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Super Bowl Economics

Feb 2, 2012 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Households, Macroeconomic Measurement, Thinking Economically • 142 Views    No Comments

The least expensive Super Bowl weekend in Indianapolis might cost close to $6248. That means you purchased a “nosebleed” seat for $2100 from StubHub, your coach airfare from NY or Boston was $1379 instead of the usual $400, and you are paying $1840 for a 2 night stay in an airport hotel that typically charges $47 a room. For your car, Hertz shifted its normal weekend rate from $102.42 to $429.89 and a parking spot near the game might cost $499.

$2100 (tickets)+$1379 (airfare)+$1840 (hotel)+$430 (car) +$499 (parking)=$6248

Other Super Bowl economics? The National Chicken Council reported that on Super Bowl Sunday last year, we consumed more than 1.24 billion chicken wings. Likewise, according to The Big Three (Pizza Hut, Papa John’s and Dominos), we doubled our pizza orders.

Do Super Bowl cities benefit from a surge in spending? Maybe. It all depends on several questions.

  1. Leakage: Does the money go elsewhere? Does the money spent at Pizza Hut and elsewhere go to a local owner or to the national firm?
  2. Crowding out: If locals stay home, will certain retailers experience less business?
  3. Money transferred: Would some of the money spent for Super Bowl goods and services have been spent elsewhere anyhow?
  4. Investment: How much money did the city spend to prepare for the event?

The Economic Lesson

The blip in prices is perfectly illustrated on demand and supply graphs. Perhaps all you need for the supply side is a shift in the curve’s position and also a change in its shape. The shift is upward and the curve becomes horizontal at the new, high price. Meanwhile, you have a demand curve reflecting individuals and businesses that are willing and able to spend astronomical dollars. Combine the two, equilibrium soars, and as a result, a parking space can cost $499.

An Economic Question: How would you draw a supply and demand graph illustrating skyrocketing Super Bowl prices?

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