The economics of Super Sunday

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Hi, welcome to Mobile Money by Moomoo. I'm your host, Justin Zacks, vice president of Strategy at Moomoo Technologies. I spent my whole career in and around financial markets. This is a show that helps investors gain a better understanding of markets and their money. Winter is here and that means playoff football, which culminates on Sunday, February 11th in Allegiant Stadium in Las Vegas, Nevada, at Super Bowl 58.

The big game started in 1967 from humble roots and has become big business for the teams, the league, advertisers and many stocks which operate in or around the industry. I will also discuss the Super Bowl indicator and whether or not you should be adding it to your trading arsenal. The big game is broadcast over 130 countries in more than 30 languages, and in the US it's extremely popular.

Over 100 million viewers. To give you an idea, about 40%, a little over 40% depending on the year. Of people with television sets. Watch the Super Bowl. While viewership is relatively steady with a lot of people watching the game. Ticket prices are anything but the average ticket price in 1967 for the first game was about $10. And if you adjust that for inflation, you're talking about $90.

Expensive, but not a bank breaker as it is today. So to give you an idea of what it costs today, resellers at a minimum are asking about $6,000 a ticket and some tickets cost as much as $85,000. And those are for just the people that watch the game in person that are going to go to Las Vegas. And again, they have to pay their flight.

They have to pay for their hotel rooms, which could be very expensive. When you have a Super Bowl in a city, they tend to jack up the rates, all the dining, all of that not included in the ticket price that just gets you into the game. And then for people that are watching the game at home, I recently saw a survey where they said Americans plan to spend about $115 on different expenses for their watch.

Parties are going out. You may already know it's big business, but a lot of you are probably wondering, well, can I make money from the Super Bowl in the stock market? And there is something called the Super Bowl indicator. And this is basically a theory that the Dow Jones Industrial Average will end the year with a gain if a team from the NFC or the National Football Conference or with NFC roots wins the Super Bowl.

And it would be the opposite if an AFC team wins. Person that figured this out was a sportswriter for the New York Times. His name was Leonard Kopit, and he first introduced this indicator in 1978. And again, there wasn't many Super Bowls at that time. They were just a little over ten Super Bowls. And so up until that point, that indicator had never been wrong.

But it comes with a caveat. And what I'll tell you is he looked at teams, some of the teams that were in the AFC, like the Pittsburgh Steelers originally were in the NFC. So he counted them as NFC teams in Pittsburgh in the seventies, won four Super Bowls and have won six Super Bowls overall. And so that led the lot into influencing the market.

If you take that out, if you put them in the AFC, then he would have only been right, whatever, 60% of of the chance. So you can see this indicator is not always correct. So as soon as someone discovers something like this, of course it's bound to go wrong. And it hasn't been as correct. And we look last year, 2023, the Chiefs won and they're an AFC team.

And so the market should have gone down. Look, we had a huge rally the previous year. The NFC Rams won, which meant the market went up or should have went up in 2022. And we had a big almost 20% down year in the S&P 500. So what you really have to think about is the statement correlation does not imply causation.

This is really about falling into a trap of coincidence and randomness when you're evaluating your investments. This was back, I think, in the seventies. They they looked at violent crime rates and ice cream sales and found that they were correlated. But really what they failed to take into account for was the hot temperatures. And that hot temperatures caused people to go out more.

They were all on the street more and this caused more violent crime. And it just happened to be that you had more ice cream sales. But just because you're selling ice cream doesn't mean it's related to violent crime. To find causation, you really need to have experimental data, not just observational data. That's the important part to think about when making this investment.

No matter which team here wins the big game, don't go out and buy stocks or sell stocks just because a certain team wins. So you might be wondering that does it work? But are there other things that might work? And one thing that does work slightly is the performance of stocks that run Super Bowl ads. I'm sure everyone knows the Super Bowl ads.

A lot of people actually tune in for the game just for the ads, not necessarily to watch the game. And so there was a study done out of the University of Wisconsin La-Crosse about how stocks of companies that advertise, how did they do so that basically they measured a ten day trading period from the Monday before the Super Bowl to the Friday after.

And they saw that stocks that ran ads outperformed the S&P 500 by about a percent. So it's kind of really interesting, but it does make sense. These companies are getting a lot of exposure. There on the mind. So people might go out and buy them at that time. But that doesn't mean that those stocks might not revert back to the mean later on.

And on top of that, these ads are not cheap. They give you an idea of of some of the costs. In 1967, the first Super Bowl ads cost about $40,000. This is for a 30 second spot. And now this price is right around $7 million. Really crazy. So these companies are spending huge amounts of money for that exposure. 30 seconds still get 40% of the U.S. population watching them and in terms of the companies, most of them are the biggest companies because they're going to have the biggest reach.

But there are stocks that are smaller that do run ads and their stocks may get a big bump. For instance, probably the most famous example was RadioShack. And RadioShack was struggling. And back in 2014, they ran a Super Bowl commercial called the eighties called They Want their Store Back. It was very popular and caused the stock to go up by 7%.

Obviously, that's not going to happen in every case. But you do see these cases where some of these smaller companies could get a bump when they run ads. And the interesting part is doesn't really matter according to the study, doesn't really matter how good the ad is. It's more about the exposure itself. So just because an ad is super highly rated by audiences or people think it's really bad, it doesn't necessarily affect the stock performance as much as just having the ad to begin with.

Most famous ads come out of some of the biggest brands that are really tied to the big game and what they're trying to get across. And probably the ad that kicked it all off and became the most one of the most iconic ads of its era was for Coca-Cola. And it was called Hey, Kid Catch. And this was with me and Joe Green.

And Nigel Green was one of the defensive linemen of the Steelers. This was in 1979. And he is known for being really tough and nasty on the defense. He was a really big guy. He was nearing kind of the end of his career. You could see the pain and weariness on his face in the ad, but then it really showed his softer side when this kid comes up to him and and they he ends up giving him a Coke and then Joe reciprocates and gives him the jersey at the end of the ad.

And this really showed how Coca-Cola could bring people together. And it's something that became very important for its brand across the world. Probably maybe the most famous television ad ever placed was placed on the Super Bowl. And in 1984, Apple was debuting the Macintosh computer. And it was kind of a play on George Orwell's book, 1984, which was this decent topic of future.

The Macintosh was portrayed as a way to save humanity from conformity, in that you could be different. And so it was just blasting these old PCs and in with the new Macs, and you had these people marching in unison and there's a woman that comes in all in athletic gear and she has this big hammer and she's just smashed in the status quo.

And it really became a calling card for Apple in the future of being different and being innovative with its technology and something that they still do as a brand to this day. Apple's actually sponsoring the halftime show. And we'll talk a little bit about that later in the podcast. Some of the other well-known ones are Snickers with Betty White, and it sort of reinvigorated her career where she plays football, which was really kind of a funny one.

And more recently in 2015, Always like a girl campaign from Procter and Gamble really tried to tackle things that were going on in society around a young girl's confidence when she reaches puberty. And it's really became a real empowering movement. And it's something I think the NFL has tried to move into in football in general has always been kind of a male dominated sports, but it's gaining female viewership and advertisers are really trying to capture those female viewers.

One of my personal favorite Super Bowl ads is Wendy's Where's the Beef? And it had several older senior citizens at a hamburger place and they're ordering the hamburger and they open the bun and there is almost no hamburger there. It's all bun, maybe a little bit of a really sad looking pickle. And it really showed that Wendy's wanted to differentiate itself from Burger King and from McDonald's, saying it had juicier beef, bigger patty, these types of things.

And and so they came up with the tagline Where's the beef? And it became a really popular tagline throughout the 1980s. But if you want to talk about the company that's probably done super Super Bowl ads better than any other is Budweiser. And you look at probably they have had six or seven excellent campaigns. What's up, 1999 football, 96, the Budweiser Frogs where they go, Budweiser, 1995, more recently, 2014 Puppy Love and who can forget the Bud Bowl where they had these beer bottles moving around the football field in 1989.

So, yeah, they've done some of the best advertising and they're almost always there. The car companies are usually very involved and this year, for the first time in, I think 23 years, they won't be there. So it's very interesting to see what will happen around that and what's going on in that industry. So those are stocks to watch going in and very interested to see what some of these car companies will say, why they're not doing Super Bowl ads and, you know, why they feel that it's not relevant for them this year.

So you may wonder, you know, which stocks do these ads, Why do they do these ads? And usually they're falling into one of two categories. And this is not always, but it's the usual. One is they're a national brand that has a huge market share already and can reach A lot of people think Coca-Cola, they have, I think, a volume share over 45%, Pepsi, about 25% volume share in carbonated beverages.

Anheuser-Busch, the Budweiser InBev, they have about a 40% market share in the beer market in the United States. And then there's the ones that are adjacent to what's going on in the Super Bowl that are athletic apparel like Dick's Sporting Goods or Nike. Think about Wingstop. Think about all the chicken wings that are eating. I heard one number about almost 1.5 billion chicken wings will be eaten during the Super Bowl.

It's really crazy how I mean, the Super Bowl is really invented, people eating chicken wings because sports bars at that time, they were really going for something a little bit cheaper than your pork or your beef, something people could share with each other and just go to a sports bar, sit down, you know, buy a big plate, a wings for you and your friends at Tiffany's may get a little bump now owned by LVMH, but Tiffany's has been producing the championship trophy.

The Lombardi Trophy. Advertising is not the only part of in the commercials, are not the only part of the business of the big game. There's also the halftime show. So the normal halftime is like 15 minutes. And I think, you know, during the big game, it's probably somewhere around 30 minutes. And so they have an invite, usually a very well-known artist to perform and the performers actually perform for free.

A lot of people don't know that, but they perform for free. They do cover expenses and production costs. But a lot of people ask, well, why would anyone do that for free? And it's really about that exposure that you're getting. To give you an idea, last year, Rihanna performed at the halftime show and her music experienced an over 200% increase in on demand streams and a 390% increase in digital song sales.

Over all this big game we have. Usher is 45 years old. He's had eight studio albums from 1994 until 2016, but is releasing a new album called Coming Home in conjunction. Last year they had Apple Music produce the show and they will be producing it again in so Apple also gets exposure for this. And I saw a statistic that said last year's show, the halftime show, delivered a $21.5 million of brand exposure for Apple Music during its broadcast.

And this is according to Reload metrics, another performing artists by the name of Taylor Swift has also had a big influence on the NFL this year due to her boyfriend, Kansas City Chiefs tight end Travis Kelce. And there's been a little bit of a debate on whether Taylor Swift is good for the NFL. And recently there were comments from former coach and current announcer Tony Dungy, who said Taylor Swift is part of the reason why fans are disenchanted with the NFL.

And he said, quote, There's so much on the outside coming in, entertainment value and different things taking away from what really happens on the field. It's a very interesting take. But there's been a lot of people supporting Taylor and there's been a lot of people thinking about what the NFL really is. Is this some type of athletic idolatry or is it entertainment or is this like the Greek Olympics where there are pure amateurs?

No, they're getting paid money and they're also getting paid as sponsors. A lot of these players are influencers and they are appearing in a lot of these ads. One of the biggest ones is actually Taylor Swift's boyfriend, Travis Kelce. His co manager, actually called his $14 million salary a side hustle compared to the amount of money that he earns from all these endorsements.

You'll probably see him on commercials for half a dozen brands during the season. That being said, the NFL's continues to reinvent itself and continues to find new ways to entertain. A lot of people don't think there's anything necessarily wrong with that. A lot of people can watch the games for a lot of different reasons and they all can enjoy it.

That is a microcosm of the big game itself. Some people will watch because it's their favorite team. Some people just love football. Some people are watching for the commercials. Some people are watching for the news. And so whatever your reason to watch, go ahead and do it. You know, please enjoy and let me know if you think this Super Bowl indicator has any merit.

As I explained, I don't see it happening very much. But I do want to know any individual stocks affected right in the comments. Let us know and I'll see you next time on the next podcast. Thank you so much. The opinions expressed are those of the host and any guest speaker and not necessarily those of Moomoo Technologies Inc or its affiliates.

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