George Orwell’s novel, 1984, that depicts an authoritarian future. The ad played once.