The Economics of the Super Bowl

Players, Performers, and Cities

Yvan J. Kelly,David Berri,Victor A. Matheson

• Publisher: Palgrave Macmillan
• Year: 2020
• ISBN:
  9783030463700
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

The Super Bowl is the most watched sporting event in the United States.But what does participating in this event mean for the players, the halftime performers, and the cities who host the games? Is there an economic benefit from being a part of the Super Bowl and if so, how much?

This Palgrave Pivot examines the economic consequences for those who participate in the Super Bowl.The book fills in gaps in the literature by examining the benefits and costs of being involved in the game. Previously, the literature has largely ignored the affect the game has had on the careers of the players, particularly the stars of the game. The economic benefit of being the halftime performer has not been considered in the literature at all. While there have been past studies about the economic impact on the cities who host of the game, this book will expand on previous research and update it with new data.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2020

Y. J. Kelly et al.The Economics of the Super BowlPalgrave Pivots in Sports Economicshttps://doi.org/10.1007/978-3-030-46370-0_1

Begin Abstract

1. Introduction

Yvan J. Kelly¹  , David Berri² and Victor A. Matheson³

(1)

Flagler College, St. Augustine, FL, USA

(2)

Department of Economics and Finance, Southern Utah University, Cedar City, UT, USA

(3)

Department of Economics and Accounting, College of the Holy Cross, Worcester, MA, USA

 

 

Yvan J. Kelly

Email: [email protected]

Abstract

The 1966 merger of the NFL and the AFL led to the playing of a championship game, initially titled the NFL–AFL World Championship. That bulky name was soon dropped and the game is now commonly referred to as the Super Bowl. The game has grown in societal importance and become part of the cultural fabric of the United States. This chapter provides an overview of the economics of the three major components of the game that are covered in this book: the football players, the cities that host the games, and the halftime artists.

Keywords

Player valuationEconomic impactSong consumption valuation

End Abstract

Nothing on the US sports scene compares to the Super Bowl. The championship game of the National Football League (NFL) is a social phenomenon which dominates sports coverage for the two weeks leading up to the game, is annually the most watched sporting event in the country, and is the justification for social gatherings and parties throughout the land. Over the years, the game has taken on a global interest and is broadcast internationally.

Fans from across the country who are able to get tickets to the game flock to the host cities. There, they stay several days in hotels, eat in the restaurants, enjoy local entertainment, and enjoy the excitement and anticipation of the big game. Corporations host private and exclusive parties rewarding their most accomplished employees and best customers. There is a lot of money spent in the host city as a result of the presence of the Super Bowl. But what exactly are the benefits from hosting the game? Are the benefits as large as popularly reported?

For NFL players, reaching the championship game is the pinnacle of their professional playing career. Being able to play in the Super Bowl is a dream most players have had since they began playing the game as a child. To be a champion might mean more to the players than the bonus money they receive for the victory. Perhaps there is a financial incentive to reach the title game and to be successful once there. Specifically, does winning a Super Bowl impact future pay? And does winning a Super Bowl have any impact on the future revenues of the championship team?

As part of the celebration of the game, the NFL puts on an elaborate and expensive halftime show featuring some of the top musical stars of the day as well as legacy stars who have had long and very successful careers. It is surprising to some to learn that the featured artists are compensated with only the union’s minimum pay scale. Surely, there must be some financial benefit to the artists for having practically volunteered their time to be the halftime performer. Where do the musical artists see the payoff? Is it in the consumption of their music following the game? Is it in future concert revenues? Are there other revenue sources from which they benefit from having been the halftime act? And what about the cheerleaders who typically perform at each game? What are they paid to perform on the NFL’s biggest stage?

This book is designed to explore these three areas: players, cities, and performers. Chapter 2 of this book will begin with a brief history of the NFL and its mergers with rival leagues over the years. The most important merger for the NFL was that with the American Football League (AFL) in 1966. This agreement for a merger led to an interleague championship game, the NFL—AFL World Championship Game. That game was renamed the Super Bowl and is marked by using Roman numerals rather than the year when the games are played.

The remaining chapters will then examine the benefits for each of these groups who participate in the Super Bowl: the cities who host the game, the players, and the performers. Building upon previous research in the labor economics and player valuation in football, the benefits to the players for participating in the game will be explored.

Chapter 3 will explore the economic impact for cities that host the Super Bowl. A historical background of cities who have hosted the game will be presented. The cities selected to host the Super Bowl, host the game expecting to receive an economic benefit. There are ex ante estimates that have been made about just how much a city will benefit from hosting all those fans arriving for the game. Problems occur within these ex ante economic impact studies that tend to overstate the benefits the city will receive. The sources of the problems and the reasons for the overstatement of benefits will be explored. An examination of the costs of hosting the game will also be presented. Ex post economic impact studies will be used to compare the differences between what cities hoped to have happened as a result of hosting the game with what actually happened as a result. There are also non-monetary benefits for the host city which are explored.

Chapter 4 explores the team and players in the game. This chapter begins with a discussion of how winning the Super Bowl impacts team revenues. It will then move on to a discussion of the most important player on the field. The quarterback—or the “face of the franchise”—is often given credit when his team wins. We will also see, there is some evidence that the winning quarterback sees his future pay increase from winning this game. What may be surprising is the winning quarterback isn’t often the “best” quarterback.

Chapter 5 will explore the benefits to the other performers (i.e., not the teams!) at the Super Bowl. We will begin with a discussion of halftime performers. That discussion will begin with the history of the halftime show and the mostly forgotten reason this spectacle expanded in the early 1990s. The benefits for halftime artists will be examined and estimates will be made for the value of the song consumption of their music prior to and following the game. The estimates point to a very large bump for the artists in the consumption of their music through the means of downloads, audio streaming, and video streaming. Musical artists also generate substantial revenues from concerts. The impact that being the halftime performer at the Super Bowl has on future concert revenues will be examined. By measuring the average gross concert revenues for artists the year prior to and the year following their Super Bowl appearance, an analysis is made concerning whether a benefit is present from being the featured artist at the game. This area of study is unique to the sports economics literature.

The halftime performers are not the only non-players to put on a show at the Super Bowl. Cheerleaders have been part of this game for decades. The most famous of these are the Dallas Cowboys Cheerleaders. Although these cheerleaders became quite famous in the 1970s, their pay did not match their notoriety. In fact, the Dallas Cowboys Cheerleaders weren’t even paid when they performed at the 1978 Super Bowl. A lack of pay remains an issue for the NFL’s cheerleaders. As we will argue, the same reason halftime performers benefit so much from appearing at these games is also why cheerleaders are paid so little.

Chapter 6 will summarize the findings and draw conclusions. This book is purposely limited in its scope and intentionally focuses on the three major participants in the game: the cities, the players, and the performers. It is the hope of the authors that future researchers will be interested enough in these topics to further explore these areas and further develop and refine our theories. For the casual fan of the professional football, the hope is that this book will provide a deeper understanding of the makeup of the game as well as giving some behind the scenes insights.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2020

Y. J. Kelly et al.The Economics of the Super BowlPalgrave Pivots in Sports Economicshttps://doi.org/10.1007/978-3-030-46370-0_2

Begin Abstract

2. The Origins of the NFL and the Super Bowl

Yvan J. Kelly¹ , David Berri² and Victor A. Matheson³

(1)

Flagler College, St. Augustine, FL, USA

(2)

Department of Economics and Finance, Southern Utah University, Cedar City, UT, USA

(3)

Department of Economics and Accounting, College of the Holy Cross, Worcester, MA, USA

Yvan J. Kelly

Email: [email protected]

Abstract

Professional football grew from the popularity of the collegiate game. The NFL began as a small, regional league and grew to become the preeminent sport in the United States. As it grew in size and financial stability, the NFL faced several challenges from rival leagues. In 1966, the NFL agreed to slowly merge with the AFL and to establish a World Championship game. That championship game, now known as the Super Bowl, is the most watched televised event in the country. The game has grown to become a massive event and very big business.

Keywords

NFL HistoryNFL–AFL mergerSuper Bowl growth

End Abstract

From its humble and financially tenuous beginnings in 1920, the National Football League has grown to become the premier spectator sport of the United States (Crepeau 2014). Likewise, its championship game, the Super Bowl, has become North America’s most watched sporting event (Stewart 2002). The NFL’s growth in popularity is demonstrated by the size of its weekly television viewership and the nat...