Dallas could lose more than $600M over pandemic

DALLAS — The NFL is a little more than three months from its scheduled regular season. While everything looks good for the NFL’s kickoff on the surface, the coronavirus pandemic could have a crippling financial effect on the league, with a recovery that might last years.

The Cowboys, as the NFL’s most valuable team at a whopping $5.5 billion according to Forbes magazine, are at the forefront of this issue.

The coronavirus has wrecked local economies across the country and created an unemployment rate of 13.3 percent. State and local governments are in various stages of allowing business to reopen in an attempt to restart the economy. When it comes to sports venues, putting fans in the seats is paramount.

Gov. Greg Abbott on Wednesday

raised the attendance capacity for pro and college sports in Texas to 50 percent, effective immediately. Seating fewer fans because of social distancing protocols would hamper NFL franchises’ ability to generate the same money as in the past, especially if the league determines fans will not be allowed at all to start the season.

Forbes, which analyzed 2018 revenue figures, reported last month that if fans are not allowed in NFL stadiums, the Cowboys would lose an estimated leaguehigh $621 million. The Cowboys generated $950 million in revenue in 2018 from AT&T Stadium in Arlington, according to the magazine.

Cowboys officials declined to confirm the financial projections by Forbes. However, experts in NFL finance, who don’t have access to the Cowboys’ private financial records, believe those numbers are close to accurate.

“It will be a very significant amount of money, and in the Cowboys’ case, you’ll be looking at potentially multiple hundreds of millions of dollars of revenue losses,” said Marc Ganis, president of SportsCorp LTD, a sports consulting firm. “That’s going to impact anybody.”

Yet despite the expected heavy losses, the Cowboys are not in a desperate situation. In the Cowboys’ case, reduced capacity for fans is just the beginning.

With less money coming in from ticket sales, the Cowboys would also lose money in parking, concessions (if allowed under local and state regulations) and local sponsorship money. Most NFL teams get a cut of the league’s merchandise, but the Cowboys have their own licensing deals. Fewer fans at games means less merchandise is being purchased at AT&T Stadium.

NFL teams print money, thanks to their television contracts. Last year, NFL teams received $274.3 million from their national TV deals, up from the $255 million in 2018. The Cowboys’ $950 million in revenue in 2018 was an increase from $864 million in 2017, according to Forbes.

It’s safe to say that the Cowboys, who stand to lose more money than any other team because of the pandemic, earn more than any other team.

“( Jerry Jones) generates, in a typical year, its double what the average team generates because he’s got that massive stadium and he’s got it hooked up with all the commercial features that you could imagine,” said Andrew Zimbalist, economics professor at Smith College. “He probably triples what the average NFL team brings in, in terms of revenue, that’s why I say he could afford it.”

The Cowboys make so much money that, according to Forbes, their projected losses ($621 million) if no fans are able to attend games is more than what the New England Patriots total revenue was in 2018 ($600 million).

The loss of income for NFL teams also could mean the salary cap, developed from total revenues generated by teams, will be lowered in 2021. In the last 10 years, the cap has increased close to $10 million per year. The salary cap in 2020 is $198.2 million.

In some ways, how much the Cowboys lose in revenue doesn’t matter from a competitive standpoint. Their spending on the salary cap is similar to what other teams spend.

“He’s dealing with what all the teams are facing, the same salary cap,” Zimbalist said. “It’s not like in baseball where the Yankees generate a lot more revenue than most teams do but salaries, player payroll, is much higher. Jerry Jones gets a tremendous amount of revenue, but then he’s basically got the same payroll as everybody else.”