Last night, hordes of fans made their way to Allegiant Stadium in Las Vegas, Nevada to witness one of the most awaited sporting events of the year…the Super Bowl. This year is a bit different though, as we saw true blue football fans of the San Francisco 49ers and the Kansas City Chiefs, as well as the pop-loving, ever loyal, Swifties. Although it can be argued that the Swifties, after all, were really rooting for the Chiefs, via “Traylor.”
While it’s tempting to reminisce the about the easy, albeit strange walk-off touchdown win by the Chiefs, or Usher’s surprise guests during the halftime show, and of course, Taylor Swift celebrating with Blake Lively and Ice Spice, this blog exists to go deeper into the economics of things; in this case, the economics of the Super Bowl.
Cities clamor for the opportunity to host the Super Bowl every year. After all, that would mean a boost to their local communities and businesses. In 2020, when the Chiefs and the 49ers faced off in Miami, around 4,500 new jobs were created in the area with a total economic impact of $571 million.
The city also becomes one of the biggest highlights of the event thereby receiving a great amount of publicity. This gives the city the opportunity to promote itself and hopefully get more return visitors. Moreover, being host city is a major revenue generating endeavor and contributes to the city’s tax revenues. For instance, hotels tend to increase their room rates as well as occupancy rates during this time and that increased revenue is enough justification to bring the event to the host city.
Host cities aren’t the only one seeing the benefits. Cities of participating teams see a small uptick in economic activity as well from gatherings and watch parties in hotels, restaurants and larger venues.
Non-quantifiable income called “psychic income” is important to the fans and cities of the participating teams. Economists describe this intangible benefit that local fans reap from a a major sporting event like the Super Bowl. The sense of pride, excitement and anticipation of a win is enough for residents to feel better about their city, increasing social networks and goodwill. While not directly, quantifiable, some of these intangible benefits translate to more spending in terms of sports apparel, swag, food, parties, and more.
And let’s not forget those epic Super Bowl ads! After all, the Super Bowl is the best time to showcase top brands in the hopes of reaching more than 100 million viewers. Millions of dollars are set aside by companies just for the Super Bowl ads. In fact, the cost of each 30 second advertisement in 2024, is $7 million, a 55% percent increase from 2019.
There’s an important reason for companies to shell out this much…this is one of the rare times, viewers are actually anticipating and looking forward to watching these ads rather than the usual avoidance of advertisements. People usually gather with friends and relatives and the shared experience of watching these ads together amplify the effect, carrying the brand recall forward to days even weeks after.
But certain economists and studies believe that the numbers may actually be overrated or inflated. In certain areas where tourism is high to begin with, like Las Vegas in this case, it may be difficult to quantify the Super Bowl’s impact on the local economy since many tourists visit around this time anyway.
Many of the economic numbers do not take into account the costs that need to be factored in to host such an enormous event, like the Super Bowl. From needing more police, EMTs, ambulances, street cleaning, etc. all of which cost taxpayer money.
The amount if jobs that were created to host the event also need to be qualified further. For instance, most of the jobs are related to temporary service industry jobs like Uber/Lyft drivers, restaurant workers and hotel workers. While the job creation is important they need to be noted as not permanent when taking into account employment numbers.
The Super Bowl is one of the greatest American traditions that we look forward to every year. As with anything, there are benefits and costs associated with the Super Bowl and while the idea of hosting this major sporting event sounds incredible from the economic standpoint, the numbers need to be looked at more carefully, especially when huge investments like stadiums, sports facilities, hotels, etc. are called for. But then again, when you have a “Traylor” thing going on, maybe, just maybe that investment may be worth it. We’ll see when the numbers start rolling in for Super Bowl LVIII, as to whether Taylor Swift’s Midas’ touch and loyal Swifties, made Las Vegas a true sporting city.
The Gist
The Super Bowl has tremendous benefits as well as costs.
The benefits include increases in tax revenues for the host cities, temp workers, and tourism.
There are also psychic income that cities from participating teams reap from the event in terms of watch parties, sports apparel, food and beverage, and many more
Companies heavily advertise during the Super Bowl since this is one of those rare chances that consumers actually look forward to commercials
There are costs to the Super Bowl as well in terms of increased facilities and support staff to accommodate the influx of visitors to the host city. These costs must be taken into account prior to making significant investments to being a Super Bowl host city.
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