The Dallas Cowboys business model – How to turn $140 million into $5 billion
Ahead of the NFL regular season, Forbes ranks Dallas Cowboys as the world's most valuable sports team. And it does so for the fourth year in a row. That is not even mentioning that they currently are the most valuable franchise in the NFL for the 12th consecutive year.
The team that plays its home games in Arlington Texas has been rated as more valuable than names such as New York Yankees, Real Madrid, or F.C. Barcelona and is now worth north of $ 5 billion. It managed to do that, although it has not won a Superbowl since 1995 and playoff wins have been few and far between.
So we all need to learn a thing or two about developing and running a successful business from ''America’s Team''. The team’s 2018 revenue was $864 million, a 2.8% increase from 2017 while operating income rose 4.3%.
How does an organization become as valuable as the Cowboys in the sports world, and how can you make money without winning?
Business models are universal. They are a way to plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. In the 1980s business model innovations came from Blockbuster, Home Depot, Intel, and Dell Computer; in the 1990s from Southwest Airlines, Netflix, eBay, Amazon.com, and Starbucks. Now they come from Facebook, Google or Tesla.
One thing remained the same. In terms of end-game, the way you operate and manage a business has changed little over the years. And the end game is growth and profit.
That is exactly what the Cowboys owner, Jerry Jones, has been doing since he bought the team in 1989. He paid $140 million to H.R. "Bum" Bright for the Texas-based franchise and managed to turn it into something worth $5 billion.
You don’t have to like football to appreciate the way Jones reshaped the Cowboys upon his arrival. From 1990-1999, the team qualified for the playoffs eight times, won six division titles, made four trips to the NFC Championship game and captured three Super Bowls. One of the first things Jones did was to fire longtime coach Tom Landry, the only head coach in franchise history, replacing him with University of Miami head coach Jimmy Johnson. Needless to say that the fans did not take it very well.
But his next move could have spelled disaster for the Cowboys franchise. He parted ways with Tex Sharam, the man that was quintessential in the early successful seasons of the team, and the genius behind the impressive scouting network employed by the Dallas franchise. He then took over managerial affairs and after a tenuous first year, he began putting together the greatest team in Cowboys history.
Regardless of the reasons he parted with them, this showed two of his traits.
- Being a good and responsible leader ready to take hard and unpleasant decisions in his company.
In spite of fans not agreeing with him, Jones understood that no matter how good the two were, the team needed a breath of fresh air. And the change in leadership was just that.
- Being able to understand where replacement is needed.
Very often going ahead with replacing important personnel, although you valued their work, is one of the hardest things to do in business as sometimes even your biggest strength can be your weakenss. A project is always more important than an individual and it is your job to improve your business.
With the money he made there he bought the Cowboys. He did not give up on his dream of going into the big league and neither should you. You must remain determined and focus on your goals no matter how long it takes you to achieve them. Every bit of effort and resources you put into your business will be rewarded if you don’t lose track of your end game.
Jones consolidated on the strengths of his organization, good reputation and above average following. Slowly but surely, he build them up as a foundation for a worldwide famous sports team. It took him almost five years but the team he put together, and the marketing work and investment began yielding steady and sustainable growth.
To ensure more cohesion he also helped the entire NFL by managing to steer the TV rights towards FOX at a time when ''The Big Three'' broadcasters were pushing for a rollback on broadcasting rights.
And that is what you want for your business. No matter how big or small your venture is. Stability and sustainability should be key to any and all companies, regardless of the market they operate in.
If somebody doubted the ''America’s team'' nickname it was time to doubt no longer. More fans came in and more revenue. So much in fact that, if not for the wage cap on players, Jones and his Cowboys could have dominated the game for another decade. The money from the FOX deals, the fans that the team gained, and fantastic management made this franchise the most successful and highest valued team in the world.
Jones signed players that caught the media the spotlight and never missed a chance to have his brand out. Even his private plane had a Cowboys logo. He then managed to have a new stadium financed and built. And opted out of the NFL’s merchandise deal that all other teams are part of. All that to ensure they had bit of cash needed to keep the business running smoothly.
Cowboys' AT&T Stadium generates more than $100 million a year in seat revenue and an additional $150 million from sponsors. AT&T's naming rights alone bring in a reported $17 to $19 million per year.
That is hard cash. And hard cash is an important asset to possess. Never underestimate the power it wields. It will keep your operating costs fluid and it will be the lifeblood of your business. It will help you develop faster and get through uneasy market stalls or declines and ease investment into your business.
Jerry Jones is the type of cold, rational businessman that raises a lot of eyebrows. The type that can succeed anywhere at any cost. This, Warren Buffet like, manager comes from the days when Wall Street was still a circus and not an elaborate software race over the internet.
And you can learn something from his success. Build on your strengths, work hard, be determined and passionate, take chances and trust your decisions. Money has not changed. That is why the Dallas Cowboys are the most valuable sports team in the world.
The team that plays its home games in Arlington Texas has been rated as more valuable than names such as New York Yankees, Real Madrid, or F.C. Barcelona and is now worth north of $ 5 billion. It managed to do that, although it has not won a Superbowl since 1995 and playoff wins have been few and far between.
So we all need to learn a thing or two about developing and running a successful business from ''America’s Team''. The team’s 2018 revenue was $864 million, a 2.8% increase from 2017 while operating income rose 4.3%.
How does an organization become as valuable as the Cowboys in the sports world, and how can you make money without winning?
Business models
The modern business world tends to follow the model of young entrepreneurs, hedge fund kings, media or real estate tycoons. They seem to be the driving force behind the economy and their business models are admired and emulated by many. Just look at the never-ending fever surrounding Silicon Valley and all start-up related ventures.Business models are universal. They are a way to plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. In the 1980s business model innovations came from Blockbuster, Home Depot, Intel, and Dell Computer; in the 1990s from Southwest Airlines, Netflix, eBay, Amazon.com, and Starbucks. Now they come from Facebook, Google or Tesla.
One thing remained the same. In terms of end-game, the way you operate and manage a business has changed little over the years. And the end game is growth and profit.
That is exactly what the Cowboys owner, Jerry Jones, has been doing since he bought the team in 1989. He paid $140 million to H.R. "Bum" Bright for the Texas-based franchise and managed to turn it into something worth $5 billion.
The old school way
Jerry Jones is not the most loved man in the NFL but he is the best business owner.You don’t have to like football to appreciate the way Jones reshaped the Cowboys upon his arrival. From 1990-1999, the team qualified for the playoffs eight times, won six division titles, made four trips to the NFC Championship game and captured three Super Bowls. One of the first things Jones did was to fire longtime coach Tom Landry, the only head coach in franchise history, replacing him with University of Miami head coach Jimmy Johnson. Needless to say that the fans did not take it very well.
But his next move could have spelled disaster for the Cowboys franchise. He parted ways with Tex Sharam, the man that was quintessential in the early successful seasons of the team, and the genius behind the impressive scouting network employed by the Dallas franchise. He then took over managerial affairs and after a tenuous first year, he began putting together the greatest team in Cowboys history.
Regardless of the reasons he parted with them, this showed two of his traits.
- Being a good and responsible leader ready to take hard and unpleasant decisions in his company.
In spite of fans not agreeing with him, Jones understood that no matter how good the two were, the team needed a breath of fresh air. And the change in leadership was just that.
- Being able to understand where replacement is needed.
Very often going ahead with replacing important personnel, although you valued their work, is one of the hardest things to do in business as sometimes even your biggest strength can be your weakenss. A project is always more important than an individual and it is your job to improve your business.
Don’t give up
Jones was never given that much of a chance, to begin with. The Los Angeles born businessman graduated from college in 1965 and borrowed a million dollars from Jimmy Hoffa's Teamsters union to open a string of pizza Restaurants in Missouri. After the venture failed he came to work for his father while completing his master's degree. After even more attempts at a business, he founded Jones Oil and Land Lease, a oil and gas exploration business in Arkansas.With the money he made there he bought the Cowboys. He did not give up on his dream of going into the big league and neither should you. You must remain determined and focus on your goals no matter how long it takes you to achieve them. Every bit of effort and resources you put into your business will be rewarded if you don’t lose track of your end game.
Don’t go all in
Jones had an abysmal first season at the Cowboys but kept the ship afloat with moderate and gradual investments. He knew that things were not going to happen overnight. The fans were against him, the media thought he was just a go-getter from Arkansas with no real knowledge of the business he was in, and the other owners in the NFL had no idea about his spectacular marketing skills.Jones consolidated on the strengths of his organization, good reputation and above average following. Slowly but surely, he build them up as a foundation for a worldwide famous sports team. It took him almost five years but the team he put together, and the marketing work and investment began yielding steady and sustainable growth.
To ensure more cohesion he also helped the entire NFL by managing to steer the TV rights towards FOX at a time when ''The Big Three'' broadcasters were pushing for a rollback on broadcasting rights.
And that is what you want for your business. No matter how big or small your venture is. Stability and sustainability should be key to any and all companies, regardless of the market they operate in.
Cash is king
Monetizing your successes to the full is the holy grail of the business world. It is why people get into business in the first place. Building from the ground up, and taking advantage of the stability the organization now enjoyed, Jones, managed to drive performance and capitalize on the team winning 3 Super Bowls in 4 years. The Cowboys were everywhere.If somebody doubted the ''America’s team'' nickname it was time to doubt no longer. More fans came in and more revenue. So much in fact that, if not for the wage cap on players, Jones and his Cowboys could have dominated the game for another decade. The money from the FOX deals, the fans that the team gained, and fantastic management made this franchise the most successful and highest valued team in the world.
Jones signed players that caught the media the spotlight and never missed a chance to have his brand out. Even his private plane had a Cowboys logo. He then managed to have a new stadium financed and built. And opted out of the NFL’s merchandise deal that all other teams are part of. All that to ensure they had bit of cash needed to keep the business running smoothly.
Cowboys' AT&T Stadium generates more than $100 million a year in seat revenue and an additional $150 million from sponsors. AT&T's naming rights alone bring in a reported $17 to $19 million per year.
That is hard cash. And hard cash is an important asset to possess. Never underestimate the power it wields. It will keep your operating costs fluid and it will be the lifeblood of your business. It will help you develop faster and get through uneasy market stalls or declines and ease investment into your business.
Jerry Jones is the type of cold, rational businessman that raises a lot of eyebrows. The type that can succeed anywhere at any cost. This, Warren Buffet like, manager comes from the days when Wall Street was still a circus and not an elaborate software race over the internet.
And you can learn something from his success. Build on your strengths, work hard, be determined and passionate, take chances and trust your decisions. Money has not changed. That is why the Dallas Cowboys are the most valuable sports team in the world.
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