Economics of the Super Bowl

By Forrester Sorensen, Staff Writer

If you have been paying attention to the news recently, you have almost undoubtedly seen headlines regarding the ongoing Winter Olympics in Beijing. The Olympics, as an institution, have historically been built on principles such as “fair play, stoicism, and self improvement for self improvement’s sake”. And despite instances of corruption and massive sponsorship deals, the Olympic games represent the purity of sport and athletic competition. This contrasts starkly with a different premier athletic event that is taking place this weekend – The Super Bowl. 

The National Football League’s (NFL’s) championship game will take place this Sunday between the Los Angeles Rams and the Cincinnati Bengals. Compared to the Olympics, the Super Bowl is closer to a corporate spectacle than an athletic contest as the game has become extremely commercialized. It has evolved from just a football game into a cultural event with significant economic implications. As such, perhaps it is worthwhile to analyze the financial impacts of the “Big Game” on its various stakeholders.

Winner: Municipality / Municipal Government

Via the Super Bowl, the hosting municipality stands to gain both in the short and long run. It is estimated that over the span of this weekend, LA will welcome tens of thousands of visitors, all of whom require food, accommodation, and entertainment. It is expected that Los Angeles’ local economy will grow by between $230M and $480M, and the region will receive between $12M and $20M in tax revenue because of the Super Bowl. The NFL’s championship game also attracts over 100M television viewers and generates tens of millions of social media interactions. Thus, hosting is a great PR opportunity as it allows one to showcase one’s city on a massive scale. This heightened exposure can then be leveraged to stimulate an increase in future tourism and outside investment, allowing the host city to continue to grow economically long after the game has finished.

Loser: Citizens / Taxpayers 

Though the 3-day party that is Super Bowl Weekend is surely a fun and novel experience for the inhabitants of the host city, they are often burdened with both tangible and intangible costs that are incurred well before the game is ever played, and long after it has ended. Firstly, many locals are greatly inconvenienced by the crowds the game draws as the thousands of visitors take over restaurants, overwhelm public transit, and can vandalize one’s city with their raucous partying. Additionally, in order to host the Super Bowl, a city typically needs a brand new stadium, the construction of which is often heavily subsidized with taxpayer money. Between 2006 and 2017, seven new NFL stadiums were built, with each having hosted a Super Bowl by 2019. According to economist Victor Matheson, on average, taxpayers contribute about $250M to the construction of a new stadium. The Super Bowl compels prospective host cities to use public money for projects that do not serve or benefit the public. A small redeeming factor for citizens is that the Super Bowl is estimated to create approximately 5000 jobs in the local area. However, the report from which these predictions originate does not specify whether these jobs are sustainable or if they are just temporary ‘gig’ positions.

Winner: TV Networks and the NFL

Despite last year’s game being the least watched Super Bowl since 2007, CBS still hauled in an estimated $545 million in advertising revenue. That figure is expected to grow this year as NBC is charging approximately $6.5 million per 30-second commercial slot, up from last year’s rate of $5.5 million. These massive revenues do not come without a cost however, as in 2021 the NFL agreed to a new broadcast deal that includes CBS, NBC, Walt Disney Co. (ABC and ESPN), Fox, and Amazon will provide the league with annual revenues of over $9 billion as each broadcast company will pay within the ballpark of $2 billion annually for the rights to broadcast weekly games and air the Super Bowl on a rotating basis.

Winner: Sportsbooks

With sports betting now legal in thirty states, a record number of wagers are expected to be placed on this year’s Super Bowl. A report from the American Gaming Association predicts that 31.4 million Americans will wager upwards of $7.6 billion, 34% and 78% year-over-year increases respectively. Johnny Avello, head of the race and sportsbook at DraftKings, is expecting the Rams-Bengals game this Sunday to be the biggest Super Bowl in the company’s history. Considering there will likely be a massive number of new and inexperienced bettors wagering on this Super Bowl, expect sportsbooks to turn a huge profit this weekend.

Loser: Fans

Considering so many other stakeholders are making money hand over fist off of the game, it figures that these substantial revenues must come at the expense of someone or some group, and unfortunately that group appears to be common football fans. As of Wednesday February 9th, four days before the game, the cheapest tickets available were upwards of $3000. This price point makes the event impossible to attend in person for the vast majority of the population. As the Super Bowl has become commercialized, it has also become inaccessible for those who lack significant wealth or status.

Winner: Players In addition to the opportunity to fulfill lifelong dreams of winning the Super Bowl and being rewarded with the distinction of champion, the players competing on Sunday also have the to make significant financial gain. Players on the winning team will receive a $150k bonus while their losing counterparts will each walk away with an additional $75k in their pockets. Individual players, especially all-stars or veterans, may also have performance-based incentives linked to the Super Bowl written into their contracts, though it is unlikely that any of the men stepping onto the field Sunday will need any extra motivation.

Photo by Adrian Curiel on Unsplash

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