Dallas named NFL’s most valuable franchise…but are they a paper tiger?
I’m a money manager by day, so the financial aspects of the NFL are as fascinating to me as what happens on the field. Forbes just released its annual report on the value of American sports franchises and the Dallas Cowboys have overtaken the Washington Redskins as the most valuable NFL team; ending an 8-year streak for Daniel Snyder’s squad.
NFL Team Values (Forbes.com)
| Rank | Team | Value($B) |
|---|---|---|
| 1 | Dallas Cowboys | $1.500 |
| 2 | Washington Redskins | $1.467 |
| 3 | New England Patriots | $1.199 |
| 4 | Houston Texans | $1.056 |
| 5 | Philadelphia Eagles | $1.052 |
| 6 | Denver Broncos | $0.994 |
| 7 | Chicago Bears | $0.984 |
| 8 | New York Giants | $0.974 |
| 9 | Cleveland Browns | $0.969 |
| 10 | New York Jets | $0.967 |
| 11 | Baltimore Ravens | $0.965 |
| 12 | Tampa Bay Buccaneers | $0.963 |
| 13 | Kansas City Chiefs | $0.960 |
| 14 | Carolina Panthers | $0.956 |
| 15 | Miami Dolphins | $0.942 |
| 16 | Pittsburgh Steelers | $0.929 |
| 17 | Green Bay Packers | $0.927 |
| 18 | Tennessee Titans | $0.922 |
| 19 | Seattle Seahawks | $0.921 |
| 20 | Cincinnati Bengals | $0.912 |
| 21 | Indianapolis Colts | $0.911 |
| 22 | StLouis Rams | $0.908 |
| 23 | Arizona Cardinals | $0.888 |
| 24 | Detroit Lions | $0.870 |
| 25 | New Orleans Saints | $0.854 |
| 26 | San Diego Chargers | $0.826 |
| 27 | Buffalo Bills | $0.821 |
| 28 | Oakland Raiders | $0.812 |
| 29 | Jacksonville Jaguars | $0.811 |
| 30 | San Francisco 49ers | $0.799 |
| 31 | Atlanta Falcons | $0.796 |
| 32 | Minnesota Vikings | $0.782 |
While Dallas is getting the headlines, I’m more interested in which franchises are generating the most operating profits and which have the least leverage (i.e., debt); both incredibly important measures of the team’s respective financial health.
Forbes provides each team’s annual revenues and their operating income. Let’s compare how the team’s rank in terms of operating margin (defined as operating income/revenues) and it paints a decidedly different picture.
| Rank | Team | Revenue | Operating Income | OpMargin |
|---|---|---|---|---|
| 1 | Oakland Raiders | 189 | 46.2 | 24.4% |
| 2 | Washington Redskins | 312 | 66.0 | 21.2% |
| 3 | Tampa Bay Buccaneers | 205 | 39.5 | 19.3% |
| 4 | Buffalo Bills | 189 | 34.6 | 18.3% |
| 5 | Kansas City Chiefs | 196 | 35.2 | 18.0% |
| 6 | Chicago Bears | 209 | 36.9 | 17.7% |
| 7 | New England Patriots | 255 | 34.9 | 13.7% |
| 8 | New York Jets | 193 | 26.4 | 13.7% |
| 9 | New Orleans Saints | 194 | 25.2 | 13.0% |
| 10 | Tennessee Titans | 196 | 24.2 | 12.3% |
| 11 | Jacksonville Jaguars | 189 | 22.1 | 11.7% |
| 12 | Houston Texans | 225 | 25.9 | 11.5% |
| 13 | Philadelphia Eagles | 224 | 25.7 | 11.5% |
| 14 | Green Bay Packers | 197 | 20.3 | 10.3% |
| 15 | Pittsburgh Steelers | 198 | 20.0 | 10.1% |
| 16 | Cleveland Browns | 206 | 20.6 | 10.0% |
| 17 | San Diego Chargers | 192 | 19.2 | 10.0% |
| 18 | St Louis Rams | 193 | 17.9 | 9.3% |
| 19 | Denver Broncos | 212 | 15.9 | 7.5% |
| 20 | Cincinnati Bengals | 194 | 11.7 | 6.0% |
| 21 | New York Giants | 195 | 10.7 | 5.5% |
| 22 | San Francisco 49ers | 186 | 9.9 | 5.3% |
| 23 | Miami Dolphins | 215 | 11.2 | 5.2% |
| 24 | Arizona Cardinals | 189 | 4.6 | 2.4% |
| 25 | Dallas Cowboys | 242 | 4.3 | 1.8% |
| 26 | Carolina Panthers | 203 | 2.5 | 1.2% |
| 27 | Baltimore Ravens | 205 | 1.0 | 0.5% |
| 28 | Detroit Lions | 189 | (1.8) | -1.0% |
| 29 | Seattle Seahawks | 196 | (2.6) | -1.3% |
| 30 | Atlanta Falcons | 185 | (3.4) | -1.8% |
| 31 | Indianapolis Colts | 184 | (17.3) | -9.4% |
| 32 | Minnesota Vikings | 182 | (19.1) | -10.5% |
The Cowboys are among the bottom third of the league in terms of operating margin, with a meager $4.3mm in operating income. Sometimes the label “most valuable franchise” can be really misleading. Compare that to the team they supposedly knocked off the top spot, the Redskins. Washington absolutely demolishes the rest of the league in total revenues ($312mm) and has a fantastic 21% operating margin. In other words, for all that money Daniel Snyder wastes, er, I mean spends on big ticket free agents, he’s got more profits to spare than anyone else in the league. Other interesting observations:
- Al Davis’ on-field product may be a laughing stock, but he’s still turning a tidy profit; generating a better margin on his revenue base than anyone else in the league
- Buffalo and Kansas City, despite being considered small market teams, rakes in the profits
- While Cleveland fans may never forgive Art Modell for moving the team to Baltimore, the new Browns franchise is generating a much better return than the Ravens are; so there’s some poetic justice
- The Colts, despite winning the Super Bowl, are hemorrhaging money
- The Falcons, despite being run by Arthur Blank [considered an uber savvy corporate magnate], are already struggling to turn a profit and that’s before the fallout from Michael Vick takes hold
- The Vikings have a legitimate gripe with their current financial situation; and either need the city to finally give in to a new stadium deal or must consider moving
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