The Forbes 2017 list of the world’s most valuable sports teams was topped by the Dallas Cowboys for the second consecutive year with an overall valuation of a staggering $4.1 billion. Baseball’s New York Yankees were just behind ‘America’s Team’ on $3.8 billion, with soccer juggernauts Manchester United, Barcelona and Real Madrid trailing by around a half billion. What has made the Dallas Cowboys – the most valuable football team in the world today – into such a financial success? Is it likely to continue for the rest of the decade?
Jerry Jones Has Been Key
The Owner and General Manager of the Dallas Cowboys was recently been granted a place in the NHL Hall of Fame for his ‘services to the sport’. Reading between the lines this award has been granted thanks to the massive influence Jones has had upon expanding the value of the NFL’s combined TV package. A $7 billion/year deal shared among the franchises tends to earn a lot of friends, but it is his achievements with the Cowboys that really make his stand out as a legendary owner.
When he purchased the franchise in 1989 for a ‘mere’ $150 million (plus over $10 million owed in wages) not many pundits gave Jones much hope of stabilizing the Cowboys. After years of financial and on the field negligence, it was too easy to dismiss this as at best a rather fanciful vanity project, and at worst a terrible business decision. By 2015 Jones had built a team that posted a $700m annual revenue – a record amount and nearly $200m ahead of their closest rival.
What makes this even more remarkable is that the Dallas Cowboys haven’t even won a Superbowl since 1995. On the field, they are obviously a force to be reckoned with, yet despite having the financial clout to attract the biggest stars and brightest prospects – the fact is they haven’t won enough or enjoyed enough success for this to explain their immense wealth. Sure they have enjoyed recent success in the NFC East and Playoff finals, but just compare them to the soccer teams in the top five. Rarely a season goes by when they fail to win at least one trophy, which goes a long way in explaining their popularity/wealth. So what gives?
Enormous Secondary Income Streams
Jones is a master of maximizing income. Merchandising the Dallas Cowboys logo (and of course the world’s favorite cheerleaders) has been central to attracting even more fans to a franchise handily located in already football-crazy Texas.
The next step in the Cowboys empire is going to be the construction of a huge leisure and retail development named ‘The Star’ which will also allow loyal (and wealthy) supporters to purchase membership to the exclusive Cowboys Club (basically a country club with a Cowboys theme). Despite membership costing an initial $4500 with subsequent monthly payments of $350, all 800 places have already been purchased. What do members receive? They can watch the Cowboys practice – not a bad source of extra revenue for the cost of building a few stands of basic seating.
It is this kind of maximizing profits that Jerry Jones is clearly a borderline genius at. Throw in the staggering increase in TV revenue – with the Cowboys exerting huge influence over thanks to their large fanbase – and it’s little surprise to see them having earned their spot at the top of the global sporting valuation tables. Compared to other NFL teams they are well ahead and unlikely to be overtaken anytime in the foreseeable future. The New England Patriots are 6th ($3.4bn) NY Knicks ($3.3) and the 49’ers and Lakers sit on a square $3bn valuation. They may not seem to be worlds apart, but when considering the huge size of these figures it may as well be an ocean.
Is It Sustainable?
Unless Texas suddenly loses interest in football then it is difficult to see anyone dislodging the Cowboys soon. Pretty much every other NFL franchise has made profits over recent years and most have allocated a good chunk of their earnings towards trying to emulate the Cowboys off-field revenue streams. The problem is that branding takes a long time to take global – and if the Texans come good and win a long overdue Super Bowl soon their position is going to be near impossible to match.