#360Business: Why hosting the NFL showpiece can be a double-edged sword

Steve Brenner 22:25 09/02/2015
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Money matters: Cities hosting the Super Bowl have to bear the load of transportation and security costs.

The Super Bowl never sleeps. While the dust continues to settle on last Sunday’s barnstormer, plans for next year’s showpiece have already moved up a gear.

Levi’s Stadium, the $1.2 billion (Dh4.4bn) home of the San Francisco 49’ers in Santa Clara, California will welcome the great, the good and the very rich from the NFL world for its landmark 50th end-of-season extravaganza in 2016.

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Delegates from their organising committee were in Glendale to not only witness the last-gasp call which has turned Seattle Seahawks  coach Pete Carroll into a national laughing stock but also how the wheels were put into motion on the biggest day in the US sporting calendar.

Over a year’s work seemingly paid dividends following a successful week in the desert. Everything went to plan, the match was a success, a good time had by all.

A record TV crowd of 114 million watching the action punctuated with a plethora of star spangled advertisements, costing around $4.5m (Dh16.5m) per slot, ensured it was a sensational denouement to a season of shame. Some though were unhappy before a ball was thrown and remain so.

“I totally believe we will lose money on this,” Glendale, Arizona, Mayor Jerry Weiers moaned in the build-up before revealing the city lost $1.6m (Dh5.8m) hosting Super Bowl XLII in 2008. He reckoned this year’s loss could be around $2m (Dh7.4m).

The accounts won’t be made public for another 12 months at least, yet there is always one perennial question posed in the aftermath: What’s the cost and who is footing the bill?

It’s a salient point, one which has caused anger and resentment peppered with the feeling of a job well done. It gets economists excited, the taxpayer and organisers less so.

It should be noted that geography of the region plays a huge part in its success. What works for Indianapolis may not be the case in New York.

There are some common themes.

Local authorities attempt to ease the pain with the insistence that in the long run, the area in question will benefit hugely from not only the influx of tourists but from the kudos of hosting the Super Bowl itself. A city like the Big Apple and their eight million inhabitants don’t need egos boosted and with the snow falling, fans weren’t flocking from all over the US when it was held there 12 months ago.

Yet for a place like Glendale –  population 226,000 – it was a huge deal.

Naturally, the NFL  – a $12 billion industry – holds all the aces when it comes to negotiations.

Estimates suggest hosting the event costs in the region of $50- $60m (Dh183-220m). Yet the organisation’s 1999 claim that a Super Bowl would bring a $670m (Dh2.4bn) increase in taxable sales in South Florida and a $396m (Dh1.4bn) increase in economic activity has had money men frothing at the mouth for years.

The number breakdown however is revealing. The NFL receives 100 per cent of the ticket sales. Considering the average price last weekend was $10,517.80 (Dh 38,623), that’s a good deal for commissioner Roger Goodell to have in place.

Most of the expenses incurred for staging the event are settled by the host committee through sponsorship revenues.

‘If I was a Mayor of a city I wouldn’t want to host the Super Bowl’ – Sports economics expert Andrew Zimbalist 

Yet the costs of improving transportation and infrastructure can leave cities with huge costs to deal with. Yes, thousands of fans will come and stay in hotels, eat in restaurants and visit bars. But, for example, those staying in places like the Hilton or Marriott aren’t expected to put their hard earned cash back into the community. Corporate offices miles away reap the benefits instead.
While those in Arizona are reluctant to talk figures, a recent release of the books from New Jersey following last year’s meeting of Seahawks and Denver Broncos  – the first ever outdoor winter match – said a great deal.

An eye watering $36.9m (Dh135m) of public funds (various authorities in the state of New York knew there would be no reimbursements) were used for security and to ensure the wintry conditions didn’t cause travel chaos. 

The NFL nor the organising committee contributed to that tidy sum. Then add on the expected total spending of $81m (Dh297m) which included media events and staging Super Bowl specific events in Manhattan. At well over $100m (Dh367m) it was the most expensive ever.

Naturally for a city like Manhattan, one which enjoys the fruits of a 365 days a year, money-making tourist machine, those costs can arguably be accounted for.

Perhaps that’s one sorry explanation for why Alfred Kelly Jr., the former president of American Express, was paid $3.6m (Dh13m) raising to over $4m (Dh14.6m) with compensation for being the CEO of the organising committee.

Shockingly, New Jersey, where the Meadowlands Stadium resides, saw no benefit whatsoever. Local businesses were forced to close on match day following a decision to mandate transportation ensuring fans were taken by bus straight to the stadium confines.

Experts insist those in Glendale and near-by Phoenix, where many of the NFL pre-game events were hosted, would not have enjoyed a huge economic boom. Far from it. Security and transportation costs trumped any potential profit. Furthermore, arguments between the various governing bodies in the state heightened tensions even more.

“If I was a Mayor of a city I wouldn’t want to host the Super Bowl. I would be very sceptical. There can be benefits, take Indianapolis for example, but it really isn’t clear if there is a net gain from any of this,” said sports economics expert Andrew Zimbalist.

“People in most of these smaller host cities are given a raw deal. The NFL has huge economic power and they are using it. Normally they urge teams to build brand-new stadiums with the promise of the Super Bowl. The NFL uses the Super Bowl knowing that public money will be used.”

Next year’s event is being touted as the Bay Area bowl – the golden anniversary in the Golden State  – ensuring the area’s 8.3 million population all get to enjoy the circus. 

Just like in Arizona, a lot of events are happening away from the main stadium. In Santa Clara’s case, 43 miles down the road in San Francisco.

Yet considering Silicon Valley giants like Apple, Google and Yahoo are already on board, Super Bowl 50 has arguably some of the biggest backers in history. 

And with 25 per cent of all money made from corporate partnerships and individual donations heading straight to local charities and non-profit companies, next year’s showpiece aims to stand out from the crowd.

“We want to be the most philanthropic Super Bowl in history,” Santa Clara CEO Keith Bruce (pictured) told Sport360.

“No-one has been so proactive in terms of fund-raising for charity. The digital economy of the world resides here and the backing of Apple, Yahoo, Intel and Google cannot be discounted. They are not normally big backers of sporting events but their help is invaluable.

“Not just with their funding but they will bring their latest technological developments for the fans to enjoy. It’s a great opportunity for them to show off.”

Leaked documents from 2013 show Bruce must build a Super Bowl Village, find two free venues to use for various activities, provide free Google Wi-Fi as well as media shuttles to and from Levi’s Stadium.

It also stipulated adding 1,500 temporary seats and taking care of all game-day staff costs up to $2m. Franchise owners would also be treated to free rounds at the prestigious Pebble Beach golf course, a dinner cooked by a world renowned chef and free use of Google’s driverless cars, if they’re brave enough.

Santa Clara, it’s over to you.

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