Why the Super Bowl is more than a game

US President Barack Obama gave his State of the Union address this week promising to stamp out economic inequality.  Ben Bernanke presided over his last meeting of the US Federal Reserve after eight rollercoaster years for the US economy. Yet all Americans wanted to talk about this week was the Super Bowl.

For a sports-mad nation like Australia it is hard to imagine that the Americans love their football even more than we do – but they do.

While about one in 10 Australians will watch the AFL grand final for instance, Sunday’s Super Bowl game between the Denver Broncos and the Seattle Seahawks is expected to be seen by 100 million Americans –about one in every three.

Of those watching, 51 per cent say they tune in only for the ads.  What that means is that a company like Jaguar will spend $US8 million for a minute of airtime during the game just to reach those eyeballs.  If you think that is crazy, Jaguar has already spent $US5 million advertising its upcoming advertisement on trains, billboards and TV leading up to game-day.

To ensure their ad is memorable, advertisers rope in big names (some of this year’s include Arnold Schwarzenegger, Ben Kingsley and David Beckham) and plenty of gimmicks (GoDaddy has promoted its ad, which will feature a real life woman telling her boss to “shove it”, while retailer H&M will ask viewers to vote on whether their ad should end with David Beckham in his jocks or completely naked.)

So the Super Bowl is a huge win for the host broadcaster, Fox.

It is also a big win for the host state, New Jersey, at a time when Governor Chris Christie desperately needs some positive news.

The NFL estimates that the economic impact of Super Bowl for New Jersey and neighbouring New York is between $500-$600 million.  If those figures are to be believed, then it is a 20 per cent increase on what the game did for New Orleans last year.

However, those figures look a little rubbery when you consider that they do not take out the economic costs from some businesses that will see profits drop because everyone is watching the game.  But the headline figure does include estimated profits for national and international companies like hotels that won’t necessarily keep that windfall in New Jersey.

That is not to say that Super Bowl isn’t an economic bonanza for the host city. PricewaterhouseCoopers estimates a more conservative benefit of around $US200 million for the New Jersey economy – not bad for a few hours of football.

So whatever the result on Sunday, it is safe to say New Jersey will be another winner.

Seattle and Denver will also see a significant one-off boost, particularly if their team wins the game.  In 2012 when the Giants took the title, New York celebrated to the tune of $US38 million.

A 2002 study by Dennis Coates and Brad R Humphreys from the University of Maryland found that the home city of the Super Bowl champions will experience an uplift of about $US140 in per capita income.

They confess the correlation might be a fluke but also believe there could be a ‘feel-good effect’ on locals that makes them more productive.

Wall Street also has a close eye on the result of the Super Bowl.  There is a long-standing myth along the street that says whenever a team from the original National Football Conference wins the Super Bowl, the share market will finish the year in positive territory but if the side from the old American Football Conference wins then the share market will go down by year’s end.

While it sounds incredibly superstitious, it has proved correct 80 per cent of the time.  Hence Wall Street will be cheering home the Denver Broncos on Sunday.

Lee University Professor George Kester used the superstition to see how an investor would do if he bought and sold shares based on the superstition compared with a simple buy-and-hold strategy.

He found that over a 40-year period he would have accumulated $US43,000 for a buy-and-hold strategy and $US105,000 for the Super Bowl market-timing strategy.

 ‘’Of course, you have to do a research project like this with a sense of humour and realise that this is spurious correlation,” he said.  "It would be difficult for me to recommend to any investors that they base their strategy on a football game. On the other hand, in hindsight, the superior investment performance of the Super Bowl market-timing strategy speaks for itself."

Investors also get sucked in by those companies willing to drop millions on Super Bowl ads.   

A study by the University of Wisconsin-Eau Claire shows that Super Bowl advertisers from 1996 to 2010 outperformed the S&P 500 by more than 1 per cent on average a week before and after the game.

So while it was undoubtedly a big week for both Obama and Bernanke, there is no question what the biggest game in town is.

Mathew Murphy is a Walkley Award-winning journalist based in New York.