The Super Bowl is the biggest night in the United States’ broadcasting calendar. Aside from the season finale of 1970s comedy classic M*A*S*H, it is the only broadcast to have reached over 100m viewers.
In fact, it does so consistently. The Super Bowl has topped the 100m mark every year since 2010. Likewise, 19 of the top 10 most watched TV broadcasts were Super Bowl events.
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It is this that makes the Super Bowl so appealing to advertisers. With an all but guaranteed audience above 100m, companies are willing to pay millions to get their products in front of consumers for a few short seconds.
Last year’s event, Super Bowl LI [51], saw ad sales total a record-breaking $392m for ads shown during the game. That was up 10 percent on the previous year, but could 2018 see a similar increase?
Will 2018 be another record-breaking year?
Super Bowl LI reportedly sold its 30-second ad slots at an average rate of $4.6m. However, this year’s broadcaster, NBC, is expecting even better results in 2018.
According to Reuters, NBC has been charging a figure above $5m per 30-second slot ahead of the Super Bowl LII.
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By GlobalDataThe broadcaster recently announced that it had less than 10 spots left to sell with over a fortnight still to go until the 4 February showpiece. It is highly likely that the remaining slots will be sold before then, which could result in another record-breaking year for the NFL.
Last year’s match saw a total of 77 ads run nationally. Typically 80-100 adverts and shown throughout. A similar number of ads this year would equate to $385m in revenue, should all slots sell for $5m or above. Add on the money generated by regional purchases and it is likely that the total would break last year’s record.
However, the NFL stated last year that it was working with television partners to cut down the number of ad breaks in order to speed up matches by as much as five minutes following viewer feedback.
How else does the Super Bowl make money?
Advertising revenue certainly generates a big portion of Super Bowl revenue. However, it isn’t the only way that the Super Bowl makes money.
Merchandise, ticket and concessions sales made during the game reportedly generated $88m during Super Bowl 50. While we don’t have figures for other years, Super Bowls are always popular events and it is therefore highly likely that a similar amount of money is made each year.
The Super Bowl also provides a huge boost to the economy. According to the National Retail Federation, each of 2016’s 111m viewers spent $82 on average on food, decorations and apparel in the lead up to the game. Likewise, $710m was spent on alcohol according to CNBC.
Who wins financially at the Super Bowl?
We can’t predict just how much money the Super Bowl will generate this year. However, with most slots already sold, we can say that some people are set to make a whole lot of money next month.
Super Bowl LII is certain to generate hundreds of millions of dollars, but where does that money actually end up?
Super Bowl teams?
The NFL doesn’t release information on how much organisations receive for playing at the Super Bowl. However, team owners are unlikely to care too much about a small appearance fee when they have the opportunity to add billions of dollars to the value of their franchise.
Good performances and winning trophies attract sponsors and this is, ultimately, what makes money and what organisations care about.
The New England Patriots, for example, has seen its value skyrocket after dominating the league in recent years. Its value climbed from $1.8bn in 2013 to $3.2bn in 2015 as they stormed through the 2014 regular season and went on to win the Super Bowl XLIX. With another victory at last year’s Super Bowl, the Patriots’ value has now grown by almost $2bn since 2013.
Super Bowl players?
The average NFL professional earns $1.9m per year, but in the grand scheme of things they aren’t earning all that much considering the amount of money that changed hands in the American football industry.
Reaching the Super Bowl does come with incentive for those on the field. Players receive a $28,000 bonus just for reaching the divisional playoffs, regardless of how they perform in the post season. Those that make it through to the Conference Championship games pocket an additional $51,000.
Unsurprisingly, the Super Bowl awards the biggest bonus. Winners of the showpiece match will take home $112,000 this year to go with their commemorative ring. Likewise, the losers will pocket $56,000 for their efforts.
In total, a Super Bowl winning run could land players a $191,000 bonus. That is almost four times the average annual wage in the United States, but it is also equivalent to approximately 1.14 seconds of ad time during the show.
They certainly can’t complain, but the players definitely aren’t the true winners here.
The host city?
Long before the two finalists take to the field to fight for the Lombardi Trophy, another Super Bowl battle is fought between numerous cities hoping to host the prestigious event.
The NFL announced Minneapolis, Minnesota, the host of this year’s game, as the host city in 2014.
The application process undoubtedly costs a small fortune, while getting the city ready for the big day comes with its own costs. Then factor in the additional costs for extra security and policing as thousands of football fans pack into the host city.
While we can’t give an exact figure, the costs undoubtedly add up. Arizona reportedly spent $30m to host the 2015 Super Bowl. Likewise, New Jersey and New York spent $70m in 2014.
However, they have good reason to splash out. Hosting such a big event brings plenty of tourists to these cities. They provide a huge boost to the local economy as they head to the hotels, restaurants and bars over the Super Bowl weekend.
In total, Minnesota has estimated that as much as $338m could be spent in the city next month thanks to the Super Bowl.
The NFL?
According to Time, the Super Bowl isn’t about money. It’s about honour and legacy.
The organisation keeps player payment fees to a minimum and refuses to pay for the biggest stars to perform at the half-time show.
Yet, somehow the NFL ends up with more than $3bn in its pocket each year, largely thanks to its showpiece match.
The competition organiser agreed a nine-year deal with three major sports broadcasters in the United States back in 2011. This saw NBC, CBS and Fox all agree to extend their contracts to broadcast NFL matches until 2022. Each broadcaster purchased the rights to a number of regular season matches, as well as three Super Bowls each.
In total, they are said to pay a figure close to $3.2bn per year. If correct, this equated to an approximate increase of 60 percent on the previous deal.
While regular season games still pull in millions of viewers, broadcasters rely on the Super Bowl to recoup the majority of their investment. NBC expects to generate more than $500m in ad revenue through broadcasting Super Bowl LII, both before, during and after the event. However, there is no guarantee that they will meet their estimate.
The NFL, on the other hand, will receive their $1bn payment from NBC regardless of how Super Bowl LII performs. That’s not including the money that they will receive from overseas broadcasters as interest in the Super Bowl continues to glow globally.
Broadcasters?
At the moment, broadcasters appear to be making fairly average gains on the cost of broadcasting NFL matches.
According to Forbes, broadcasters make small losses on NFL broadcasts most years. However, Super Bowl years tend to cover the costs.
Ad revenue for the 2016 season put NBC and CBS around the $900 million mark, which fell short of the reported $1bn annual broadcasting rights payment. However, Super Bowl broadcaster Fox brought in $1.44bn in ad revenue.
Should they make similar amounts from ad sales each year, they would make around $3.25bn over a three year period, equating to $250m in profit. Production and advertising costs likely chip away a fair portion of that too.
The sale of NFL’s Thursday Night Football broadcasting package will give us a better idea next month, but it is highly likely that the cost of broadcasting a Super Bowl will likely increase once the current deal expires in 2022. If so, broadcasters might end up paying more for the Super Bowl than it’s worth.
Advertisers?
Advertising at the Super Bowl must be worthwhile for advertisers or they wouldn’t be willing to shell out millions of dollars for their place.
Regulars Anheuser-Busch, Doritos, Budweiser, Hyundai, Coca-Cola and PepsiCo are among those that have confirmed that they will be broadcasting something at this year’s Super Bowl. Universal Pictures will also be airing a new trailer following on from The Fate of the Furious last year.
While it’s impossible to say just how much they make from their investment, they obviously feel that it’s worthwhile for obvious reasons. Regardless of the price, no other broadcast can offer such a large number of viewers as the Super Bowl.
Likewise, given the hype around not only the match, but the adverts themselves, in reality, advertising during the Super Bowl equates to much more than just advertising during the Super Bowl. The ads tend to get a lot of media attention. Particularly good ads also have the potential to go viral and get people talking on social media, potentially providing viewers for years to come.
However, according to advertising expert Lee Garfinkel, advertisers are beginning to have second thoughts about splashing out on the Super Bowl as cost begins to catch up with return.
Bookmakers?
Gambling might be a grey area in American law, but that doesn’t stop sports fans from betting on the Big Game.
As is always the case with major sports events, the bookmakers will be the big winners on Super Bowl weekend. Perhaps not on paper though. The American Gaming Association estimates that 97 percent of bets placed on the Super Bowl are wagered illegally.
Taking this into account, the money that swaps hands through betting swamps the amounts earned by broadcasters and organisers. The AGA estimated that $4.7bn was wagered on the Super Bowl LI match between New England Patriots and Atlanta Falcons last year.
