Value-added: Spinning money from the Super Bowl

The Super Bowl is the pinnacle of sporting extravagance. For advertisers, the cost of a prime-time slot is in the millions but the cultural cachet is priceless.

Like it or not, sport is big business these days.

Nowhere is this clearer than in America’s Game where the pinnacle, the Super Bowl, also represents the peak of sporting extravagance on an annual basis. And this year the celebration promises even more as it comes to New York City for the first time – well, next door at least.

The home to symbols of wealth like Wall Street, Fifth Avenue and Park Avenue as well as over 400,000 millionaires and the world’s most outlandish permanent advertising space in Times Square, it is the perfect fit for the Super Bowl. Its occasionally vicious winter makes it less hospitable for a football game, but these days that’s a secondary concern.

On Sunday night, one hundred million Americans will be glued to their TV sets for any combination of three reasons: the game itself, the half-time show, or perhaps the bevy of new (and often lauded) advertisements.

This can represent a make-or-break moment for advertisers. After all, buying the right to advertise in the coveted time slot comes with a record price tag of $US4 million for 30 seconds.

That’s around 40 times the price Australian advertisers pay for airtime during the most closely watched local equivalent, the AFL Grand Final.

In fact, given we are talking about New York, the price for 30 seconds of airtime during the Super Bowl could have paid for a billboard in Times Square for a year. There’s an opportunity cost worth discussing in marketing courses across the country.

As with all major sporting events, the risk of ambush marketing is high as companies not linked to the Super Bowl seek to confuse viewers into believing they are linked. The surprising consequence over recent years has been ads from companies to promote the fact they will be advertising during the big game.

Jaguar, Hyundai, Toyota, Budweiser and Volkswagen are among companies pursuing such tactics. It has involved everything from the painting of subway cars in New York City to the more common leaking of shortened, or even full, versions of the ads online to build hype.

So far this year’s early frontrunner is Budweiser, which saw its ad on YouTube rack up over 15 million views in a little over 24 hours this week.

Pepsi, meanwhile, has downsized the number of ads it will run during the Super Bowl to just one but directed plenty of money toward sponsoring the half-time show. Over the past month the company has pumped commercials onto TV promoting the half-time show and its sponsorship of it.

It’s unusual tactics by Australian standards, but that’s the competitiveness of advertising in the United States. Breaking through the Super Bowl clutter is a challenge, especially when there are over 50 companies clamouring for attention.

Advertising, however, isn’t the only area where the cost boggles the mind.

Anyone who has enjoyed a trip to New York is well aware hotel costs in the Big Apple are exorbitant at the best of times. But costs have reached outlandish levels for this weekend.

An analysis I carried out a couple of weeks ago into the price of a hotel room on the Saturday night before the Super Bowl, as opposed to the Saturday night the week prior, found prices soaring 110 per cent higher.

Costs have been seen dropping off highs in recent days as plenty of hotel rooms remain vacant, but prices are still well above typical February rates.

Then there’s the cost of tickets.

Average ticket prices run at around $US3,000 on the secondary market, which is surprisingly less than last year. This is being put down to the two combatants being from the other side of the country.

Regardless, if you want the cheapest ticket, you need to be prepared to pay upwards of $US1500, which is off-limits to all but true diehards and the affluent.

The greatest sign of extravagance, however, is the corporate box. With suites selling for upwards of $US500,000, this Super Bowl is shaping as the most expensive of all time for the corporate world.

But despite all the cash being thrown around in excitement, there threatens to be a big loser from the day – New Jersey.

Jersey’s East Rutherford is technically hosting the game, though all the publicity is being directed to New York City given the stadium is just a 30 minute train ride from world famous Penn Station.

As a result, the most expensive Super Bowl of all time may hit state coffers without offering up the usual benefits seen largely in the form of tourism dollars.

Perhaps Chris Christie can block the Holland and Lincoln tunnels back to Manhattan after the game to ensure at least some supporters hang around in Jersey.

Daniel Palmer is Business Spectator's North America correspondent @Danielbpalmer

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