How the Big Game is a big deal for payments

January 30, 2020 10:18 AM

Given the Super Bowl's large audience of consumers and the ability to sway their future spending habits, businesses spend millions of dollars for the opportunity to air a 30-second TV commercial. This year a 30-second spot will cost up to $5.6 million on the Fox network-hosted Super Bowl according to CNBC, up almost 7% from 2019 when a spot on the CBS-aired Super Bowl cost $5.25 million.

But now more than ever, other forms of entertainment are competing for consumers' attention — last year almost 100 million consumers tuned in to watch the New England Patriots win Super Bowl LIII, down from the 2015 peak of 114.4 million in 2015 according to CNBC.

Even with viewership down, spending was forecast to be up. Those attending in person have paid for high-priced tickets and costly beers. Those watching at home are spending heavily on snacks and drinks. And the ever-popular Super Bowl TV ads will introduce viewers to even more ways to spend their money.

The number of consumers paying to place a bet on this year’s Super Bowl is expected to rise to 26 million, up from 23 million according to the American Gaming Association. This is likely due to a combination of factors.

While new teams playing in a championship game will always generate new interest, it’s not the only reason. The growth of legalized sports betting is making it easier and safer for American adults to wager their money on the outcome.

“Legalized sports betting is having its intended consequence of taking share away from the illegal betting market. Sports bettors are a more engaged audience,” said Bill Miller, president and CEO of the AGA.

Since the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act in May 2018, many state legislatures have quickly moved to legalize sports betting for their constituents. The AGA reports that 14 states are currently live with legalized sports betting, six states and the District of Columbia have legalized it but are not yet operational, and an additional 14 states currently have legislation in place for its legalization.

"A record 26 million Americans — more than 1 in 10 adults — will wager on the Super Bowl with more than 4 million doing so in-person at a brick-and-mortar sportsbook," Miller added.

According to the latest insights from the National Retail Federation’s Super Bowl trends, U.S. consumers will spend over $17.2 billion on preparations for this year’s game between the San Francisco 49ers and the Kansas City Chiefs. This year’s spending represents a 16% increase over last year’s total, and is also a new record, beating 2016's all-time high when Americans spent $15.5 billion for the event.

While it may be difficult to attribute the increased spending solely on new teams playing in the Super Bowl (sorry New England Patriots’ fans), the fact remains that the boost in 2020 spending does break the pattern for the last five years of spending that has risen and fallen between a range of $14 and $15 billion.

In other words, the change in the team lineup could be sparking renewed interest in spending.

For those lucky fans seeing the game in person at the Miami stadium, it will be a memory that they will never forget — nor will their wallets, for that matter. The average cost per person for attending this year's Super Bowl is $6,500, according to CNBC.

Stub Hub is selling tickets starting at $4,995 as of Jan. 28,while Ticketmaster offers tickets starting at $4,721. Rooms are averaging about $275 per night at two-star hotels, so a four-day trip will cost an attendee about $1,100 for the event. The average travel cost to Miami from a major U.S. city will also set an attendee back about $353.

While Super Bowl fans may be able to scrimp and save on food outside the event by frequenting fast food restaurants or buying at grocery stores, they won’t have such luck inside the venue. According to the website Cheapism, the average price of a beer at Miami’s Hard Rock Stadium goes for $9.50 and the price of a hot dog registers in for $6.75 a piece. Additionally, CBS Sports also reports that concessions expect to serve 2,700 Maine lobster tails, 6,000 servings of short ribs and 1,500 servings of beef tenderloin in addition to the basic hot dog.

Buying tickets last minute could add another expense: fraud. “Statistical evidence shows that ticket sales spike up to 60% within three days of gameday, and that is when we can expect the most fraudulent activity (beginning Friday, January 31st) this year," said Colin Sims, COO of Forter, in an emailed statement.

For the Super Bowl fans that intend to watch the game at home with friends and family, one thing is certain: There will be plenty of snacks to munch on during the game. According to SNAC International, the trade association of the snacking industry, Americans will eat 90 million pounds of snack foods on Super Bowl Sunday. That’s the equivalent weight of the water in 17 Olympic-sized swimming pools.

SNAC International examined last year’s sales, provided by IRI, from Super Bowl week compared to the prior week and found significant increases across the board for many snack food categories. The increase in dips for both dry mixes and refrigerated versions were up by over 50% and 33%, respectively. Not to be outdone, tortilla chips sales were up 24%, pretzels were up 14.5% and potato chips were up almost 12%.

Americans will be washing down all of those snacks with more than $1 billion dollars worth of beer as it remains the alcoholic beverage of choice among adults watching the game. Last year, consumers purchased about $1.2 billion in beer, $568 million in hard alcohol and $652 million in wine according to a press release from the Beer Institute.

While it may be hard to admit for most die-hard football fans, a key part of watching the Super Bowl is viewing the TV ads that air during the event.

For women, viewing the ads is equally as important as viewing the game, according to the National Retail Federation’s survey of adults about the most important aspects of the Super Bowl event. Twenty percent of women reported that the commercials were the most important aspect, while only 19% said it was the game.

Since TV commercials provide such a wide audience, it’s difficult for many consumer-facing companies to pass up on such an opportunity to introduce new products or offerings. This year, the Little Caesars pizza chain announced that it would be running its first-ever Super Bowl commercial during the third quarter to introduce its new delivery service, which it is touting as “America’s Best Value Delivered” and being “the best thing since sliced bread.” Actor and comedian Rainn Wilson, best known as Dwight Schrute from “The Office,” will feature in the spot as the CEO of Sliced Bread Inc.

According to Ad Age, Discover will have two 15-second ads during the fourth quarter to demonstrate Discover’s acceptance rate at most stores and the lack of an annual fee.