With Super Bowl XLVII just two weeks away I figured it would be appropriate to take a look at the business side of the much-hyped game. The average ticket price this year is nearly $3,100. That means ticket revenues alone will be about $227 million. In 2012 it was estimated that Super Bowl fans would spend approximately $11 billion on Super Bowl related costs. To put it in perspective, that is more than Fortune 500 company, Stanley Black and Decker’s (SWK) revenue in 2011. However, one of the most unique aspects of this business is the highly anticipated commercials. This year companies have gone to great measures to promote their commercials even further. Anheuser-Busch went as far as airing a preview to their ad for their new product, Black Crown. The frenzy surrounding these commercials has grown year after year and the ads are now one of the biggest attractions for many of the viewers. The 2012 AFC Championship game had 48.7 million viewers. This was a record high number, however it was still trumped by the 111 million viewers attracted by the Super Bowl last year. That leads us to the question, why does the Super Bowl attract so many more people? Both games are played at a very high level and have background stories that make for great football games. The difference can be attributed to the unique experience that surrounds the game itself. It’s the one time each year when it is okay to have a party filled with beer, wings and pizza on a Sunday night. On top of all that, the Super Bowl is commercial free! Sort of. During any other TV program the commercials are ignored, even hated. In a survey by BIGinsightTM 73% of people surveyed said they viewed the Super Bowl commercials as entertainment. Many people are more excited to see what Pepsico’s new commercial will be than they are to see the two Harbaugh brothers go head to head.
With over 110 million viewers likely for this upcoming Super Bowl, companies including Pepsico (PEP), Coca-Cola (KO), and Anheuser-Busch (BUD) have paid, on average, $4 million for a 30 second spot. But, is it really worth $4 million dollars? Over the past three years Pepsico, Coca-Cola, and Anheuser-Busch have seen their stock prices increase by 33%, 52%, and 90% respectively. While Coca-Cola and Anheuser-Busch have vastly exceeded the return of the S&P 500 during this time, 38%, Pepsico has not. These are three of the most noted companies in any Super Bowl advertisement discussion. However, no clear conclusion could be drawn regarding a correlation between their Super Bowl commercials and financial performance. Before writing this investment off, it is important to consider the size of the investment. $4 million dollars is just .08% of Anheuser-Busch’s sales and marketing expense for 2011. At such a minimal cost, it is difficult to claim that the commercials are a poor investment. With more than 2/3 of the US population watching, it is the ultimate stage for any company. Companies such as GoDaddy have built their entire brand image around their Super Bowl commercial. This opportunity can’t be found anywhere else. The survey by BIGinsightTM showed that 8.4% of people watching the Super Bowl claimed that the advertisements influence them to buy the product from the company. So, while these companies have not seen a directly correlated increase in their stock prices over the past several years, the have been able to take advantage of prime time exposure to develop their brands and position themselves well within their respective industries.
The Invisible Hand 