With the 50th anniversary Super Bowl is in the rearview mirror, we can sit back and assess where the game is now and what it says about our society as a whole. Football has apparently overtaken baseball in popularity, becoming our de facto national pastime. But as its popularity grows, the NFL and its Super Bowl have become a microcosm of society, revealing a class divide between the haves and have nots. Here are some examples:

Super Bowl Advertisers versus Viewers

Super Bowl advertisers are certainly not hurting for money. Television commercials for the big game broke another record during Super Bowl 50, cracking the $5 million mark for a thirty-second advertisement.1 This represents an 8.7% increase over last year.2 Every year it seems ad prices can’t go any higher and every year they somehow do just that. The $5 million price tag represents a 12,500% increase since the very first Super Bowl between the Packers and the Chiefs, fifty years ago.3 For some perspective, this outpaced the stock market by almost six times (2,140%) over this same 50 year period.4

One takeaway is that corporations are still willing to spend on sales and marketing efforts for live events that drive top line growth. The networks realize that recording live sporting events, especially the Super Bowl, is just not an attractive option for viewers, so it commands a high premium.

There is no doubt that the Super Bowl is the biggest sporting event in the United States, consistently drawing over 100 million viewers annually. But if you are a corporate advertiser or ticket buyer, you have to ask yourself, ‘does the Super Bowl represent a Super Investment anymore? While Super Bowl ratings are still huge, they appear to be plateauing. While this year’s 111.9 million worldwide viewers is certainly nothing to sneeze at, it ranks third all-time among Super Bowls. Still this year was the 50th anniversary game and a classic matchup and potentially Peyton Manning’s final game (not to mention a halftime trifecta of Beyoncé, Coldplay and Bruno Mars) so not setting a new record was probably a bit disappointing for NFL brass.

Super Bowl Ticketholders

Something telling can be seen with Super Bowl ticket price disparity. Nick Colas, chief market strategist at ConvergEx, reported that the average price of Super Bowl tickets cracked the $6,000 mark this year ($6,007), up 5.7% over last year’s $5,684 ticket price.5 This shows that corporations are still willing to spend to entertain top clients.

But the “get in” price of the Super Bowl actually fell 10%, year over year (this year’s get in price was $2,950 versus last year’s $3,300).6 The ‘get in’ price is the lowest advertised price for any seat (often less glamorous nosebleed seats). Purchasers of these seats are typically regular fans, while the higher priced ‘average’ tickets seats are typically corporate seats or very affluent fans.

The disparity can also be seen in hotel rooms where the Hilton in Santa Clara reportedly was asking $1,999 for one night over this Super Bowl weekend and will go back to its more standard $287 in a couple weeks.7 Presumably, these prices are only attainable for corporations or the very wealthy.

NFL Owners vs Fans

Perhaps nowhere is the bifurcation between rich and poor more evident in society than the average American worker and an NFL team owner. These owners were rich to start with when they bought the teams and the record breaking increases in NFL team values have only made them richer. The average NFL team is worth $1.97 billion which is up a whopping 38% from last year.8 One reason for the growth is that NFL teams are quite profitable, especially given the leagues revenue sharing model. Using a typical financial accounting metric, EBITDA, the average team is profitable to the tune of $76 million.9

The most valuable professional football team is the Dallas Cowboys, valued at over $4 billion.10 This amazing considering the Cowboys have not been in a Super Bowl in 20 years, which is when values (as driven by profits) really kick in. Contrast this to the #2 slot New England Patriots ($3.2 billion) who have been in 6 Super Bowls in the last 20 years, winning four. Even with all that success, they still couldn’t surpass the Cowboys.

One reason for the Cowboys success off the field is their brand new AT&T stadium, which holds an average of 90,000 fans. Speaking to the fan base, average ticket prices at well over $100 with premium seating commanding much more. Just the parking cost at AT&T stadium ($75) is not much higher than the cost of a ticket to the Kansas City Chiefs game. The Cowboys benefit from hosting non-NFL events including the College Football National Championship, WrestleMania and concerts including Taylor Swift to Jay-Z.

But nationwide, we are seeing that the average fan has gotten largely priced out of attending NFL games. Yahoo sports did a study a few years ago reporting that it costs the average family of four $443.93 to attend an NFL game, all in,11 and game attendance has dropped by over 2 million fans over the last three years.12 As the prices for attending games has continued higher, people would rather just watch the games from the comfort of their living rooms, where they can stream the game online or watch it on their big screen HD television. Loud, often drunk, fans means less families are attending. And of course, fantasy football lovers can’t be that far away from their NFL redzone channel where they can watch their players score in real time.

Super Bowl Host Cities vs Taxpayers

Cities take a source of pride for hosting major events. The problem is that taxpayers may be left with at least some of the bill. For example, the gala Super Bowl 50 is expected to cost San Francisco close to $ 5 million in police overtime and street cleaning, neither of which is reimbursed by the National Football League. It would be one thing if the hosting Super Bowl city had a team in the game, but taxpayers have to pay for the rowdiness of other team’s fans. Jane Kim of San Francisco’s Board of Supervisors called the ‘agreement’ between the City of San Francisco and the NFL “the worst deal ever” and told CBS News that “our taxpayers shouldn’t be left with a $5 million tab”.13

Businesses and city representatives counter that it will bring in tax revenues for the city. Each has their own set of economists with their own specific projections, often with quite different forecasts. At the end of the day, both sides will revert to their own self-interests.

Long-time San Franciscans are not afraid to voice their opinions against their richer residents or constituents. There has been an underlying friction between San Francisco residents and Silicon Valley elites. This has manifested in the vandalizing of Google shuttle buses for employees and the actual blocking of Apple shuttles.14

Super Bowl Indicator

So what does this all mean for finance going forward? While it’s a bit like something out of Farmer’s Almanac, you may be able to glean the direction of the stock market from the winning Super Bowl team. The indicator, credited to a New York Times writer in 1978, says that when the Super Bowl winning team is from the pre-merger, National Football League, the stock market tends to rise over the next year. If the winner is from the old American Football League, stocks tend to fall in the following year. Recall that in the 1960’s there were two professional football leagues in our country, the smaller ‘American Football League’ and the larger ‘National Football League’. In 1969, they merged, with the NFL basically absorbing the old AFL.

The victory by Peyton Manning and the Denver Broncos (old AFL) portends a rough year ahead for the stock market, mirroring what we’ve already witnessed year to date. While there is little scientific merit to the indicator, it has amazingly been right over 80% of the time.15 This success rate is better than many algorithms market traders rely upon. If this indicator proves correct, it could go a long way in leveling the inequality gap in America, where the richest 1% owns more wealth than the bottom 90% combined.16

 

1http://fortune.com/2016/01/26/super-bowl-50-ad-cost/
2,3,4http://www.forbes.com/sites/mikeozanian/2016/01/21/super-bowls-ads-up-six-times-faster-than-stocks-past-50-years/#5be032b33408
5,6,7http://www.forbes.com/sites/steveschaefer/2016/02/06/big-game-economics-what-super-bowl-50-says-about-america/2/#1812170e3ee5
8,9,10http://www.forbes.com/sites/mikeozanian/2015/09/14/the-most-valuable-teams-in-the-nfl/#24c4b034326f
11http://sports.yahoo.com/news/nfl–nfl-game-day-costs-for-fans.html
12http://businesssideofsports.com/2015/08/03/why-has-nfl-attendance-declined-by-over-2-million-fans-in-the-last-36-months/
13http://www.cbsnews.com/news/super-bowl-50-how-much-will-hosting-the-big-game-cost-san-francisco/
14http://www.usatoday.com/story/tech/2013/12/20/san-francisco-tech-shuttle-buses-blocked/4147335/
15http://www.cnbc.com/2016/02/05/why-you-should-pay-attention-to-the-super-bowl-indicator.html
16http://www.nytimes.com/2014/07/24/opinion/nicholas-kristof-idiots-guide-to-inequality-piketty-capital.html?_r=0