Amongst the numerous professional sport leagues in America, a nation driven by sports, the NFL is the most profitable and revenue generating industry. The NFL is an intricate industry made up of a multitude of revenue driving facets of business the franchises within the leave so prosperous. From actual ticket sales and personal seat licensing, to numerous types of media coverage, to sports apparel, to performance effects, to even beverage endorsements, the valuation of a professional sports team is not a simple task. In 2010, the 32 teams in the NFL generated over $8 billion dollars in revenue and were valued at a collective $33 billion. Those staggering numbers are generated through a multitude of different econometric analysis and different approaches to valuing the net worth of a team. Cost-asset based approach, income approach, and market/sales comparisons are a few ways that analysts and investors can value a team. For purpose of specificity, I plan to focus on the novelty effects of the Dallas Cowboys new Cowboys Stadium on revenues and the overall value of their organization. (Dallas Cowboys are privately owned, thus public financial information is not available so other resources were used) Does a new stadium have a positive effect of an NFL team? Well, that question kind of seems vague and challenging to answer. Inevitably it would seem that players would want to play harder in a newer facility, thus improving the performance of their game, in turn spurring larger attendance rates which would generate more revenues. However, it is not as simple as that, as there is much to analyze in term of costs that would affect an owner to make such a decision. In regards to a specific method of valuation to analyze the question at hand, the Income Approach is the most efficient measurement and applicable method when analyzing the contributors of ticket sales and stadium attributes to team value. The mastermind behind the entire Cowboys operations is the savviest NFL owner Jerry Jones, the Owner, President and General Manager. At the top of most profitable team in the most profitable professional sports league in America, the Cowboys have been established to be the most thriving and valuable sports organization world wide, behind Manchester United Club Soccer teams. In order to further the success of the Cowboys, Jerry Jones strategically moved the Cowboys into the new $1.2 Billion retractable-roof stadium in 2009. The new stadium seats 80,000 fans (expandable to 100,000 during other events) and is the largest domed stadium in the world. The Cowboys are valued at $1.8 billion dollars and are a prime example of a revenue generating machine due to their new modern stadium built in 2009. With a reputable operating income of $143 million last year, this organization is only showing signs of growth, with a 13% annual gain since the purchase of the stadium. For teams like the 49ers, Bills, and the Raiders, a contributing factor that has lead them to be the least intrinsically valuable in the league is because they also have the oldest and most archaic stadiums in the league. Granted, team performance and success is a pivotal aspect of team valuation, the age of a teams’ stadium is a driving factor of success. This $1.25 billion stadium successfully sold out every regular season game last year even at the league’s highest average ticket price of $160. The NFL has the shortest season out of all of the professional sports leagues, which is ironically even more of a reason for owner’s to sacrifice high costs to build a new stadium that will produce revenues outside of the 16 regular season games, only 8 of which are home. Jerry Jones’ money hungry mentality pocketed himself an extra $12 million last year on events other than Cowboy games, such as boxing events, concerts, the NBA All-star Game, and even NCAA Tournaments and numerous games. To further secure stability within this enormous stadium investment, Jerry Jones paired up with Yankees owner George Steinbrenner and Goldman Sachs Group Inc. to form a private food and retail company, Legends Hospitality Management LLC (Kuriloff and Sessa). Jerry Jones has identified that there are 12 professional sports teams that have catering contracts that expire in 2010, as he plans to get others invested in this private catering company. Efforts such as this make teams like the Cowboys’ so profitable, because their owner tries to get his hand in every industry to strengthen the financial backing of the company. By securing outside funds other than ticket sales, Jerry Jones will be able to secure solid financing to pay off deserving salaries to the best athletes and staff. Thus, the stronger the internal operations, the more successful the stadium will be, which will improve the value of the organization. (Specific financial information has not been released regarding Legends Hospitality Management LLC ) In order to finance such an expensive job, a multitude of capital sources were turned to. In 1999, the NFL created the G3 Loan Program, which was created to enable various teams around the league to fund the construction of new revenue generating stadiums. The Loan Program ensured the bulk of their funds from a proportion of NFL media revenue and opposing teams’ ticket revenues generate by those newly built stadiums (Schoettle). The staggering cost of $1.2 Billion to build this 3 million square foot stadium was funded by $350 million of public funding (Arlington Bonds, and Tarant County Infrastructure), and $850 million of private funding (Private bonds, G3 Loan Program, Cowboys Cash Contributions, and Bank Of America Bonds Secured by Club Seat Options). This public financing comes from the taxpayers of Arlington’s pocket, as they anticipate the building of the stadium to open up more jobs for the surrounding cities and improve business as a whole. The hope is that those taxpayer funds will in turn stimulate business and return more than that $350 million in debt financing. “Hill Estimated 3,000 to 4,000 people will be working at stadium, about 1.5 times the number of employees at Texas Stadium in Irving.” In comparison to the new Indianapolis Colts stadium built in 2008, the new Cowboy stadium will employ roughly 1,000 more employees. This also adds to the value of the organization because though it may be difficult to trace the positive effects of employing more local labor, the company image as a whole will be strengthened if the surrounding city endorses the stadiums’ business. A direct result of any beneficial construction project such as this on its surrounding city is the positive effect on the housing market. “Positive net benefit projects raise house prices in aggregate” and in this case, the “property values increased in the city of Dallas after the announcement that the Cowboys might move from the city of Irving to a new stadium in downtown Dallas” (Dehring). In the new Cowboys’ stadium, “The real revenue magic, year after year, is in the 15,000 club seats that didn't exist at Texas Stadium and in the 300 suites, which can hold additional 12,000 or so fans. Together, these premium areas make up more than a third of the base capacity at the new stadium and account for more than two-thirds of the team's estimated revenue gains”(Jacobson). At $340 per club ticket each game, the Cowboys will be able to generate up to an additional $50 million in ticket revenues a year. This spike in ticket revenues is expected to continue to rise, and they are not expecting a default in season ticket holders even during these tough economic times. For Robert Kraft the owner of the New England Patriots, the construction of the new Patriots stadium was able to spike revenues by 39% ($53 million) and for Jeffery Lurie of the Philadelphia Eagles, the construction of the new stadium in 2003 spiked revenues 48 % ($64 million)(Jacobson). Once a naming rights deal is finalized, there is a potential for a $20 million a year increase in revenues for up to 20 years, which will further boost there operating profit. Thus bolstering the answer that yes, the construction of the new Cowboys stadium will lead to an improvement in organization valuation despite the enormous expenses at hand. Budgeted total costs were estimated at $650 million in the summer of 2004 for the entire project, but costs quickly escalated leading the actual total cost of the project to be $1.2 billion. This under allocation cost of $550 million dollars is 84% of the budgeted costs that were estimated at the beginning of the project. Although these costs may be higher than they had pleased, even during this tough economic time the Cowboys managed to stay out of the red. The NFL’s 32 teams collectively had a 2% decrease in value in 2009, the first decline in value over the last 12 years. However, out of those 32 teams, the Cowboys were one of five teams to experience growth during this downturn in the economy. The Cowboys grew 9% from 2008 to 2009, with a 2009 revenue of $420 million and an operating income of $143.3 million. “Revenue is net of stadium revenues used for debt payments. Operating Income is earnings before interest, taxes, depreciation and amortization”(Forbes). These numbers are based off of the 2009 season, even with the debt of the stadium into account. The debt/value ratio for the Dallas Cowboys Franchise is 11%, also including stadium debt. These numbers clearly convey that with the construction of the new Cowboys Stadium, revenues hence team valuation have been positively impacted and are expected to continue to grow due to promising future revenue drivers. Throughout an extremely admirable professional career, Jerry Jones owner of the Dallas Cowboys, has ambitiously delivered unprecedented success and value to the organization he devotes so much time to. A true depiction of a business man, Jerry Jones has financially succeeded in creating the most valuable team in all of the NFL, and it is primarily due to his assertive business decisions. The construction of the new Cowboys Stadium has not only improved the value of the organization, but it has revolutionized the NFL and expectations of a prosperously thriving franchise. The success and profits of the organization thus far and expected future earnings far outweigh the costs incurred to construct this modern masterpiece. Admirable sports franchises such as the Cowboys must maintain that throne of excellence by adopting to the times, and in their case, constructing an innovative new stadium was that essential message that was needed to be sent to the entire NFL to prove that they are in fact are the most successful financially.

Works Cited
Badenhausen, By Kurt. "The Business Of Football - Forbes.com." Forbes.com - Business News, Financial News, Stock Market Analysis, Technology & Global Headline News. 25 Aug. 2010. Web. 2o Nov. 2010. .

Dallas Cowboys New Stadium. Digital image. Sony Insider. 20 Apr. 2009. Web. 23 Nov. 2010. .

Jacobson, Gary. "Analysis: Cowboys Stadium Could Generate Extra $90 Million | Dallas Cowboys News | Sports News |." Dallas News, Sports, Weather and Traffic from The Dallas Morning News. 4 June 2009. Web. 20 Nov. 2010. .

Kuriloff, By Aaron. "Yankees, Cowboys, Goldman Sachs Form Stadium Company (Update2) - Bloomberg." Bloomberg. 20 Oct. 2008. Web. 20 Nov. 2010. .

"NFL Team Valuations - Forbes.com." Forbes.com - Business News, Financial News, Stock Market Analysis, Technology & Global Headline News. 25 Aug. 2010. Web. 19 Nov. 2010. .

Perez, Ross. "NFL Team Values - It's All About the Stadium | Tableau Public." Fast Analytics and Rapid-fire Business Intelligence from Tableau Software | Tableau Software. 26 Aug. 2010. Web. 23 Nov. 2010. .

Schoettle, Anthony. "Labor Tiff Puts Loan for Stadium in Limbo | North America United States from AllBusiness.com." Small Business Advice and Resources from AllBusiness.com. 27 Feb. 2007. Web. 20 Nov. 2010. .

Smith, Kelly. "Valuing Professional Sports Franchises: An Econometric Approach." Economics at About.Com -- Your Portal to the World of Economics. 2004. Web. 22 Nov. 2010. .
Vrooman, John. "Dallas Cowboy Stadium Analysis." Vanderbilt University (2010). Print.