Dallas Cowboys Football Club, Ltd. - Company Profile, Information, Business Description, History, Background Information on Dallas Cowboys Football Club, Ltd.

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Irving, Texas 75063

History of Dallas Cowboys Football Club, Ltd.

The Dallas Cowboys Football Club, Ltd. is the most profitable professional sports operation in the United States. Since entering the National Football League (NFL) as an expansion team in 1960, the franchise has appeared in more Super Bowls than any other team and is one of only two teams to have won five of them. Under the direction of owner Jerral (Jerry) W. Jones, the Cowboys have excelled off the field as well. Jones has run the team as a business, boosting revenue and profits through marketing deals, as well as the sales of stadium suites and tickets. While Jones's individualistic and sometimes iconoclastic ways have led him into disputes with the NFL's power structure, they have benefitted himself and his team handsomely.

Early Years: 1960-70

The Dallas Cowboys Football Club entered the NFL as an expansion team in 1960. The driving force behind the team was its first owner, Clint Murchison, Jr., who paid $600,000 for the franchise. Even before he was awarded the team, Murchison had settled on his coaching staff, hiring Tex Schramm, then a public relations employee with the Los Angeles Rams, to serve as the Cowboys' general manager, and tapping then-New York Giants defensive coordinator Tom Landry as head coach. Schramm and Landry would lead the team for the next 29 years.

The Cowboys' first years were difficult. With no permanent stadium or training facility, the young team finished the 1960 season winless. Although Dallas recorded its first victory in the 1961, it would not boast a winning season until 1966.

Despite its early on-field struggles, the team gained a great deal of exposure and a loyal fan base. With his marketing savvy, Schramm recognized the importance of image to the Cowboys' long term success--both on and off the field. When Dallas negotiated the terms of its entrance into the NFL, Schramm had lobbied hard for the Cowboys to be included in the league's eastern division, home to the New York Giants, who played in the single largest television market in the country. As a result, Cowboys games reached millions of television viewers. Schramm made sure the team capitalized on the opportunity. 'We captured people's imagination because we had good looking uniforms ... [and] a modest head coach that people respected.... We were just the underdog people would be attracted to,' Schramm told the Dallas Morning News in 1999.

The Cowboys also benefitted from league-wide changes that began the same year Dallas joined the NFL. At the time, the NFL was under pressure from the American Football League (AFL), a rival association of teams founded in 1960. (In fact, the AFL created the Dallas Texans in 1960, which competed directly against the Cowboys, though in 1963, the Texans moved to Kansas City, becoming the Chiefs).

Pete Rozelle, who had been named NFL commissioner in 1960, strove to rally the league against this upstart. By the early 1960s, the NFL had begun to lose some of its luster due to a growing competitive imbalance among its franchises. This situation arose largely because of the fragmented television coverage arrangements the NFL's individual teams had made. Until this point, each team had been free to negotiate its own broadcast deals and to keep whatever revenues were generated (with the exception of the NFL championship game, the rights fees for which were shared equally). As more popular teams in larger markets commanded better deals, they received more money, which they used to sign better players. Rozelle was able to convince the owners of the danger posed by this situation; if two or three teams gained total hegemony, fan interest (and therefore the league as a whole) would falter. National television contracts were soon negotiated, the proceeds of which were split evenly among all teams. In a similar vein, Rozelle launched NFL Properties in 1963 to promote the league as a whole. Under this arrangement, royalties from the sale of the merchandise of each NFL team were pooled, with all teams sharing equally in the profits. It was, according to the Orange Country Register, 'at that point that the league really took off.'

In 1966, Schramm joined with Lamar Hunt, the owner of the Chiefs, to negotiate a merger between the NFL and the AFL. The union was consummated in 1967, with the two league's 24 teams converging under the NFL's umbrella. All teams now shared a common draft, all national television resources, and a championship game known as the Super Bowl.

While the NFL adjusted to these changes, the Cowboys began steadily to improve their record on the field. In 1966, Dallas won its first Eastern Conference title, though it lost the NFL Championship Game later that year to the Green Bay Packers. In 1967, the Cowboys again traveled to Green Bay, this time for the NFC title. (The winner would then play the AFC champion in the first Super Bowl.) Although Dallas again lost, the game raised the team's profile further. Played in temperatures well below freezing, the game (known afterwards as the 'Ice Bowl') was closely contested and became a symbol of pro football's gritty image. Dallas at last captured the NFC crown in 1970, though it lost to Baltimore in the Super Bowl.

America's Team: 1970-80

In an effort to boost the Cowboys' ticket sales (one revenue source teams were allowed to keep for themselves), Murchison oversaw the construction of a new stadium, which was completed in 1971. Located in Irving, Texas, a suburb of Dallas, Texas Stadium could hold over 58,000 fans. Even more noteworthy was Murchison's prescience in building 180 luxury suites in the stadium. Unlike standard seats, luxury suites offered spacious and comfortable accommodations with excellent views of the field. Air-conditioned and glassed-in, the suites provided a more upscale environment from which to watch the game. The suites carried a hefty price tag, though, and were marketed to profitable corporations as an ideal spot to entertain clients or colleagues. The revenue generated by the sale of these suites helped not only the team's bottom line, but also positioned it to attract a bevy of talented athletes who would lead the team on a glorious run through the 1970s.

In 1971, the Cowboys beat the Miami Dolphins 24-3 to claim their first Super Bowl title. After achieving its tenth consecutive winning season in 1975, Dallas again reached the Super Bowl, losing that game to the Pittsburgh Steelers. However, Dallas rebounded in 1977 to claim its second Super Bowl, downing the Denver Broncos 27-10. The Cowboys returned to the Super Bowl again in 1978, and were edged out once again by the Steelers in what is largely regarded as one of the more exciting title games in NFL history.

The Cowboys success during this period earned it legions of supporters nationwide. The Ice Bowl had given the team an image as a scrappy underdog, and its 1970s roster of charismatic stars--including quarterback Roger Staubach, wide receiver Drew Pearson, and running back Tony Dorsett--captured the hearts and minds of fans around the country. A highlight film produced by the league in 1976 referred to the Cowboys as 'America's Team.' The moniker both fit and stuck.

Tough Times: 1980-89

While President Reagan declared that 1980 marked a new morning in America, 'America's Team' found the dawning decade to be a bleak one after the brilliance of the 1970s. Staubach retired in March 1980, and while the Cowboys would return to the NFC championship game in 1980, 1981, and 1982, they were unable to make it back to the Super Bowl. In 1984, Murchison sold the team for $60 million to an 11-member limited partnership headed by Dallas entrepreneur H.R. 'Bum' Bright. Bright instituted few personnel changes; both Landry and Schramm remained in their positions. However, the Cowboys' decline accelerated as the team missed the playoffs entirely for the first time in a decade. In 1985, the team moved its headquarters and training facility to the newly-constructed Cowboys Center in Valley Ranch, but its on-field performance continued to flag. In 1986, the Cowboys had their first losing season in 20 years, and things turned ugly. Both Schramm and Bright publicly sniped at Landry, who had by then become a Dallas institution. In 1988, the team recorded an embarrassing record of three wins and 13 losses. The team's profits spiraled downward with its record. Between 1983 and 1987, attendance at Texas Stadium fell 24 percent. To compound the problem, television revenues had decreased in the wake of declining ratings caused by fan disgruntlement with the labor disputes that plagued the league throughout the 1980s.

Rebuilding: 1989-91

Despite these downturns, Arkansas oilman Jerry Jones bought the Cowboys and Texas Stadium in 1989 for $140 million, the most ever paid for an NFL franchise. Observers were amazed at the price. Their shock only grew when Jones implemented sweeping changes at the organization. Jones confidently pledged that the Cowboys would win the Super Bowl within five years and immediately set out to rebuild the team. In an act which brought him death threats, Jones fired Landry and replaced him with University of Miami coach Jimmy Johnson. Schramm resigned soon after, and Jones named himself general manager.

Jones was determined to return the Cowboys to profitability. To do so, he cut expenses--laying off two-thirds of administrative personnel--and simultaneously strove to boost revenues. His first priority was to reverse the exodus of fans from Texas Stadium. After lowering regular ticket prices, Jones aggressively marketed vacant luxury suites. By the end of 1989, he had filled 27 of them, raising a total of $27 million. Jones used this money to attract excellent players, knowing that fans--and thus ticket sales--would return to watch a winning team. In 1989, he paid a record $10.4 million to secure the services of rookie quarterback Troy Aikman and, in 1990, drafted running back Emmitt Smith who--along with Aikman and wide receiver Michael Irvin--would form the heart of the Cowboys' successful teams of the 1990s.

A New Dynasty: 1991-95

Jones was universally despised during his first season as owner. To make matters worse, the Cowboys finished the 1989 season with a pitiful record of 1-15. The community 'judged this man to be a fast-talking, hot-dogging, publicity-hounding Arkansas hillbilly with more dollars than sense,' observed the Houston Chronicle. Nevertheless, the Cowboys broke even in 1989 with revenues of $32 million. Good news in the accounting department was soon followed by good news on the field, as the Cowboys returned to the playoffs in 1991, posting the team's best record since 1983. In 1992, Jones made good on his promise, as the Cowboys won their third Super Bowl. Moreover, the next year, the Cowboys again claimed the Super Bowl title. By then, Jones had nearly tripled the value of the franchise. With its net income in 1993 estimated to be $10.7 million, the Cowboys were ranked among the top five profit-producers of all U.S. sport franchises. As agent Lee Steinberg explained to U.S. News & World Report: 'from the beginning, [Jones] has seen that everything--from his players to his stadium--has value beyond just that of a football team. Everything is part of a business that cross-fertilizes other ventures in that business.'

Jones's financial success continued in the mid-1990s. By the close of the 1994 season, he had increased the number of occupied luxury stadium suites from 100 to 300 and was planning to build more. Because NFL franchises could keep local television contracts, Jones renegotiated these deals, boosting them from $2.8 million to $6.2 million in 1994. Even more impressive was Jones's savvy in bringing in local advertising revenues. By aggressively selling stadium billboards and local corporate sponsorships, the Cowboys raised advertising sales from $400,000 to $8.5 million in 1994. In the process, Jones forged an impressive profit-making cycle. The team's success generated revenue, which paid for talented players, who won more games, which improved the team's reputation, which generated more revenue. Financial World named the Cowboys the most valuable franchise in sports in 1994 and 1995.

Despite the Cowboys' success on the field, Jones replaced Johnson as head coach with Barry Switzer in 1994. The move was not entirely shocking, as both Jones and Johnson were exceptionally strong willed and had clashed repeatedly. Even with the coaching change, the Cowboys returned to the Super Bowl--and won--in 1995.

Jones continued to seek new ways to convert the team's on-field success into profit. He began to lobby the NFL to end the practice of pooling merchandise sales, since in 1994 and 1995, nearly one-third of all NFL paraphernalia purchased in the United States bore the Cowboy's logo. However, the league refused. In response, Jones forged independent marketing alliances with sponsors in 1995. Nike Inc., PepsiCo, and American Express all made special agreements with the Cowboys that excluded the rest of the NFL. (In fact, the NFL as a whole had sponsorship relationships with Reebok and Coca-Cola, which directly competed against Dallas' individual sponsors. Moreover, the revenues derived from the NFL's corporate sponsors were equally divided among all the teams, including the Cowboys.) Because Dallas's deals were struck formally between Texas Stadium and its various sponsors, the Cowboys were not technically breaking the NFL's resource-pooling policies. Nevertheless, the NFL was deeply threatened by Jones's actions. 'The whole system is based on revenue sharing and access to players,' league commissioner Paul Tagliabue told USA Today. In September 1995, the NFL filed a $300 million lawsuit against Jones; he responded with a countersuit for $750 million. In 1996, both parties agreed to drop their suits.

The Late 1990s

Despite its high profile status and considerable earnings--Financial World estimated that in 1998 the team netted $41.3 million on revenues of $413 million--the team did not return to the Super Bowl after 1995. In part this was due to the aging of Dallas's core players. It was also a result of changes in the league's collective bargaining agreement that made it easier for teams to sign free-agents away from their competitors. While the Cowboys invested heavily in their marquee athletes, the league's salary cap prevented them from locking up many of the key players who had quietly but crucially contributed to the team's success. In 1998, Jones fired Switzer and installed Chan Gailey as head coach. However, this change failed to right the listing ship, and Gailey was released after a disappointing 1999 campaign. Dave Campo was then chosen to lead the team into the new century.

Even with its on-field woes, though, Jones had placed the franchise in an enviable financial position. As one of the first owners to view the operation of an NFL team as a true business, he established a course that appears likely to alter the face of the league for years to come.

Principal Competitors: Washington Football Inc.; Tennessee Titans L.L.P.; Chicago Bears Football Club Inc.; Arizona Cardinals; New York Giants; Tampa Bay Buccaneers.


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Further Reference

Brown, Ben, 'NFL Sues to Save Itself,' USA Today, September 20, 1995, p. C3.Campbell, Bill, 'Underdog Image Helps Club Become America's Team,' Dallas Morning News, September 12, 1999.'Cowboys `Broke Even' in 1990, NFL Records Show,' Fort Worth Star-Telegram, August 19, 1992, p. 7.'Cowboys Lucky if They Show a Profit for '84,' Baton Rouge Advocate, January 14, 1985, p. C7.Cowlishaw, Tim, 'Jones: Cowboys' Financial Footing on Firm Ground,' Dallas Morning News, November 22, 1989, p. B1.Freeman, Denne H., 'With Free Agency, Cowboys Won't Be in Lone-Star State,' Seattle Post--Intelligencer, January 9, 1993, p. D4.Haman, John, 'Jerry Jones Hits Pay Dirt,' Arkansas Business, February 15, 1993, p. 1.Kelly, Kevin, 'Jerry Jones: The Man Who Fired Tom Landry,' Business Week, April 24, 1989, p. 148.Markiewicz, David A., 'Texas Stadium Endures as a Financial Gold Mine,' Fort Worth Star-Telegram, October 22, 1996, p. 1.McGraw, Dan, 'The Very Lonesome Cowboy Jerry Jones Refuses to Join the NFL's Corporate Huddle,' U.S. News & World Report, September 26, 1994.Oppel, Richard A., and Doug Bedell, 'A Gem of an Investment,' Dallas Morning News, January 30, 1994, p. A1.Robertson, Dale, 'Jerry Jones Personifies a Real Dallas Maverick,' Houston Chronicle, January 28, 1994, p. 4.Seeholzer, Don, 'The Evolution of Pro Football,' Orange Country Register, January 29, 1993.Swift, E.M., 'Another Gusher for Jones,' Sports Illustrated, December 12, 1994, p. 44.

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