When it comes to national cultural rituals, the Super Bowl is it. It is New Year’s Eve and then some.
Consider this. According to reports, some 21.5 million households were expected to host Super Bowl parties this year that would be attended by 54.6 million people. Another 9.9 million trekked to bars or restaurants to watch the game.
Since 1972, television ratings for the Super Bowl have exceeded 40 every year except one. The exception was 1990, when the then-dominant San Francisco 49ers blew out the Denver Broncos 55-10, and even then the rating reached 39.
There’s nothing else like it. Neither the World Series’ nor the NBA Finals’ ratings have reached as high as 20 in the recent past, and the ratings for the NHL’s Stanley Cup finals don’t hit a 4.
With 110 million television households in the United States, a 41.1 rating means that 45.2 million households were watching the game. Add the people in the bars and restaurants, figure in the parties, and it implies well over 100 million people watching in the United States alone.
Estimates for the worldwide audience go as high as 800 million viewers — second only to soccer’s World Cup finals, which has an audience of more than a billion.
Another interesting feature of the Super Bowl as cultural ritual is that it crosses religious, ethnic and gender lines. Just about everybody watches: old white men, young white men, women, African-Americans, Hispanics and more.
Former Presidents Bush and Clinton participated in this year’s pregame show. Needless to say, the champion New England Patriots will be feted at the White House.
In fact, you don’t even have to like football to watch it. A recent survey found that 34 million people will watch the game for the advertisements.
This is the annual coming-out party for advertisers. It’s a national advertisers’ fashion show where the ad industry struts its latest, most creative products.
And no wonder. If a company is going to spend $2.4 million for a 30-second ad spot, it has to make sure that each second of the ad is well used.
That’s why the average cost of producing Super Bowl ads is estimated at nearly $1 million a shot. And a million bucks produces a quality ad.
Some companies, of course, buy more than one spot. Anheuser-Busch purchased 10 of the 58 spots on this year’s Super Bowl. The company had 25 potential ads produced before selecting its finalists.
When one does the math, at first blush Super Bowl advertising seems too expensive. After adjusting for the number of viewers, ad rates are so high that the cost per viewer on the Super Bowl is still double or triple the norm for prime-time programming.
Many companies, however, figure it’s worth the premium. Unlike other shows, where during commercials people channel-surf, go to the kitchen or the bathroom, or press the skip button on their TiVo control, viewers intently watch and discuss Super Bowl ads.
It’s a formula that works well for the NFL. Ratings are converted into ad revenue, which is converted into rights fees. This year, each of the NFL’s 32 teams will receive about $90 million from national media revenue.
With the new TV deals, that number will soon be jumping to $110 million or more annually per team. Not only is this a lot of money (the total revenue from all sources of the average NBA team is about $90 million), it is money that is equally distributed to all NFL teams.
In part because of the NFL’s equal revenue distribution and in part because of the league’s salary cap, the NFL is supposed to be a league where a single team cannot dominate year in and year out. Yet the Patriots, as well as a few teams before them, put together multiyear streaks.
Part of this is good fortune, part is that success breeds success, and part is effective management. When teams win, everyone is happy and players (like the Patriots’ Tedy Bruschi, Troy Brown and Matt Light) give hometown discounts to stay with a championship team.
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| Belichick, Kraft found winning formula. |
But certainly much of the Patriots’ success rests with owner Robert Kraft, who not only traded a player to get Bill Belichick as his coach, but then stepped out of the way and allowed Belichick and his staff to run all aspects of the team.
Robert and Jonathan Kraft also set a purposeful team strategy. An important element of this strategy has been to have a steady cap-level payroll each year.
Many teams spend big in some years to sign marquee players with large signing bonuses, surpassing the payroll cap, and then have to make up for the excess in one year with a shortfall in another. In contrast, the Pats have attempted to come in around the cap consistently. This strategy has fostered steady performance.
A key to the success of the NFL and the Patriots is that both emphasize the collective over the individual. For the NFL it is the league over the team; for the Patriots it is the team over the player.
Even though a former disgruntled Patriot, Lawyer Milloy, recently called the Krafts cheap, the team, in fact, has been in the top 12 in cash spending over the last five years.
The Krafts are anything but cheap. They built their new state-of-the-art stadium entirely with private funds and are even reimbursing the state for its modest $70 million infrastructure contribution.
Cheap organizations don’t win three Super Bowls in four years. Intelligent organizations do.
Andrew Zimbalist is Robert Woods Professor of Economics at Smith College.
