Super Spending: The Super Bowl
Sure, the Super Bowl is big. But how big?
Try $11 billion. And that’s just for starters.
From tacos to TVs, $11 billion is how much consumers in this down economy will spend on activities related to the big game this Sunday, according to a survey sponsored by the National Retail Federation’s Retail Advertising and Marketing Association. And yet, that’s just the tip of the iceberg. In fact, this uniquely American event offers a fascinating glimpse into the intersection of consumer and corporate practices, public and private spending, and financial services and other industries, with huge chunks of money squarely in the middle.
First, consider the venue, Lucas Oil Stadium in Indianapolis, IN. As a recent Bloomberg story points out, the ongoing debate over public financing is exemplified in this case. The home team, the Indianapolis Colts, previously played in the league’s smallest venue, and a new stadium was critical in preventing a move to another city. Tortured legislative wrangling eventually led to higher taxes aimed mostly at tourists, but they inevitably affected Indianans too.
The Indiana Finance Authority subsequently set about borrowing more than $600 million to build the stadium, using auction-rate bonds, but credit markets started froze up not long after. Interest rates spiked and it didn’t help that insurer FGIC Corp lost its AAA rating. The bills began to climb, and that was even before concerns over operating costs (which weren’t covered by the legislation) turned out to be valid. The stadium opened in 2008; by 2009, the Capital Improvement Board (CIB) of Marion, IN, was predicting a deficit of $25 million, and close to double that the next year.
For the record, the CIB expects to lose about $800,000 on this weekend’s game, mainly due to maintenance, legal services, utilities and so on. Still, the state predicts a potential economic impact of $286 million from the Super Bowl, while a study from Ball State University in Muncie, IN, goes even further, with $365 million in economic activity. Yes, the Super Bowl is big.
But enough about state spending—what will all this do to the stock market?
MoneyMattersblog points out (tongue firmly in cheek) that the Dow Jones Industrial Average is supposed to go up for the year when the winner is from the original NFL (an NFC team, or an AFC team from before the 1970 merger), but falls when an original AFL or expansion team wins. Of course, this ‘Super Bowl indicator’ is about as accurate as a coin flip; since 1998, it’s been right only half the time. Ironically, its biggest failure was after the 2008 matchup between the New England Patriots and the New York Giants. Guess who’s playing this Sunday.
So when you’re watching the game, along with some 171 million others, and want to know where you fit into the scheme of things, here’s one stat: your average fellow viewer will spend $63.87 on Super Bowl-related merchandise. How about you?