U.S. News

At The Top Of Its Game

By Scott Reeves

The Super Bowl is a dream, but no mystery: Advertisers covet the game for its reach, underscoring the NFL’s marketing muscle, and the ads are often discussed as passionately as the game’s outcome the day after.

The Super Bowl consistently delivers the largest single TV audience for any sports event, making the game a bonanza for advertisers and the league.

“The NFL has created the unofficial American sports holiday,” says Paul Swangard, managing director of the James H. Warsaw Sports Marketing Center at the University of Oregon’s Lundquist College of Business. “The Super Bowl is a platform that reaches sports fans and mainstream America – it’s one of the few vehicles that brings everyone together at once – and the commercials have become part of the event.”

This year, about 90 million people in the United States were expected to watch Super Bowl XLI, including Treasury Secretary Hank Paulson, who was at the game and has a thing ot two to say about football.) The Indianapolis Colts defeated the Chicago Bears, 29-17 in a rain-soaked contest.

Football to Finance

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.

Bowl of Plenty

Gaming And The Game

Advertisers know exactly whom they’re reaching during the Super Bowl. Chicago and Indianapolis fans are more likely than others in their cities to have a college degree and more likely to have a household income greater than $100,000 with hefty portfolios containing stocks, bonds, mutual funds and money market accounts. Still, fans from both cities are devotees of fast food, with 63% of Chicago fans and 30% of Indianapolis fans eating at McDonald’s within the last 30 days, says Scarborough Sports Marketing.

Despite the NFL’s marketing muscle, Domino’s Pizza will again sit out the Super Bowl advertising blitz.

“We expect to sell 1.3 million pizzas on Super Sunday,” says Dana Harville, a spokeswoman for Domino’s in Ann Arbor, Mich. “We don’t feel we have to spend the large ad dollars on Super Sunday to make our phones ring.”

MLB’s World Series and the NCAAA’s March Madness draw significant audiences over the course of the event, but no single day matches the Super Bowl. 

Building Fan Interest

The NFL knows how to create a story line that will attract an audience as evidenced by the decision to pit brothers Peyton Manning (Colts) and Eli Manning (Giants) against each other in the season opener. The NFL also sells pink merchandise, a pitch to women. That’s part of the league’s concerted effort to expand its audience to attract more women, Hispanics and overseas fans.

This year’s Super Bowl will be broadcast in 232 countries in 33 languages.

The Betting Line

The Super Bowl has developed another following: Bettors. The point spread can overcome a dull game. About $100 million is expected to be bet in Nevada’s casinos this year, up from a record $94 million last year. The state’s gaming industry totals about $11.6 billion a year. Atlantic City doesn’t run a sports book.

“More compulsive gamblers fall off the wagon on Super Sunday than any other day of the year,” says Bill Thompson, a professor of Public Administration at the University of Nevada, Las Vegas and author of several books on the gaming industry, including Gambling in America: An Encyclopedia. “Betting gets the juices going and makes the game worth watching.”

Casinos, including those run by publicly traded companies such as Boyd Gaming, Harrah’s Entertainment, Sands Las Vegas and MGM Mirage, don’t care who wins the Super Bowl or any other sports contest as long as the bets are about evenly split, guaranteeing a healthy return for the house.

If the point spread is too high, bets pile up on the underdog, but if it’s too narrow, money flows to the favorite. If the betting gets lopsided, the point spread is  changed and, behold, the house still pockets a healthy profit. Estimates vary about the size of illegal betting and some put the number as high as $8 billion.

The Super Bowl also creates the opportunity for many oddball wagers, called “prop bets” in the trade. You can bet on just about any combination of game statistics, including the number of tackles plus sacks and interceptions at certain points in the contest, rushing yards, longest or shortest field goal, the stats of individual players and, if you can find a taker, who will suffer this year’s wardrobe malfunction during the half-time show. For the record, the Colts are favored by seven points.

Don’t bet on this, though: When an NFC team wins the Super Bowl, the Dow Jones Industrial Average is up 80% of the time the fourth day after the game, but when the AFC wins, the Dow is up only about half the time.

There is one sure thing: The Super Bowl is a winning formula.

Bowl of Plenty