Jan. 29 (Bloomberg) -- New Orleans is awash in money this week, with an estimated $185 million changing hands during the run up to the Super Bowl.
The Baltimore Ravens and San Francisco 49ers will be among those spending more than they are making, according to executives from the teams playing for the National Football League championship on Feb. 3.
“It’s a very significant bill,” Ravens President Dick Cass said in an interview. “You lose money. But there are long-term benefits that pay off later. Hey, we work hard all year long to go to the Super Bowl. I don’t think anybody would trade off a short-term loss for winning a Super Bowl.”
Neither the Ravens, owned by Stephen Bisciotti, nor the 49ers, owned and co-chaired by Denise and John York, would say exactly how much they will spend or what they expect their shortfalls to be, though past Super Bowl participants said it can be at least a few million dollars. PricewaterhouseCoopers LLC said this week the game will generate $185 million in direct spending for New Orleans.
During the first two rounds of the playoffs, the NFL pays the home team about $681,000. The visiting team gets the cash-equivalent of 80 first-class roundtrip tickets to the game, plus $619,000. That visiting team’s payout increases to $681,000 for the divisional round.
In the conference championship, the home team gets the same reimbursements plus $1.05 million, and the visiting team gets the cash equivalent of 85 first-class tickets and the same amount.
For the Super Bowl, each team is reimbursed for transportation expenses equal to 200 first-class airfares, and the winner gets $4.3 million while the runner-up gets $3.2 million.
Super Bowl appearances are rare so teams usually take their entire football and business staffs, plus their families. They also host clients and prospective business partners, the executives said.
That leaves the team paying for airfares, hotels, game tickets, numerous reception parties, gift baskets for their guests, and then there are the postgame parties -- win or lose - - with live entertainment.
“It’s all about class; you want to do it right,” said San Francisco 49ers President Gideon Yu, a former chief financial officer at Facebook Inc. and YouTube Inc.. “It’s an opportunity for the organization to show its appreciation to its employees for all their hard work, but also to send a message to prospective business partners about who we are as an organization.”
While the teams will lose money in the short term, a Super Bowl appearance positions them to increase the price of tickets, club seats, suites and sponsorships in the coming months. The New York Giants, winner of last year’s Super Bowl, haven’t increased ticket prices since moving into MetLife Stadium three years ago and selling personal seat licenses for the first time. The licenses are a one-time expense to fans that are required to purchase season tickets. Sponsorship deals typically are staggered so they don’t all expire at once; a Super Bowl’s affect on them can be limited.
Co-owner John Mara declined an interview request. The team hasn’t announced its pricing for the 2013 season.
The players get their Super Bowl shares from the NFL; teams pay any other performance bonuses they may have in their individual contracts. Ravens players, who played one more postseason round than their counterparts on the 49ers, have made $84,000 so far. The Niners made $62,000. The Super Bowl champions will earn an additional $88,000 per player, while the losers get $44,000.
Though the Ravens and 49ers are keeping their postgame party plans secret for now, the organizations’ owners and executives who ran the franchises in previous years say the parties and gifts get swanky.
When the Ravens beat the New York Giants in the 2001 Super Bowl in Tampa, Florida, now deceased team owner Art Modell chartered three jets for players and their families, hired a band and served lobster and shrimp to more than 800 guests. Each day, players, coaches, cheerleaders and other employees found gifts including video cameras, digital cameras and embroidered sweatsuits delivered to their hotel rooms.
The Ravens’ opponents, the Giants, spent about $2.5 million for bonuses to coaches, administrators and others who work for them, according to the team.
When the San Francisco 49ers beat the Denver Broncos in the 1990 Super Bowl in New Orleans, then-49ers owner Eddie DeBartolo Jr. had some of the city’s most prominent chefs prepare local cuisine for 1,000 guests at a post-game party.
“It was Trumpesque,” then president Carmen Policy said, invoking the name of the Trump Hotels & Casino Resorts Inc. Chairman Donald Trump.
The 49ers didn’t skimp during the 1980s and 1990s, when the team won five Super Bowls under DeBartolo.
When the 49ers defeated the San Diego Chargers for the title in 1995 in Miami, the team spent $1.8 million more for direct expenses than the league provided, plus an additional $2 million in bonuses to coaches and other employees, according to Policy, the 49ers president at the time.
David Modell, the Ravens’ president in 2001 and the son of Art Modell, says the team treated its extended family “like kings” at the 2001 Super Bowl. The Ravens beat the New York Giants that year, 34-7.
“It wasn’t exactly a Dennis Kozlowski special, but it was a pretty good party,” Modell says, referring to the former Tyco International Ltd. chief executive officer who threw a $2 million birthday party for his wife in Sardinia.
“It was attitudinal: We’re here to be champions,” Modell said.
To contact the reporter on this story: Curtis Eichelberger in Washington at email@example.com
To contact the editor responsible for this story: Michael Sillup at firstname.lastname@example.org