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Forbes.com: The $1 Billion Team


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The $1 Billion Team

Brett Pulley, 09.20.04

Raised on the Redskins, Dan Snyder got a little too emotionally close to the team. To make a successful business out of the team, he had to step back a little.

My father taught me to love the Washington Redskins. Every fall we spent Sunday afternoons at the old Robert F. Kennedy Stadium in the nation's capital, idolizing Sonny Jurgensen and Art Monk and other stars of yesteryear. The unofficial mascot, politically incorrect in a full-feathered headdress, would whip up the crowd with a war dance up and down the steep stadium stairs. Today, seven years after my father's death, the four season tickets he first purchased in 1963 are in my hands, and I await the day when my young daughters will accompany me to the games.

Daniel Snyder's father taught him to love the Redskins, too--so much so that he acquired the team and the stadium. People close to him say he grows emotional when he speaks of how his own father worshipped the Skins; Gerald Snyder was a former writer for United Press International and National Geographic who died a year ago at age 69. Dan Snyder, 39, is married, with two young daughters and a son. "I had to have a boy to take to football games," he tells his friends.

In college Snyder started a charter travel service and by the age of 19 had earned his first million. He later launched direct-marketing firm Snyder Communications, which approached $1 billion in sales in the 1990s. Then, in 1999, he took on $495 million of debt to pay $750 million to buy the team (and the stadium) of his childhood fantasy, selling his marketing firm a year later for $2.3 billion. Today he has a net worth of $500 million.

Since then he has turned the Redskins into a marketing machine. With a value that FORBES estimates at $1.1 billion, the team is the richest franchise in U.S. sports and the first American team in FORBES rankings ever to clear the billion-dollar mark. Snyder has expanded the stadium to mythic proportions--it is the largest in professional football, holding 92,000--and plastered ads throughout the stadium and across a range of broadcast properties and publications. Executives eagerly fork over hundreds of thousands of dollars a year to occupy 234 corporate suites.

Despite the 47% appreciation in the value of the Redskins since Snyder bought them, he's left a lot of money on the table because he's been too meddlesome. He's doled out huge player contracts of dubious value to aging superstars like Deion Sanders (seven years, $56 million) and hired and fired coaches with alarming frequency (five different head coaches in five years). The strategy backfired, leaving the Redskins paying on the contracts long after the players retired.

After the end of last season, when the team had only 5 wins against 11 losses, head coach Steve Spurrier was so disenchanted with working for Snyder that he quit and walked away from $15 million remaining on his five-year, $25 million contract. The Redskins have a losing record over the past five years.

To his friends, even Snyder himself now confides: "We've made some mistakes."

While most of us are scrunched on top of each other in our seats, Snyder spends home games inside the cherrywood confines of his luxurious owner's suite, smoking cigars and drinking Scotch with dignitaries and celebrity friends. "C'mon, have some fun," he urges his guests, who include former Secretary of State Madeleine Albright, FCC Chairman Michael Powell and former CNN anchor Bernard Shaw. But as the new season begins, Snyder is, uncharacteristically, talking very little. Shouldering the blame as the Redskins rack up losses, he has come to realize that being a lifelong fan and toting a fat checkbook aren't enough.

So Snyder has reached back into the team's past for some help, bringing coach Joe Gibbs, 63, out of retirement. The Hall of Famer had led the Redskins to three Super Bowl championships in the 1980s and early 1990s; now he will reap $28 million over five years to serve as head coach and president.

The addition of Gibbs enhances one of the country's strongest sports brands, says Marc Ganis, who heads the Chicago sports marketing firm Sportscorp Ltd. More important, it diverts the spotlight from Snyder himself. "Snyder is now experienced enough that he is comfortable having someone who has the spotlight more on them," Ganis says.

On the night when the National Football League's free-agent negotiating period officially started this spring, Gibbs began calling prospective players at one minute past midnight. A year earlier coach Spurrier was away on vacation when the free-agent negotiations started. The overbearing Snyder handled everything. Gibbs, says Vinny Cerrato, the head of football operations, "is much more involved than any of the other coaches have been."

Gibbs redux already is adding value to the team's bottom line. In August, the day before the Redskins played their first home preseason game, Snyder excitedly walked around the stadium, inspecting 5,000 new seats that he added this summer. Three hundred of them are "dream seats," priced at $3,500 each per game and close enough to the action for fans to high-five players after they run off the field.

The new additions also include luxury loge seating, where fans can buy individual seats in catered, climate-controlled areas without springing for an entire corporate suite. Snyder also has added 150 seats to his "owner's club" area, where suites go for up to $200,000 per season and amenities include restrooms with individual TV screens over each urinal. The team's revenue from premium seating is expected to hit $75 million this year, which we estimate will be more than three times the league average. What made the new premium seats salable? Heightened interest after coach Gibbs was hired.

In five years Snyder has increased the team's revenue by 60% to $245 million per year. Some of it was easy, if a little mercenary. He sold stadium naming rights to FedEx for $207 million over 27 years, reaping the most lucrative deal of its kind. Never mind that the stadium, completed in 1997 a few months after the death of longtime Redskins owner Jack Kent Cooke, had been named in Cooke's honor; Snyder simply scrapped the moniker.

He also increased the number of team-owned radio and television shows, partnering with broadcasters to produce several programs and sell ads across myriad platforms to such sponsors as Nextel, Home Depot and E-Trade. "We don't just sell stadium signage,'' Snyder likes to boast. He personally courts advertisers. When he took over he discovered that one consumer products company was paying only $180,000 a year for an exclusive deal that prohibited the team from striking an agreement with a competitor. Snyder renegotiated, lifting the price to $2 million a year and getting rid of the exclusivity; then he sold a similar deal to the sponsor's rival for another $2 million a year.

Since 1999 annual revenue from marketing and sponsorship has gone from $2 million to $50 million. At the same time revenue from local radio broadcasts has increased tenfold to $10 million. Additionally, Snyder has expanded the team-owned retail outlets (where some jerseys sell for over $300) from a single, stadium store open only on game days to 12 stores in the Washington area. Snyder was also the first football owner to charge fans to watch their team practice.

Although the NFL limits players' salaries to 65% of revenues, Snyder has a big advantage over his rivals because signing bonuses are prorated over the life of a contract for salary cap purposes. The team signed tackle Jon Jansen to a six-year, $25 million contract to start with the coming season. Last year the Redskins had operating income (net before depreciation, interest and taxes) of $69.6 million, the highest in the NFL.

"Snyder is a marketing genius," says Salvatore Galatioto, managing director of sports finance at Lehman Brothers. "If Gibbs turns things around on the field, Snyder will make even more money." Galatioto handled Snyder's recent sale of 30% of the team's equity to three investors: Federal Express founder and chairman Fred Smith, Virginia real estate developer Dwight C. Schar, and Robert Rothman, a Florida insurance executive. The equity stake sold for $225 million, which Snyder used to pay down debt that now totals $225 million. Other minority stakeholders in the team include Snyder's mother and sister, and Fred Drasner, a publishing executive.

Why such a low price for a 30% stake? Because suite and sponsorship revenue were not included. Those proceeds belong to a separate entity that includes the stadium. Snyder's brazen style has at times annoyed other owners. He once advertised his premium seats in the nearby Baltimore Ravens market, breaking an old gentlemen's agreement in the league not to poach. Four years ago he did an end run around league rules when he bought out a minority partner, real estate mogul Mortimer B. Zuckerman, without first getting the permission of the NFL.

Snyder's profligate spending continues: This season the Redskins will have the highest payroll in the league at $112 million (the team can exceed the salary cap because signing bonuses are prorated over the life of a player's contract). "Dan swings for the fences," says Cerrato, the Skins' operations chief. "He wants to win." But Snyder has changed his approach this year, giving the richest contracts to younger stars who will be around to earn the money, Cerrato says.

This isn't a game, this is a business. If Snyder's bet on Joe Gibbs works and the victories start rolling in, the owner will reward the loyal fans with a surprise, says one knowledgeable source: He will raise our ticket prices next season.



The Redskins lead the NFL in virtually every revenue category, thanks to a loyal and wealthy fan base.

Average ticket price

$68 ($53 NFL Average)

number of suites

234 (143)


667,000 (529,000)

suite revenue

$35 million ($13 mil)

sponsorship/ad revenue

$32 million ($13 mil)


$11 million ($4 mil)

All figures are for 2003 season. 1Excludes club seats and luxury-suite seats. Sources: Forbes; Team Marketing Report.


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Does a team really need an owner that charges a lot, and spends a lot? I know a lot of people here will say at least Snyder spends on the team, but does it really have to be this way to get some wins? Do we really have to pay the highest ticket prices in the NFL to get some wins? Is this the only way?

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