Retailers, restaurants, bars and supermarkets across the country are bracing for an onslaught of free-spending football fans preparing to watch Super Bowl XL on television Sunday.
With close to 145 million people nationwide expected to watch at least part of the game, often at parties or in public venues, the economic impact is significant.
About $5.3 billion will be spent in restaurants and bars, on wagering, on hosting parties, or buying snack foods, drinks and pizza, according to BIGresearch, which conducted a survey on Super Bowl spending for the Retail Advertising and Marketing Association, a division of the National Retail Federation (NRF).
While individual Super Bowl-related purchases are expected to come to $49.39 on average this year, up slightly from $49.27 in 2005, overall spending is expected to decline from $5.6 billion in 2005. The reason for the decline: Fewer people are buying in relation to the Super Bowl this year notes Scott Krugman, a spokesman for the National Retail Federation. “But these people are buying more expensive products, like televisions,” he added.
By comparison the host city Detroit is expecting an economic boost of about $300 million in related revenues to hotels, restaurants, stores and other businesses, according to a study done for the city's Super Bowl host committee by Lawrence Technological University.
“Retailers look forward to the Super Bowl every year, knowing that it means big business,” said Phil Rist, vice president of strategy for BIGresearch. “Home electronics and team apparel sales are sure to beef up retailers’ revenue as consumers hit the stores in anticipation of Super Bowl Sunday.”
Most Americans polled — 66.2 percent — said they plan to do some shopping for Super Bowl Sunday, whether it is purchasing food and beverages, televisions, furniture, or team apparel or accessories.
Consumers expect to purchase 1.7 million new televisions to upgrade for the Super Bowl, compared with 1.4 million in 2005, BIGresearch found. They also expect to buy roughly 800,000 pieces of furniture (including entertainment centers), compared with 530,000 last year.
Nearly a quarter of those polled plan to attend a Super Bowl party, while one in ten plans to host. About 8.3 million consumers will be enjoying the game from a bar or restaurant, according to the survey, although the National Restaurant Association puts that estimate slightly higher at 4 percent of Americans, or about 12 million.
Roughly one in seven Americans, or 15 percent, order restaurant takeout food for a Super Bowl gathering, a figure that rises to 22 percent for younger adults aged 18 to 34, according to the restaurant association. About 58 percent buy pizza, 50 percent buy chicken wings and 20 percent order sandwiches.
America’s premier day for sports viewing is a day of gluttony, ranking as the No. 2 day for food consumption, just behind Thanksgiving, according to the American Institute of Food Distribution. And the game helps make January the top sales month for frozen pizza.
Pizza makers like Dominos definitely expect a boost, says CEO David Brandon.
“It’s far and away the busiest day of the year for us,” he told CNBC. “We expect to deliver 1.6 million pizzas on Sunday, and it’s not only a marketing challenge, it’s also an operations challenge. We have to have full staffing and be ready to go because we have to serve an enormous number of customers during our biggest day of the year.”
While food sales and pizza deliveries are a windfall for supermarkets and restaurants, the big bucks in Super Bowl are spent on marketing during the show by big-name companies hoping to reinforce their brand image with a large, captive audience.
Each year, companies from unknown dot-coms to big consumer products corporations spend millions of dollars to run commercials during the Super Bowl, but the question remains as to whether the money poured into this marketing is money well spent.
“Over $2.1 billion of corporate advertising money is spent on professional football annually, and the Super Bowl is the classic premium buy,” said Rick Horrow, CEO of Horrow Sports Ventures and a visiting professor of sports law at Harvard Law School. “Corporations are willing to spend $2.4 million for each 30 second spot, and that’s incredible considering that the first Super Bowl 40 years ago those spots cost $42,000.”
Horrow says that companies like Sprint, this year’s sponsor of the Super Bowl halftime show featuring the Rolling Stones, can see a significant bump in trade in the days and weeks following the game.
Sprint Nextel vice president of sports marketing Michael Robichaud says the wireless firm’s involvement in the Super Bowl and halftime show represents a desire to reinforce the company brand with NFL viewers. The company recently merged with Nextel, known for its “push to talk” wireless phone function.
“We are getting the word out that we have two great companies together here and we are introducing ourselves to NFL fans, and this is a huge platform for us to get that message out,” said Robichaud, adding that the company hopes to showcase its “Power Vision” high-speed data service recently launched for Sprint Nextel handsets, which includes NFL content.
“This is an unbelievably huge audience, and such a broad group watches the Super Bowl, whether they are football fans, watching for the commercials or Rolling Stones fans, so it’s worth us investing in this. It’s important for us to let people we are part of the NFL, like Coors and Pepsi,” Robichaud added.
If an investor is looking to make money from the Super Bowl, there are certain fundamental factors that decide whether a company’s stock should be drafted into portfolio, or left on the bench, says Tom Gardner, co-founder and co-chairman of The Motley Fool investment Web site. (The Motley Fool is a content partner of MSNBC.com.)
And if a stock is already in your portfolio, it pays to monitor the firm if it is paying out big bucks to sponsor the Super Bowl, or run a commercial during one of the much-watched commercial breaks he says.
Gardner says he looks at three factors: Does the sponsoring company have any relevance to the game itself? Do they have the money to make this kind of investment? And does the marketing motivate him to get up and buy the product they’re offering?
“I look to see if it is money well spent,” he said, adding that sometimes an ad can stir up so much controversy that the viewer only remembers the ad and not the company or what it stands for. A case in point, he says, is Internet company GoDaddy.com, which in 2005 generated post-Super Bowl buzz with its titillating ad featuring a buxom model.
“In this regard, a big company like Sprint obviously represents a lower risk than a small Internet company no one knows,” Gardner continued. “But the smaller the size of company and the further away the content of the ad is from the message of the company itself, the bigger throwaway it is.”