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The Cincinnati Bengals and the Kansas City Chiefs at the AFC championship game on Jan. 30.
David Eulitt/Getty Images
Sunday brings the Super Bowl, which has been transformed from a football game to a kind of secular Fat Tuesday: a celebration involving most of the Seven Deadly Sins in an attempt to stave off SAD (seasonal affective disorder) for the six dreary weeks of winter that inevitably remain in northern climes. Lots of parties, featuring gluttony for the food and drink consumed, and greed for the millions bet on the contest.
The Big Game provides as silly an indicator for the stock market as the groundhog does for the weather: Bulls supposedly fare better in the coming year if an NFC team wins, and vice versa.
The indicator, which for a time really did seem prescient, has broken down in recent years, with the
S&P 500 index
posting gains for 10 of the past 11 AFC victors, according to Ryan Detrick, chief market strategist at LPL Financial. A better indicator was when Tom Brady was in the big game, he adds. His record seven victories were followed by good years for stocks, while the three he lost heralded lousy ones. Of course, the Brady indicator has been retired, along with the GOAT.
Given that the Super Bowl is as much a social event as a sporting one, it has become the biggest day of the year for advertising. In a world of dispersed viewing of on-demand streams, the game is a throwback to when everybody gathered around to watch a single program. And lots of folks focus on the commercials as much, if not more, than the game itself.
Which advertisers pay up millions to capture all those eyeballs for a mere 30 seconds is telling. Of course, purveyors of beer and salty snacks (to go with the suds) are mainstays. But what other outfits elbow their way in can have market implications.
That insight comes from Doug Kass, the head of Seabreeze Partners, who offered it to our predecessor, Alan Abelson, in this very space back in 2000: The more businesses in any sector advertise on the big broadcast, the more likely the group’s stocks will fare poorly in the year ahead.
Back then, the proliferation of spots bought by internet-related companies caught their coming crash. The coup de grâce would be inflicted a few weeks later, when Barron’s detailed the furious rate at which these dot-coms were burning through the cash that the irrationally exuberant stock market had provided them.
Fast-forward to 2021, when Kass noted that food and beverage commercials were even more numerous than usual, ostensibly to take advantage of all the people stuck at home because of the pandemic, with little to do but snack and quaff a few.
With Bud Light having more commercials than any other advertiser, shares of its brewer,
Anheuser-Busch InBev (ticker: BUD), fell 14.30% last year, by his tally. Hellman’s mayonnaise, produced by
Unilever (UL), was another prominent advertiser, and Unilever fell 12.02%.
Kellogg (K) flogged its Pringles chips last year and gained 3.90%, badly trailing the S&P 500’s 28%.
Moreover, last year’s first-time advertising by online broker
Robinhood Markets (HOOD) came just ahead of meme-stock mania’s peak. According to data tracked by Nikolaos Panigirtzoglou, J.P. Morgan’s head of global quantitative and derivatives strategy, the share of retail trading through brokers such as Robinhood had fallen to 14.1% of the total by December, the lowest level since the pandemic began. Robinhood’s own shares are now down 83.9% from their peak early last year.
This year, the usual crew—auto manufacturers, food and brew makers, travel websites—are back. And as The Wall Street Journal noted this past week, cryptocurrency outfits will be ponying upward of $7 million for each ad, to grab the attention of viewers during the innumerable breaks in the action between the L.A. Rams and the Cincinnati Bengals.
That includes trading platform FTX, which will be giving away millions of dollars in Bitcoin during the Super Bowl, as part of its sports strategy, which includes an ad with the now-retired Brady, a sponsorship with Major League Baseball, and a deal affixing its name to the arena of the NBA’s Miami Heat. FTX will be joined by Crypto.com, which similarly paid $700 million to put its moniker on the former Staples Center, where the L.A. Lakers play, and is being touted in commercials featuring actor Matt Damon, who intones how “fortune favors the brave.”
The burgeoning partnership of cryptocurrency and sports is reaching fever pitch, Kass writes in an email. Given the precedent of collapsing dot-coms in 2000, the message to him is clear: Short crypto.
Of course, the internet didn’t disappear when the dot-com stocks crashed at the turn of the century. It has become integral to our business and personal lives to an extent few could have envisioned. But many of online pioneers didn’t survive once the bull market’s financing tap was turned off.
So enjoy the game, along with the chips, wings, and beer. But if you’re inclined to play along in crypto, at least be aware of the precedents of speculative fads.
Write to Randall W. Forsyth at randall.forsyth@barrons.com
