The Dallas Cowboys went 8-8 last year and missed the playoffs for the sixth time in the last decade. Yet the team set new highs in revenue and operating profit, and this month, it was the first NFL franchise to be valued at more than $2 billion. According to Forbes magazine, the Cowboys are worth roughly twice as much as teams in the middle of the pack.
Is winning overrated?
Jerry Jones would blanch at the suggestion, because he’s as much a football fan as owner and general manager. The Cowboys also won a string of earlier titles, both before Jones and with him, that helped establish the brand around the globe.
Win or lose, the Cowboys remain a glamour team and TV favorite, and this week, the national spotlight returns to Arlington for Monday Night Football. Fans always focus on what happens on the field, but there’s a business game within the game, and that’s where the Cowboys are world beaters.
Jones paid $140 million for the team in 1989, and it’s valued at $2.1 billion today. Every franchise in the National Football League has become richer in the past generation, thanks to a string of record-setting broadcast contracts. Still, the Cowboys stand apart, and in the last year alone, the team’s value rose 14 percent.
Cowboys Stadium is difference maker No. 1, so it’s fitting that it usually gets a lot of airtime during broadcasts. Last year, the Cowboys led the league in attendance and averaged about 6,000 standing room tickets per game. According to Stats LLC, attendance exceeded stadium capacity by 7 percent, second highest in the league by that measure of popularity.
Star power
With more fans staying home and watching the NFL on big, high-definition televisions, Cowboys games remain the place to be. The stadium’s luxuries are impressive, from the field boxes to the art collection to the giant video board. And it keeps making news, announcing that a Victoria's Secret shop will open Monday, with the help of lingerie models.
The big turnout and TV attention keep corporate sponsors happy. AT&T, Bank of America, Dr Pepper, Ford, Miller Beer and Pepsi help generate $80 million a year in sponsor revenue, Forbes reports. And those dollars aren’t shared the way that broadcast rights and gate receipts are split among the league’s 32 teams.
Jones sometimes primes the pump by serving as the ultimate pitchman, and he has surprising crossover appeal. He’s been making national TV commercials since the 1990s. (Remember the Pizza Hut ad with Deion Sanders after he signed the player to a huge contract? Jones asks if he wants $15 million or $20 million, and Sanders says, “Both” — and Jones just shrugs.)
Ads for Papa John’s pizza have Jones doing rap songs and hip-hop dances, and serve as another example of how the Cowboys combine national and local campaigns — and boost their brand and their partners’ at the same time. Jones even has an ownership stake in the pizza chain, and he’s replicated the same model with Dunkin’ Donuts.
“It’s extraordinary how the Cowboys convert publicity into revenue,” said Marc Ganis, president of Sportscorp Ltd., a consulting firm in Chicago.
He compares Jones to the late George Steinbrenner, the New York Yankees owner who was as famous as his players and appeared in TV commercials, too. Celebrity CEOs don’t get any more high profile, and Jones and the Cowboys have an additional advantage: The NFL’s salary cap keeps the biggest expense — player payroll — under control.
When the Cowboys leverage their brand (or Jones) with advertisers, revenue gains quickly hit the bottom line. Last season, the Cowboys’ operating income was $227 million, up from $9 million the year before they moved into the new stadium. Revenue increased almost 80 percent during the same time.
The Cowboys and most NFL teams are private businesses that don’t report financial results. Forbes has long estimated the numbers for pro sports teams, and the reports are widely respected.
Building the brand
When Jones bought the team, the Cowboys were laggards, but the franchise was a great name in a big, growing market. And the NFL’s popularity was about to explode, boosted by new broadcast deals. Jones was one of the ringleaders who pushed for more competitive bidding, which brought Fox into the fold and eventually led to more NFL games on more networks.
While that grew the pie for everyone, Jones was also growing a separate revenue stream. He sold sponsorships at the old Texas Stadium that often conflicted with the official leaguewide sponsors. He signed contracts with Nike when the league had a separate apparel deal. Today the Cowboys have their own merchandising outfit and a concessions company with the Yankees. Its Legends Premium Sales unit is handling suite and ticket sales for the San Francisco 49ers’ new stadium.
Jones doubled his building budget on Cowboys Stadium to $1.2 billion, and he paid the extra, not Arlington taxpayers. He wanted an attraction that wouldn’t be eclipsed a few years later.
MetLife Stadium, which opened in 2010 in New Jersey and had a higher price tag, isn’t nearly as compelling — or valuable.
“The Cowboys had the better vision and execution,” Ganis said. “Management counts.”
The New York Giants play in MetLife, and they won the Super Bowl last year. They’re No. 4 on the Forbes list of NFL teams — and still trail the Cowboys’ value by $632 million. That’s a lead that looks safe.
