World's most recession-proof economy? The Super Bowl
Originally Published: January 28, 2008By John Helyar | ESPN.com
The Dow Jones industrial average has dropped 8 percent since the start of the year. The government just reported that the U.S. median home price dropped 10 percent last year. The economy is fading faster than the Dallas Cowboys.But never fear. In these dark economic times, there is still one beacon of light: Super Bowl XLII. America's corporations and citizens might be paring expenses and bracing for hard times in every other respect; but in metro Phoenix this week, the mantra is: Recession? What recession?
Rooms at Scottsdale's 5-star resorts are going for $3,000 a night (four-night minimum), and getting Bill Belichick to smile is easier than booking one. Glendale Municipal Airport near the stadium, which usually handles four flights a day, will park 100 corporate jets this week. Hundreds more private aircraft will swarm into other local airports. The bull market for Super Bowl tickets is the inverse of Wall Street's bearish one. The average price of tickets sold on StubHub is currently $4,227, a hefty premium from their face values of $700 and $900. The game already ranks No. 4 in total dollar volume among StubHub's all-time best-sellers, with a week to go before game time. (The top three: the past two BCS championship games and last year's Super Bowl.) The game isn't the only hot ticket in Arizona. The Super Bowl host committee's "big ticket gala" costs $10,000, if you'd like an NFL Hall of Famer to grace your table. Tickets to the Playboy and Maxim parties, perennially among the week's top bashes, are going for $2,000 to $3,000. VIP tickets to the "Super Village" in Scottsdale, where events such as a celebrity flag-football game featuring Pamela Anderson and Matt Leinart will be staged, are going for $500. The Super Village alone has 10 corporate sponsors aiming to connect with well-healed consumers. Pontiac will present a 50 Cent concert, while showing off its 2008 model. Samsung is prominently displaying its latest HDTVs. Some of the NFL's biggest sponsors have had their bells rung lately. Motorola last week reported horrible year-end results for 2007, with revenues falling 15 percent because of its sagging cell-phone business. Sprint Nextel lost 109,000 wireless subscribers in the fourth quarter of 2007 and recently announced it was laying off 7 percent of its workforce and closing 8 percent of its company-owned retail stores. Yet they're at Super Bowl XLII in full force. Sprint Nextel is promoting the heck out of its new SEE video service, covering the party scene and having expert commentators such as Marshall Faulk discuss the game. Its Sprint "Phone-a-Friend" program at the NFL Experience allows fans to ask NFL players to talk with a friend or family member on Sprint wireless. Jim Andrews, editorial director of the IEG Sponsorship Report newsletter, sees no pullback in sponsors' spending at the Super Bowl.
AP Photo/Ross D. FranklinSuper Bowl tickets just might be the most valuable currency in the United States right now.
"It seems recession-proof," he says. "It's the safe bet, the way the companies see it. They may not want to get involved in new sponsorships at a time like this, but they know what they're getting from the Super Bowl." Still, Bob Sullivan, president of the Super Bowl host committee, isn't quite prepared to declare the event recession-proof. "Nothing is immune from a steep economic decline," Sullivan says. The deteriorating economy definitely hurt his fund-raising efforts. The committee had to raise $17 million, mainly through corporate sponsorships, to cover costs. When Sullivan approached major local home-builders about being sponsors last year, he recalls, "They said, 'What, are you reading the papers?'" (Home sales and home-building permits in metro Phoenix are projected to drop 30 percent in 2008.) Pulte Homes finally came through as a sponsor, but the host committee was still $3 million short of its target a month ago. It isn't now. The way the committee finally hit paydirt helps explain what drives the Super Bowl economy: insatiable demand. Sometimes it comes sooner, sometimes later; but it always seems to come. Each year, the NFL gives the local host committee about 750 game tickets. Sullivan's group used theirs primarily for fund-raising. It put together packages ranging in price from $4,000 (for a ticket, a parking pass and access to pregame and postgame hospitality areas) to $100,000 (for 10 tickets and a table for 10 at the Big Ticket gala, where Jay Leno will provide the entertainment). The committee still had 15 packages for sale until last week. Then on Tuesday, two days following the NFC conference championship game, a big swarm of orders started coming in from the Big Apple. The packages sold out in, well, a New York minute. The host committee put another 30 packages on sale Saturday, nearly half of which had been sold by Monday. The Giants' presence clinched a robust Super Bowl LXII for many business interests. The team plays in America's biggest market and draws many moneyed fans. According to Nielsen, 40 percent of Giants fans have household incomes over $100,000. Regardless of the economy, they aren't starving -- except for championships.
AP Photo/Keystone/Steffen SchmidtOne way to get attention for the new Pontiac? Present 50 Cent in concert during Super Bowl week.
For scores of New York-area execs, scoring Super Bowl tickets is the ultimate win-win proposition. They get to fly to sunny Arizona in the dead of winter to root for Eli Manning & Co., and they also get to generate goodwill for their companies by inviting prized clients along. At TSE Sports & Entertainment, which sells Super Bowl tickets-and-travel packages, "the phone started ringing off the hook after the Packers game," says Robert Tuchman, the firm's president. Those calls weren't just coming from midtown Manhattan. Many were from companies based elsewhere, wanting to be sure their New York offices were stocked with corporate America's most valuable late-January currency: Super Bowl tickets. Tuchman estimates he'll sell 1,000 packages, typically priced at $6,000, which about equals last year's total. Businesses tied to the Super Bowl are actually quite fortunate that Lawrence Tynes made that overtime kick to win the game for the Giants. Sure, Packers fans would have swarmed from the frozen tundra to the Arizona desert, too. But let's face it: Some 57 Fortune 500 companies are headquartered in New York; there are nine in Wisconsin. The Cheeseheads more likely would be angling for nosebleed seats than VIP packages. The Super Bowl economy is also fortunate there's a writers strike still on in Hollywood. As hit series such as "Desperate Housewives" have been put on hold for lack of new episodes, advertisers have fewer highly watched vehicles through which to hawk their products. Even the next big blockbuster TV event following the Super Bowl -- the Acadamy Awards, currently scheduled for Feb. 24 -- could be scuttled by the strike. So advertisers who might have been tightening their belts in this dicey economy and balking at Fox's record $2.7 million asking price for 30-second spots instead are paying up. "The Super Bowl is more important than ever this year to advertisers," says Patti Williams, a marketing professor at the University of Pennsylvania's Wharton School. "There's very little TV you can count on, and the Super Bowl is something you can count on." Ironically, while the unbeaten Patriots are the primary lure for a possible record-setting TV audience, New England isn't attracting nearly as many of its backers to Arizona as the Giants are. Maybe Patriots fans are blasé, since this is the team's fourth Super Bowl appearance of the decade. Maybe people who traveled to the Red Sox's post-season games last fall are tapped out. In any event, says Nick Giammusso, president of VIP Super Bowl Tickets, "The corporate business out of New York has been 10 times, 20 times higher than Boston." To the Williamsville, N.Y., tickets-and-travel packager, the explanation for the enduringly robust Super Bowl economy is simple: "The rich are still rich, and they're not afraid to spend." John Helyar is a senior writer for ESPN.com and ESPN The Magazine. He previously covered the business of sports for The Wall Street Journal and Fortune magazine and is the author of "Lords of the Realm: The Real History of Baseball."
Larry Marano/Getty ImagesWho wouldn't pay a premium to see Pamela Anderson in a flag football game?
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