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The Economics of the Super Bowl PDF

51 Pages·2014·12.958 MB·English
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Crabtree Publishing Company www.crabtreebooks.com ECONOMICS OF ENTERTAINMENT ECONOMICS  OF THE  SUPER BOWL Lizann Flatt Crabtree Publishing Company www.crabtreebooks.com Author:Lizann Flatt Photographs and reproductions: Editor-in-chief:Lionel Bender Dreamstime.com: 1 bottom middle (Lawrence Weslowski Jr), 4 Editors:Simon Adams, Rachel Eagen middle left (Wisconsinart), 10–11 (Wisconsinart), 16–17 bottom (Lawrence Weslowski Jr), 18–19 (Sean Pavone), 20–21 top (Kenneth Proofreaders:Laura Booth, Wendy Scavuzzo D Durden), 20–21 bottom (Wisconsinart), 24–25 (Ragarwal123), 25 Project coordinator:Kathy Middleton top left (Jerry Coli), 27 top (Lawrence Weslowski Jr). Getty Images: Design and photo research:Ben White 6–7 (The Washington Post), 11 middle (Focus on Sport), 12–13, 22– Cover design:Margaret Amy Salter 23 (Boston Globe), 26–27 bottom (Boston Globe), 32–33, 33 middle Production:Kim Richardson (fstop123), 34–35 (Jeff Kravitz/FilmMagic), 36–37, 38–39 (Erika Print and production coordinator: Goldring) , 40–41 (Sports Illustrated), 41 top left (MCT), 42–43 Margaret Amy Salter (Toronto Star). Shutterstock.com: cover-bottom left inset (aceshot1), Prepress technician:Margaret Amy Salter cover-top right and bottom right insets (Anthony Correia), cover- Graphics: Stefan Chabluk top left inset (Ken Durden), cover-center (Richard Paul Kane), banners (aceshot1), icons (RTimages, Mike Flippo, Trinacria Photo, Nicholas Piccillo, Kletr), 4–5 (Christopher Penler), 8–9 (Richard Consultant:Laura Ebert, Ph.D., Lecturer in Paul Kane), 14–15 (Richard Paul Kane), 16–17 top (aceshot1), 28–29 Economics at the State University of New (Richard Paul Kane), 29 bottom (Richard Paul Kane), 30–31 York at New Paltz, N.Y. (Richard Paul Kane), 42 bottom (Padmayogini). AOL, Apple, iPad, Android, Coca Cola, AFL, NFL, Super Bowl, This book was produced for Fox, ESPN, NBC, CBS, Verizon, AT&T, Levi Strauss, MainGate, Inc. Crabtree Publishing Company by and other manufacturers and brands are registered trademarks Bender Richardson White. and/or are protected by copyright. They are usually given with a ™, ®, or © symbol. Library and Archives Canada Cataloguing in Publication Library of Congress Cataloging-in-Publication Data Flatt, Lizann, author Flatt, Lizann. The economics of the Super Bowl / Lizann Flatt. The economics of the Super Bowl / Lizann Flatt. pages cm. -- (Economics of entertainment) (Economics of entertainment) Includes index. Includes index. ISBN 978-0-7787-7972-8 (reinforced library binding) -- ISBN Issued in print and electronic formats. 978-0-7787-7977-3 (pbk.) -- ISBN 978-1-4271-7871-8 (electronic ISBN 978-0-7787-7972-8 (bound).--ISBN 978-0-7787-7977-3 (pbk.).-- pdf) -- ISBN 978-1-4271-7986-9 (electronic html) ISBN 978-1-4271-7871-8 (pdf).--ISBN 978-1-4271-7986-9 (html) 1. Super Bowl--Economic aspects. 2. Sports--United States-- Finance. I. Title. 1. Super Bowl--Economic aspects--Juvenile literature. I. Title. GV956.2.S8F53 2014 796.332'648--dc23 GV956.2.S8F53 2014 j796.332'648 C2013-907577-1 C2013-907578-X 2013043401 Crabtree Publishing Company www.crabtreebooks.com 1-800-387-7650 Copyright © 2014 CRABTREE PUBLISHING COMPANY. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or be transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Crabtree Publishing Company. In Canada: We acknowledge the financial support of the Government of Canada through the Canada Book Fund for our publishing activities. Due to rights restrictions and copyright protection, contents in this ebook may vary from the published original. Published in Canada Published in the United States Published in the United Kingdom Published in Australia Crabtree Publishing Crabtree Publishing Crabtree Publishing Crabtree Publishing 616 Welland Ave. PMB 59051 Maritime House 3 Charles Street St. Catharines, ON 350 Fifth Avenue, 59thFloor Basin Road North, Hove Coburg North L2M 5V6 New York, New York 10118 BN41 1WR VIC, 3058 CONTENTS WHAT IS THE SUPER BOWL?.....................................................4 An introduction to the Super Bowl and its huge popularity. How the Super Bowl and the NFL (National Football League) can help us understand economics. 1. SUPERNOMICS..........................................................................8 The U.S. football industry and how it affects economics. The history of professional football from 1920 to today. 2. WHO MAKES MONEY?.........................................................12 Where all the money comes from, who watches a Super Bowl, and why American cities compete to hold the annual event. 3. THE BIG GAME........................................................................22 Ticketing, sponsorship, merchandising, and other game-day attractions. The costs and revenue of hosting a Super Bowl. 4. MONEY MATTERS..................................................................30 The Super Bowl monopoly and its affect on TV commercials and the artists who perform at the halftime show. 5. OTHER BENEFITS...................................................................36 The tangible and intangible benefits of a Super Bowl. The benefits to the players and their salaries. 6. THE FUTURE OF THE SUPER BOWL.................................40 What does the future hold for the NFL and the Super Bowl? How and where will it expand, and is Europe the answer? Glossary........................................................................................44 Find Out More............................................................................46 Index..............................................................................................47 References...................................................................................48 WHAT IS THE SUPER BOWL? Two football teams battle on a field. The winner of this game, the Super Bowl, will claim the title as the year’s best team in the National Football League (NFL). Tens of thousands of fans cheer from the stands. Millions more watch on television, computers, and other devices. It’s an event that costs—and makes—millions of dollars. Why all the hype? Tickets to be in the stadium at Super Bowl XLV cost $800 each. People are willing to pay a high price to be at this one-of-a-kind event. 4 SUPER SPECTACLE The single game to determine the year’s winning NFL team makes the Super Bowl exciting. With one Super Bowl a year, you don't want to miss A stadium hosting a Super the game. The game is held on a Sunday in Bowl game is packed with January or February in a different city each year. fans. Only the first Super Bowl That city attracts many thousands of football in January 1967 failed to sell fans who come to the game. The city hopes these out all seats. people will spend money on hotels, restaurants, and other entertainment while they’re in town. The NFL is a producerbecause it makes the Super Bowl. It distributesthe Super Bowl by charging money for others to watch it through ticket sales and TV or Internet broadcasts. The NFL makes a profitfrom producing the Super Bowl. When businesses produce things to sell and make money, we call this capitalism. THE LAST FOUR SUPER BOWLS February 5, 2012 Super Bowl XLVI Lucas Oil Stadium Indianapolis, Indiana Winner: New York Giants FOOTBALL FOUNDER VINCE LOMBARDI The trophy hoisted by the winning team is called the Vince Lombardi Trophy. February 6, 2011 Lombardi was the coach of the Super Bowl XLV Cowboys Stadium Green Bay Packers, leading North Texas, Texas Winner: Green Bay Packers them to victory in the first two Super Bowls. He died of cancer February 3, 2013 February 7, 2010 in 1970. That same year, the Superbowl XLVII Super Bowl XLIV Mercedes-Benz Superdome Miami Gardens Super Bowl trophy was named New Orleans, Louisiana Miami, Florida Winner: Baltimore Ravens Winner: New Orleans Saints in his honor. Four different teams have won the Super Bowl in the last four years. 5 WHAT IS ECONOMICS? ECONOMICS Economicsis the study of how goods (such as shirts or footballs), services (such as a dental checkup), and resources (such as water or oil) get from the people that make or provide them (the producers) to the people who use them (the consumers), like you. The economic system used in the United States is called a market economy. In this system, everyone has the freedom to choose what goods, services, and resources they consume. To put this another way, when you use goods, services, or resources, you are a consumer. You consume or use things you need such as food, clothing, and a place to live. You will pay for these things because you need them. But what about the things you don’t need, such as a ticket to a football game? You might want a ticket. But if you buy one, that means you won’t be able to buy something else with that money. Of course, you can decide to consume things you want but don’t necessarily need. Economics often involves making choices. WHAT DO  BUDGETS YOU THINK? No person, business, organization, or government has an unlimited supply of There are a limited number of money, so everyone has to decide how much seats in a football stadium, so of their money goes toward the things they there is a limited supply of need and the things they want. A detailed plan tickets. If lots of people want to that manages money received, expenses, and buy tickets, would you expect available spending money is called a budget. the price of a ticket to be low When you make money, that’s called income. or high in price? What would  When you spend money, that’s known as an a demand greater than the expense. Many people make an income number of tickets available  working in the sports industry. When you do to the price? A price that decide to budget some of your allowance for changes based on demand  game tickets or buy a football to practice with is called elastic.  your friends, you are acting as a consumer and supporting the sports industry. 6 Money left over after you have paid all your bills and expenses is known as SCARCITY disposable income. You can spend it on a Pro-football The quantity of a good or service available is called Hall of Famer Jersey. the supply. The demandis how much of that good or service people are willing and able to buy. There's only one Super Bowl a year, which means there's a limited supply of Super Bowls. When there is a low supply of something relative to demand, called an excess demand, people are willing to pay more. Businesses can ask for more money for a product where the supply is scarce because lots of people want it and they're willing to pay more to get it. This in turn means more profit for the business. This is why prices are flexible. Supply and demand will always affect price in a market economy. It works the other way, too. If there's a high supply of a good relative to demand, called excess supply, the price will fall. NUMBER OF PEOPLE EMPLOYED 12,450 professional American athletes 22,140 umpires, referees, and officials 201,800 coaches and scouts 39,700 work in snow skiing facilities 68,300 work in bowling centers 342,300 work at country clubs or golf courses 491,760 work in fitness and recreational centers 1.17 million Americans work directly 245,800 work in retail 45,000 work in the wholesale in amusement and recreation sectors sporting goods stores trade of sporting goods Sport is big business in the United States. Almost 1.7 million Americans work in sports and sports-related industries. 7 1 SUPERNOMICS Just think of all the money that is exchanged at a football game. Every person bought a ticket, and maybe souvenirs, too. Did they drive a car to get to the game, or travel by train or bus? Consumers create demand for goods and services, which boosts the amount of money generated by those goods and services. 8

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