This was war! Since its inception seven years earlier, the upstart American Football League (AFL) had fought the National Football League (NFL) for players, fans, television revenues, and respect. The successful new league had won everything except, respect. On January 15, 1967, the first World Championship game against the AFL and the NFL took place. The powerhouse NFL champions the Green Bay Packers against the AFL champion the Kansas City Chiefs. What ended in a 35 to 10 loss to the NFL, the AFL earned its long sought after respect. But the winner that day was not the AFL or even the NFL; it was professional football.
January 15, 1967, was the first-ever Super Bowl. A few seasons later it was the Super Bowl who merged the two leagues into what we all know it as today, The National Football League. Thirty-four years later the Super Bowl has become Americas most-watched sporting event. It is often the most-watched television program each year, and nine out of the top 15 shows in history are NFL championship games according to Nielsen Media.
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The popularity of the Super Bowl has seen television networks like NBC, CBS, ABC, and FOX fight it out each year for the contract rights to broadcast, this much-anticipated event. Many factors contribute to the broadcasting networks’ struggle to obtain the rights to air the Super Bowl, mainly advertising dollars and television ratings, but it’s not always worth the fight.
A Brief History of Sports on Television
In 1960 the AFL sold its rights to ABC. The NFL and CBS agreed to broadcast rights in 1961. But also in 1961, Congress passed the Sports Broadcasting Act, which permitted leagues to act as cartels in the negotiation and sale of their broadcast rights. This led the NFL to make arrangements, which all networks got some games at some times. When the broadcast rights were sold on a club to club basis, fans got the chance to see their local teams’ away games. It bought a new dimension to the avid sports watcher that has never been seen before in the professional football league.
Over time, television increased the club revenues drastically. After the AFL and NFL merger, the Super Bowl, in particular, began to be tossed between different networks mainly CBS and NBC. CBS form 1967 to 1984 aired the Super Bowl ten times while NBC aired it nine times. The rating began each year to drastically increase more and more while the popularity of the sport and the implementation of a more organized television contract became apparent. In fact, the rating increased shockingly fast from 22.6 per cent in 1967 to as much as 49.1 per cent in 1982.
Under the NFL contracts with CBS, NBC and ABC that expired in 1981 each of the twenty- eight teams in the league received about $5.8 million dollars. In 1982 a new contract was reached in which the networks paid the teams an average of $14.2 million a season. But in 1987 when that contract was up, negotiations became rather difficult. In his book Playing for Dollars, Paul Staudohar states “During the last two years of the old agreement advertisers were less willing to pay large fees, which caused the networks to lose money.”
And as though no negotiation was in site cable television emerged and entered the scene as an active bidder for broadcast rights. ESPN a 24-hour sports news channel, which was owned by ABC, agreed to pay 50 million dollars per year for eight regular-season Sunday night games. In fear of losing all rights to cable networks, ABC retained its rights to Monday night football and CBS and NBC to Sunday afternoon football games.
In 1990 the NFL again reached agreements with NBC, CBS, ABC, and ESPN and added a new cable partner Turner Broadcasting. The contract called for a total of 3.65 billion dollars with 32.6 million per team. Each next term of contract saw the NFL prospering more and more until recently. During the late part of the ’90s when teams were receiving more and more money, free agency loomed its ugly head.
Teams began to purchase talent and dynasties became extinct, hence Super Bowl rating began to fluctuate more and more. NBC became the most used network to host the Super Bowl, four out of the next eleven years form 1990 to 2001, while CBS, FOX, and ABC held 3, 2, 3, times respectively. And in 2001, Super Bowl 35 saw its lowest television (CBS) ratings since 1992.
Trouble for Television Begins or Does It?
Advertising Helps Out
Nothing seemed to go CBS Sports’ way during Super Bowl 35, dragging the television ratings (40.3) the lowest since the abysmal Super Bowl of 1992. The record low 60 per cent share was the lowest since 1992’s and 1999’s Super Bowl which held a 61 per cent share. The only other Super Bowl since 1971 with a lower rating was the 1990 Super Bowl 24, which saw a 39.0 per cent rating.
Still, CBS estimated that 131.2 million people watched at least part of the 2001 Super Bowl, according to Nielsen Media Research. The network had not promised a minimum rating to advertisers, who paid an average of more than 2 million dollars per 30-second commercial spot during the telecast. In an interview by the Associated Press about the dismal rating Super Bowl 35 received, CBS Sports President Sean McManus said “We’re absolutely thrilled from every standpoint…Other than having some control over the score, I don’t think I would have done anything differently.” Apparently pleased with the outcome of Super Bowl Sunday, but why?
It’s a well-known fact that air-time during the Super Bowl is the most expensive in the world. Based on the Super Bowl’s massive reach, it has become something of a tradition for advertisers to try and outdo each other. For the first year in a long time, CBS was having difficulty selling space. 86 ads ran during the Super Bowl most from the usual-suspects, cars, fast food, beer and telecommunications.
A recent study report by Clickin Research Incorporated of the impact of Super Bowl advertising on brand recognition and likeability found that during the 1999 Super Bowl the total viewing audience that watched at least 1 minute was 127.5 million and the average viewing audience was 83.7 million. This 83.7 million resulted in the second lowest-rated Super Bowl since 1971. Yet, FOX generated 150 million dollars in advertising revenue, with 85 product commercials being aired during the game. Being mainly form fast food, automobiles, and alcoholic beverages. The cost of a 30-second commercial was 1.6 million dollars. So as one could see even if ratings fall; as long as the network can fill the time to advertisers then revenue will be obtained.
The report also showed familiar brands like Pepsi, and Mastercard showed little change in likeability and brand recognition. In contrast, the less familiar brands like “dot-coms” showed a much larger increase in brand recognition and likeability after their Super Bowl exposure. The before mentioned study at Ithaca University found that eight per cent of those watching the Super Bowl tuned in just to watch the ads.
This all begins to show how the Super Bowl has created niche superiority for advertisers. This is why the major networks struggle to telecast the Super Bowl each year. Because the niche for reaching mass audiences satisfies advertisers they don’t mind paying more money each year even if ratings are staggering during the Super Bowl. No other sporting event can produce an audience like Super Bowl Sunday, so even as networks see ratings decline the ad revenue they receive outweighs the drop in viewership.
The Current Environment
Today television networks reek at the benefits of hosting the Super Bowl. In today’s economy where sports are looked upon as being the number one entertainment segment and escape function from the real world, networks gain loyalty and likeability when hosting such events. Take for instance the 2001 Super Bowl on CBS; although, they had a dismal rating most of the 40.3 per cent of viewers stayed glued to CBS after the Super Bowl to watch the season premiere of “Survivor.”
In the 1999 Super Bowl FOX ran promotions for their new show “The Family Guy” when the show premiered it was one of the top shows of the week. So in retrospect, television networks pay money to achieve more than just money, they get in return a new fan base perhaps higher ratings on new shows and loyalty that has no value.
In her book, Television and National Sports Joan Chandler say that “the success story would seem to indicate that professional football owes its present popularity entirely to t.v.” I tend to disagree with her, on the basis that football these days has becomes the most-watched sport in America, and because of this, networks should be grateful for football, not the other way around.
Granted sports franchises gain most of their money through broadcast contracts but imagine with the rise of cable systems, how many networks would love to air football? Turner Broadcast host 2-3 games per season, which makes one think that they would not love to get their hands on a prime-time package of football games given the opportunity. Advertising revenue alone make football an asset to your network, and as stated before, even as ratings slip further and further down during the Super Bowls, audience reach will still attract companies to advertise.
I agree with Steven Barrett when he says “television did not create American football, nor will it break it. This marvellous, complex sport, so satisfying to watch, will only die if those who play and organize it allow it to be turned simply into a means to a profitable end” in his book Games and Sets. He basically has said that television and football do not depend on one another to exist in today’s economy, where high player salaries and free agency determine the outcomes of the games. Television can exist without football and football without broadcast television.
As for competition in the field, no other sporting event has the reach to encompass America’s homes like the Super Bowl. The Super Bowl stands alone, as the only one of its kind to supply mass audiences within a three hour time period.
Challenges and Opportunities
The opportunities for television networks to receive revenue is basically endless. The Super Bowl has created such a niche for advertising that advertises will stay to pay millions of dollars to retain exposure. Familiar clients like Pepsi, Visa, Mastercard, Budweiser, and McDonald’s will always be there to give money to obtain mass audiences. It has become a duel rather than a process for the above-mentioned clients. Brand loyalty, recognition, and likeability already exist within these companies, reaching mass audiences are only to show who can make the best new ad.
Another opportunity will be to continue where last years half time special left off. Super Bowl 35 gave way to dazzling performances by Britney Spears, NSYNC, Aerosmith, Nelly and Mary J. Blige all together on one stage. Performers such as these combined with a grand stage of decorations, lights, and special effects; made the 2000 half time special amongst the most-watched special in Super Bowl history. CBS benefited from this because viewers did not tune out as much then in previous years. Ratings can stay strong with half time special like the one from last year.
Last year also saw technology firms investing heavily in Super Bowl ads, with “Digital Economy” advertisers accounting for 47 per cent of the game’s television commercials. Again the opportunity is there to sway these technology firms to advertise again; perhaps their perception has changed since this year’s embarrassing rating. Perhaps whomever the lucky television network who lands the Super Bowl has some work to do if they want to obtain the most ad dollars as possible.
Since ratings are steadily declining presently, it is getting harder and harder to sell space during the Super Bowl. A challenge to television would be to find companies that don’t usually advertise during this period. A great area to look into would be “dot-com” or e-commerce startups. Although that might view this ask a risky chance, it would benefit both greatly. In the report by Clickin Research Inc., they found that little known dot-com firms that advertise have made big gains in name recognition and likeability.
Internet hits to those web-sites increased greatly after their exposure during Super Bowl 34. Chief Executive Kelly Wanser of Epidemic.com said, “it’s definitely worth the money. The site traffic was very strong. I was very pleased with that aspect of it as well as the number of people that requested service.” Yet in 2001 the cost of advertising time increased by 13.6 per cent to 2.5 million per 30-second spot. So many dot-coms did not show to advertise during Super Bowl 35.
Another challenge that exists is getting higher ratings during the Super Bowl. Television networks have no control over who plays and how entertaining the game might be. With the rise of free agency, no team is unstoppable for seasons at a time. There hasn’t been a true dynasty after the early ’90s, which belonged to the Dallas Cowboys. Denver has been the only team to win back to back Super Bowls after the Cowboys did. So far, this season is proof that even the defending champions Baltimore Ravens who are sitting at a 7-4 win-loss record might not repeat. Because of free agency, ratings might continue to fall, and networks must sit back and anticipate and hope for the best outcome.
My predictions are very optimistic and simple. Running an ad during the Super Bowl is clearly attractive to many companies, with the obvious potential to jump-start a new e-commerce company. It is essential that networks seek out those that are new to the e-commerce industry and perhaps sway them to advertise during the Super Bowl. Because of the declining ratings many of these start-ups don’t have the guts to advertise during the Super Bowl. If networks continue to sit back and wait for companies to come to them eventually it will get harder and harder to fill the spots needed to maximize revenue. Start-ups would be a great place to start convincing about the niche superiority that the Super Bowl holds.
A few good ideas to work with would be to lower the amount of money needed to advertise per 30-second spot, to these new start-ups. Show an incentive for their business, because it is from them whom networks receive their revenue from. Another incentive might be to bundle advertising space during the Super Bowl and on their website SuperBowl.com, which attracts many Internet surfers on the days leading up to and after the Super Bowl. Double exposure for the same price you would sell to McDonald’s and Pepsi, but throw in the web-site.
I believe that ratings will increase this year, mainly due to the attacks on September 11th. Many people now hold sports closer than ever to there heart and homes. Perhaps ratings will increase each year but that is up to the level of entertainment and excitement that pro football brings to the table. Having the power to reach across millions of homes each year is something that is truly a gift.
Having the superiority that the Super Bowl holds, advertisers will continue for many years to come, to true to out advertise each other and gain better brand recognition. It’s in our competitive hearts that we strive for excellence, just like in 1967 the AFL only wanted respect, and even with a loss in our first-ever Super Bowl, respect was gained yet the competitive edge never disappeared. And thirty-four years later Americans sit at home on that marvellous Sunday afternoon and watch our competitive hearts at work.
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