The Financials Behind The Super Bowl
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Hey Friends,
After not having a team compete for a championship in its home stadium during any of the first 54 Super Bowls, the NFL has now seen it happen two years in a row.
The Tampa Bay Buccaneers beat the Kansas City Chiefs last year in Tampa, Florida, and this year, the Los Angeles Rams will take on the Cincinnati Bengals at SoFi Stadium in Inglewood, California.
The opening line at Caesars Sportsbook has the Rams as a 4-point favorite over the Bengals, and the total is set at 49.5.
But rather than talk x’s and o’s, I thought it could be interesting to take a different approach today — here are a few (financial) things I think are interesting about the 2022 Super Bowl.
Player Compensation During The Playoffs
It’s no secret that NFL players are paid exceptionally well.
Annual salaries range from $250,000 for practice squad players to nearly $50 million for franchise quarterbacks like Matt Ryan and Aaron Rodgers, and almost all NFL players are within the top 1% of income earners globally.
But when it comes to the playoffs, most players end up taking a heft pay cut because their salaries have no bearing on what they make after the regular season.
Here’s how it works: NFL players earn their base salary throughout the 18-week regular season, but playoff money comes from a league pool instead of from NFL teams — there is a specific amount for each playoff round, and each eligible player competing in that game gets paid the same.
This is the payout schedule for the 2021/22 NFL Postseason:
Division Winner Playing In Wild Card: $42,500
Non-division Winner In Wild Card or 1st Round Bye: $37,500
Divisional Playoff Game: $42,500
Conference Championship Game: $65,000
Super Bowl: $150,000 (winning team) or $75,000 (losing team)
Receiving a single game check between $37,500 and $150,000 is a lot of money, of course, but it’s still a significant drop off from the $1-$2 million weekly checks that many top quarterbacks see during the regular season.
Luxury Suites At The Super Bowl
The most ever paid for a luxury suite at the Super Bowl was $750,000 for a box at Super Bowl LIV in Miami, in February 2020, according to the NFL & Sportico.
But this year, the NFL says that they have already sold multiple luxury suites for more than $1 million, despite SoFi Stadium having 90-plus more suites than Hard Rock Stadium in Miami.
The game is in Los Angeles, California, one of the most extravagant and pricey entertainment districts globally, so that’s certainly a contributing factor.
Add in the fact that fans weren’t able to attend sporting events for much of the last two years—Super Bowl LV last year had more cardboard cutouts (30,000) than actual fans in attendance (25,000)—and you can quickly see why corporate entertainment budgets have compounded, and client demand is through the rough.
Also, don’t forget that U.S. household wealth grew by $19 trillion during the pandemic to $137 trillion, but those in the top 1% saw their wealth increase 23%, while those in the bottom income quintile experience only a 2.5% gain in net worth.
The federal reserve injected trillions of dollars into the economy, virtually all asset prices went up, the rich got richer, and inflation reached a 40-year high.
The result is higher demand and a historical rate for luxury suites at the Super Bowl.
The Cost Of A Super Bowl Commercial
Whether it was the truth or just an attempt to drum up more demand, NBCUniversal announced that they had nearly sold out of Super Bowl commercial time before the 2021 NFL season even started.
With more than 100 million viewers watching the game on average, notable brands like Bud Light, Doritos, Budweiser, and Coca-Cola continued their tradition of becoming television mainstays during the Super Bowl.
Most Frequent Super Bowl Advertisers (2010-2020)
Bud Light: 26
Doritos: 19
Budweiser: 18
T-Mobile: 17
Coca-Cola: 16
Hyundai: 14
GoDaddy: 12
Kia: 12
Tide: 11
But the cost of advertising has gone up significantly since they started advertising.
Cost Of A 30-Second Super Bowl Ad
1967: $42,500
1970: $78,200
1975: $107,000
1980: $222,000
1985: $525,000
1990: $700,400
1995: $1.15 million
2000: $2.1 million
2005: $2.4 million
2010: $2.95 million
2015: $4.25 million
2021: $5.5 million
But this year, 30-second Super Bowl ads are reportedly selling for $6.5 million, which is a 1,700% increase to 1967 after adjusting for inflation.
Cost Of A 30-Second Super Bowl Ad (Inflation-adjusted)
1967: $360,000
2022: $6.5 million
As they say, the house always wins.
I hope each of you has a great day. I’ll talk to everyone tomorrow.
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