Kent Tukeli |  Tue 15/08/2017 - 21:04 EDT

Did CRTC Super Bowl Ad Policy Cost Canadian Economy $158 Million?

Did CRTC Super Bowl Ad Policy Cost Canadian Economy $158 Million?
The Super Bowl is a cultural phenomenon powerful enough to make an economic impact across borders. When the CRTC decided to ban simultaneous substitution of Canada's Super Bowl ads on American TV stations, Canadian broadcasters and media groups decried the decision as damaging to the economy. Forcing Bell to allow U.S. Super Bowl commercials on American channels certainly impacted the telecom giant's bottom line, even if the estimated economic cost strains credulity.

Bell Claims Canadians Lost $158 Million

For years, Canadian consumers were frustrated by simultaneous substitutions that played Canada’s commercials instead of U.S. ads. This was particularly true for American Super Bowl advertisements, which gather about as much interest as the football played on field. Brands leverage Super Bowl ad hype as much as possible by creating flashy, often humorous commercials.

The CRTC responded to the complaints of Canadians by forbidding simsubs during the big game. Viewers in Canada could choose to watch the American version of the broadcast after the ruling, participating in the same experience as fans south of the border. Consequently, Bell no longer had the option of forcing Canadian commercials on American airwaves.

CRTC’s mandate states that “we do not intervene in newspapers, magazines, the quality and content of TV and radio programs or the retail rates for most communication services.” The decision to ban Super Bowl simsubs appears to directly contradict the mandate of the organization. In fact, the CRTC ban appears to cost the Canadian economy upwards of $158 million, according to estimates published by Bell.

The Super Bowl Economy 

By far the largest annual major pro game in North America, the Super Bowl draws as many as five times more people than the World Series. Compared to regular tourists, people who visit cities for the Super Bowl tend to have higher average incomes. The NFL likes to repeat these stats for their most important event, claiming responsibility for hundreds of millions in economic activity every year, including the construction of new stadiums.

The Super Bowl exerts such a strong influence that cities build new sports entertainment facilities using taxpayer money to attract the big game, including Dallas, Houston, Indianapolis and cash-strapped Detroit. These construction projects tend to be considered part of the positive economic impact of the NFL, even if the public pays out of their own pocket.

Methods used to calculate the benefit of the Super Bowl also raise questions. Typically, the formula determines economic activity by multiplying average spending by the number of visitors, measuring the “direct impact”. An “indirect impact” adds to the total, more than doubling the final estimate.

Independent studies of the Super Bowl suggest that the NFL ignores important contextual information, resulting in an economic benefit that’s a fraction of the estimate. Essentially, the NFL doesn’t include economic activity displaced by the Super Bowl as part of the estimates, focusing only on the numbers generated by the NFL.

There’s no doubt that Super Bowl games generate economic activity for host cities, but those numbers are likely in the tens of millions, rather than the hundreds of millions. If the NFL overestimates the numbers on their own product, there’s a good chance that Bell overstates the impact of the Super Bowl in Canada.

Did Canadian Economy Lose $158 Million Due To Super Bowl Ads?

Bell released another appeal of the CRTC simsub ban, this time joining with the NFL, Unifor, ACTRA, and other industry groups to amplify the message.

They cite a study conducted by [email protected] Management Inc., which states that the Canadian economy lost $158 million over the past year because Canadian commercials no longer play on American channels during the Super Bowl.

The same letter outlines an $11 million loss in ad revenue, a 40% drop in viewership, and more than $7 million in losses for the creative community for Super Bowl LI. A large chunk of the estimate appears to focus on Canada spending ad dollars in the U.S. to reach Canadian viewer, but this doesn’t explain the rest of the $140 million missing from the economy.

Bell Media certainly lost revenue because of the simsub ban, but claims of a $158 million economic loss due to Super Bowl advertising appear flawed. Similar to NFL estimates of economic benefit for cities, Bell overstates the value of Super Bowl ads within Canada’s economy.

Regardless of your opinion of the CRTC decision, Bell and the NFL will continue to lobby for simsub Super Bowl ads to protect the value of their property.

Category : Business

Tag : nfl , Super Bowl

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