Tickets to see this year's frigid battle between Seattle and Denver would have cost no more than $85 if they had kept pace with the government's perspective of inflation (CPI). If Super Bowl tickets had tracked the S&P 500's reflationary trajectory, they would cost $275. Instead, in what is the biggest surge in face-value prices YoY ever - more than doubling last year's - the highest Super Bowl tickets this year cost $2,600 face value, a record high.
However, resale tickets – where the market really sets the price – tell a quite different (and more) negative story.
As ConvergEx's Nick Colas notes, in the 48 hours prior to the weekend before Super Bowl XLVIII, the average price paid for a ticket was $2,505, which ranks as the cheapest since the 2010 game. Prices have fallen fast, too, down almost $1,000 and more than 27% in just three days. Meanwhile, current hotel and airfare inflation for the New York area isn’t even close to what New Orleans experienced last year.
Note from Nick: Is New York City “The best corner in the game” to host a Super Bowl? You’d think so, given Gotham’s popularity as a tourist destination and first-class sporting venues in New Jersey to showcase the actual event. And you’d be wrong. This year’s game has less of the frenzied pricing for tickets, rooms and amenities compared to past events. Beth’s been looking at Super Bowl economics for the last four years and has all the details here.
It was billed as the most expensive Super Bowl on record, but it isn’t. Despite Costco selling trip packages starting at $14,000 for two people and the National Football League (NFL) jacking up its maximum face value ticket price by more than 100%, a Super Bowl experience is a relative bargain-buy this year. And while it didn’t pan out to be the priciest on record, the 2014 showdown between the Denver Broncos and the Seattle Seahawks is indeed the “most amateur” in 32 years. Peyton Manning is the only participant to have a Super Bowl ring; just three other Broncos have been to the game without winning; and no Seahawk has ever played for an NFL championship. In other words, this year’s game showcases the fewest players with prior Super Bowl experience since 1982.
Which generally means both teams are really, really hungry for a win. And coupled with the relative wealth of the New York City metro area, it wasn’t unrealistic to expect record high costs of attending the game. Regardless, we analyze pricing surrounding the game every year, because in addition to being the most popular game in America’s most popular sport, the Super Bowl is also a useful case study in economics that allows us to gauge both the confidence of high-end consumers as well as the pricing of temporarily scarce resources. The game occurs every year at roughly the same time, so this year’s data is comparable to other periods. And obviously, the content is the same. We summarize the costs of attending the 2014 edition below.
We’ll start with the ticket price to the game. Getting into Super Bowl I in 1967 would have cost you $12, assuming you were lucky enough to pay face value to the NFL, which as we know today is no easy feat. From there, stated ticket prices went to $50 in 1984, $100 in 1988 and $500 in 2003. Today, the prices printed on the ticket for Super Bowl XLVIII in East Rutherford, NJ are between $500 and $2,600. The NFL actually reduced the price of its cheapest ticket by $100 this year, but boosted the maximum price by 108% from last year’s $1,250. The logic behind this huge price increase involves the population density of the Northeast, the probability for a greater number of fans driving to the game (saves money on airfare and rental cars) and the NFL’s desire to close the gap between resale and face value prices.
However, no one pays sticker price with the exception of very lucky lottery winners (roughly 30,000 entries for a chance at one of the one-thousand $500 seats), close friends and family of NFL players and coaches, and lucky season ticket holders for one of the two Super Bowl teams. The “street price” always sets you back a bit more, but this less so this year than in recent years. Resale prices started out high – $2,700 on average the Monday after the conference championship games – but fell fast and fell sharply. As of January 24, with nine days to go before the Super Bowl, the cheapest price in the aftermarket was $1,779, which was $409 less than the same period a year ago and $809 less than in 2012. By Monday, January 27 we found an upper-deck seat available for $1,242.
As for the cost of a plane ticket, it’s considerably higher than normal this weekend, though airfare inflation is nothing compared to what visitors to New Orleans experienced last year. A nonstop, roundtrip flight from Denver to the New York area this weekend goes for about $480, compared with just $230 two weeks from now, or an increase of 196%. Flights from Seattle to New York are available for $752 this weekend, versus $328 on a typical weekend, marking a 129% inflation rate. Last year’s matchup between the Baltimore Ravens and the San Francisco 49ers in New Orleans resulted in airfare inflation of 335%.
The difference in hotel inflation this year is even starker. The cheapest room still available within five miles of the Meadowlands is at the Knights Inn in South Hackensack, NJ; this 2-star accommodation is going for $133 a night, or 85% more than its usual nightly rate of $72. For a more upscale experience, the Four Seasons in Manhattan has rooms available for $1,150 a night, or 82% more than the normal $633 nightly rate. As of press time, there are plenty of rooms still available (ranging from 2- to 5-star options); last year though, the only choices this late in the game were 3-star hotels in the $2,600 to $2,700 range outside of downtown New Orleans. Inflation there was as high as 1,645%.
Corporations, too, are getting somewhat of a break this year. The cost of a 30-second ad stands at an exorbitant $4 million, but that’s flat from last year, when big companies faced a 14% markup from 2012. Still, $4 million is tied for a record high, and the ad slots sold out months in advance of the game. And as an indication of the relative importance of football versus baseball and basketball, Super Bowl ad sales generate more revenue than ALL of the World Series and the three game of March Madness Final weekend.
So what do we gather from all of this data? At first glance, it would seem as though the mood of the high-end consumer is a little gloomier than in the past couple of years. Resale ticket prices – where the market really sets the price – imply more about the economy than NFL-mandated pricing decisions, and this year’s aftermarket is quite soft and getting softer by the day. And yes, the cost of traveling to New York City this weekend is more than double the norm, but it’s relatively “cheap” versus what New Orleans experienced last year.
To be sure, there are some noteworthy economic signals in the data, but a couple of distinct factors indicate that a lukewarm economy is note the sole reason for this year’s relatively soft pricing. First, the abundant supply of hotel rooms in New York, as well as a total of three major airports in the area, means that resources for getting to the game aren’t as scarce as they are in most other cities in the country (i.e. New Orleans). It’s basic economics – more supply equals less pricing power. Also, East Rutherford was blanketed by over a foot of snow last week, and the current forecast for Super Bowl Sunday calls for a high of 38 degrees. It’s really no surprise that a lot of people prefer to watch the game from the comfort of their own living room, especially with the super technologically-advanced TVs these days.
Luxury items are of course a good way to gauge the relative health of the upper middle to upper classes, though pricing a “Bucket list” item (such as the Super Bowl) is a bit harder than just luxury goods in general. Next year’s game in is Glendale, AZ; it will be 73 and sunny on Sunday. Since there is a Super Bowl every year, perhaps some people are waiting for a more climatically appealing destination before crossing this item off their bucket list. True fans, however, will show up regardless of the conditions – they’re not in it for a fun vacation. The NFL must have understood the pressure on pricing from a cold weather game, and its decision to hold the game in the Northeast in the dead of winter actually made the experience more affordable for diehard fans. As a result, this year we’re uniquely able to isolate the value of the event to the true fan versus the event-driven bucket list person. It is certainly enough to command a premium for tickets, airfare and lodging. But we’ll likely have to wait for next year’s Super Bowl to have a reasonable economic comparison point to past warm weather games.