In my house, today is all about Super Bowl XLIX. Yes, we'd rather see the Eagles playing (to be fair, we didn't expect that to happen this year) and yes, I've had to have some interesting conversations with my kids about cheating (my son was a Tom Brady fan until recently - now, he's not so sure). But we'll still be parked in front of the television with 112 million or so other viewers to watch what is generally regarded as the television event of the year.
The amount of money that goes into this moment is staggering.
Players' salaries. The highest paid players in Super Bowl XLIX raked in a base salary of $58,780,000 this year. Granted, that's a bit misleading since it doesn't count bonuses: Tom Brady makes a mere $2 million this year in base salary - less than his kicker, Stephen Gostkowski - though he snatched up $30 million in signing bonus just two years ago. Those base salary numbers also don't include achievement bonuses, front loaded contracts or endorsements.
Coaches' salaries. The New England Patriots' Bill Belichick brings home an average salary of $7.5 million per year while the Seahawks' Pete Carroll - who just signed a contract extension in 2014 - is thought to top $8 million per year.
Assistant coaches. Equipment managers. Sports therapists. Cheerleaders. There are a great deal of personnel and costs attached to a National Football League (NFL) team that makes it to the Super Bowl. The NFL is a multi-billion dollar business - even those teams who won't be at the big game still pay out millions of dollars to players, coaches and support each year. And while the NFL may enjoy tax exempt status under section 501(c)(6) of the Internal Revenue Code, not all dollars escape taxation. Those millions of dollars in salaries? They are still taxable.
Also a big dollar generator? Taxable ad revenues. NBC expects to rake in somewhere approaching $360 million in television ad revenue tonight. That's based on an average cost of $4.5 million per each 30 second spot. Companies shelling out those kinds of dollars include perennial favorites Anheuser-Busch (
That Super Bowl halftime show? Pop star Katy Perry won't pay to play the Super Bowl this year - and she won't be paid either. The NFL will, however, pick up the tab for the cost of producing the show, thought to be in the millions.
I know. You get my point: there's a lot of money at stake. You can see some of those dollars (and more) in graphic form here, courtesy of Common Form:
Super Bowl Infographic. Posted with permission from Common Form. To see the original post, click on... [+]
With all of this money pouring in and out of the Super Bowl, will any of it stick? Meaning, does any of it create a financial benefit for those outside of the NFL? Specifically, what does it mean to Arizona - and Glendale?
More than 100,000 visitors are expected into the greater Phoenix area for the Super Bowl which should translate into a lot of sales.
The state sales tax in Arizona (called the transaction privilege tax) is 5.6%. Sales tax can be imposed on top of that rate by counties and municipalities. Maricopa County, where Phoenix is located, imposes .7% in sales tax, while the city of Phoenix tacks on an additional 2.0%, bringing the total sales tax to a whopping 8.3%. And while many Super Bowl attendees head straight for Phoenix, the University of Phoenix Stadium is actually located in Glendale, Arizona, about 10 miles northwest of the Arizona capital. Sales inside of Glendale are still subject to the state sales tax of 5.6% and the Maricopa County tax of .7%. Glendale tacks on an impressive 2.9% bringing the total to 9.2%.
The transaction privilege tax is imposed on most retail sales, restaurants/bars, hotel/motels, advertising, amusements, personal property rentals, real property rentals, and transportation, which means that sales made during the Super Bowl are sure to bring in tax dollars. The Department of Revenue makes it clear that the tax applies to out-of-state residents, too: sales are exempt only if the purchaser has proof of out-of-state residence and the merchandise is shipped out of state for use out of state.
Tickets for Super Bowl XLIX range from $500 to $1,900 (not counting scalpers and freebies). Total ticket revenue for the event is estimated to be $60.3 million, according to the Arizona Sports and Tourism Authority. Those tickets are subject to sales tax - but some of those tax dollars won't stay in Arizona. By agreement, more than $4 million in ticket sales tax revenue will be refunded to the NFL.
Add in dinners, taxis and hotel stays, souvenir tee shirts and giant foam fingers, and the potential for tax revenue could be significant, right?
Maybe not. Super Bowl XLVI, held in Indianapolis, was considered a financial success. But Glendale Mayor Jerry Weiers says that likely won't happen in his town: he expects to lose money. While additional tax revenues may temporarily bump coffers, they can be offset by additional costs. A big one for Glendale? Public safety. The cost of public safety, including blocking roads and extra staffing, is covered by Glendale and is not reimbursed by the state of Arizona or by the NFL.
How much are we talking? The city expects to spend at least $2 million on security for the Super Bowl. Adding in other costs, Glendale expects to be out of pocket at least $3 million. The hit is deja vu all over again: when Glendale hosted Super Bowl XLII in 2008, the city lost $1.6 million.
The mayor of Atlantic City may feel Weiers' pain. When Miss America made her way back to the boardwalk in 2013, Atlantic City was charged with picking up the cost of public safety, including nearly $400,000 in overtime. The majority of overtime expense went to police who logged 3,000 hours in overtime to keep contestants and attendees safe.
But the long term effect on the economy could be worth it, right? That added exposure has to mean something.
Maybe. Weiers sure hopes so, saying, "In the long run, down the road, certainly we might break even on this, we might even possibly make money." The exposure could entice tourists to consider Glendale as their next tourist destination. It's happened before: a return to the national spotlight for Super Bowl XLVII was thought to kickstart a post-Katrina resurgence in New Orleans, dubbed "an economic miracle."
But "super" events don't always work out that way. Sometimes, local taxpayers end up picking up the slack.
Atlanta dropped millions of dollars to make the 1996 Summer Olympics a commercial and media success – all while the city struggled years later to meet a $56 million deficit (Atlanta voted to raise property taxes to make up the difference).
Philadelphia initially picked up the tab for Jay-Z’s Made In America concert in 2012 despite the fact that the city's finances were such that it couldn’t pay for its schools (taxpayers were subsequently hit with a number of tax hikes including a cigarette tax increase and a permanent sales tax increase). The same event in Los Angeles in 2014 was estimated to cost taxpayers half a million dollars in police overtime alone.
It's hard to judge how much of an impact a mega-event like the Super Bowl can have on a city. Event destinations often struggle with the balance between spending tax dollars on promotions and security with the idea that the eventual payoff in good press and future tourist dollars will be worth it. While it's easy to evaluate the outlay in terms of tax dollars, it's more difficult to quantify the return to the taxpayers. Weiers wondered, "[H]ow do you go back and verify that you actually got benefit from that?"
It's a fair question. And one that may not have a ready answer.
Meanwhile, as his city goes on display, Weiers will watch just like my family, from the comfort of his own home: he doesn't have tickets to the big game.
