Packers 31 – Steelers 25

I’m a huge sports fan, but I won’t talk X’s and O’s today.  Instead I will touch on some of the economics of the Super Bowl.

The Super Bowl Theory says that the stock market goes up when a team from the original National Football League wins the big game. This indicator has correctly predicted the direction of the Dow 35 out of 44 years that this game has been played. Both teams trace their roots back to the original NFL, but the Dow has a better track record when the Steelers take home the hardware.  The Dow rises an average of 18.4% in years the Steelers have won the Super Bowl, while advancing only 14% in years the Packers are champions.

I can’t think of any reason the outcome of the Super Bowl and the direction of the stock market should be related (other than data mining of course) but it’s an interesting fact nonetheless.

Advertising during the Super Bowl comes with a hefty price tag.  The number I’m seeing for this year is that a 30 second spot cost $3 million.  It may sound like a crazy amount of money, but it is actually fairly standard pricing considering the viewership.  For advertisers, they think in terms of cost per thousand heads.  This year’s Super Bowl drew 111 million viewers, which means that the $3 million price tag comes out to about $37 per 1,000 viewers.

Super Bowl spots are more costly than typical prime-time spots – according to Bloomberg, advertisers pay $25 per 1,000 prime-time viewers – but the commercials have become a significant aspect of the event and viewers are likely paying closer attention than they would otherwise.  In addition, people on the Internet blog/tweet/chat about the commercials after they air, which provides even more exposure for these advertisers at no additional cost.

One more interesting piece of data from TiVo: the average Super Bowl viewer with a DVR either paused, rewound, or fast-forwarded 145 times during the game.

Ownership structure for both teams is quite unique.  The Packers are the only non-profit team in the major American sports leagues.  It has hundreds of thousands of shareholders, though they have no claim to season tickets or dividends, and a board of directors is elected to oversee the team.  No other team can have this ownership structure as the rules have since changed, but the Packers were grandfathered in. 

The Steelers, on the other hand, have always been owned by the Rooney family.  They are not the only sports franchise like this, but it is a very rare circumstance.

Ticket prices are ridiculous.  Scalping a ticket cost an average of nearly $4,700 per seat, almost twice as much as a year ago. Worth it?  For that price you could attend 24 Packers home games or 23 Steelers home games.  This of course doesn’t consider the utility per dollar, or bang for your buck, that the Super Bowl experience provides. 

Peter Lazaroff, Investment Analyst

St. Louis, MO

www.acrinv.com