Jerry Jones, owner and general manager of the Dallas Cowboys, stands out as one of the most colorful and highly recognized figures in the National Football League. Ever since purchasing the team in 1989, Jones, 77, took an unusually hands-on approach to running the organization, with an enviable success record. Not only did he lead the Cowboys to Super Bowl victories in 1993, 1994, and 1996, but he shepherded his team to the best record in the NFL in 2014.
Early Career Origins
After graduating from the University of Arkansas in 1965, Jones began his career working for his father’s insurance company, selling life insurance policies. But this wasn’t professionally satisfying, so he borrowed money from his father-in-law to buy several pizza franchises throughout the state of Missouri. Unfortunately, these business ventures failed. And at age 25, Jones pivoted careers again, when he formed Jones Oil and Land Lease, an oil and gas exploration outfit. (For more, see: Recession-Proof Sports Leagues.)
Rolling the Dice on Oil
“Wildcatting” is a business term describing the speculative act of drilling for oil in places not heretofore known to contain it. Although the land is relatively cheap, wildcatting is considered to be a high-risk exercise, because the land is often devoid of oil, frequently leaving investors with useless acreage. On the other hand, if an oilman happens to strike oil, wildcatting can be immensely profitable, because the land suddenly spikes in value.
As a wildcatter, Jones found extraordinary success with the purchase of an overlooked but fecund piece of land in Oklahoma. At the time, he was extremely over-leveraged, paying $10,000 per month in loan interest. But the investment ultimately catapulted his net worth into the 8-digit range, allowing him to bankroll his purchase of the Cowboys, for an unprecedented $140 million. This high price-tag was especially notable, given that the team had just come off of an abysmal 3-13 season. After firing the existing staff and replacing it with entirely new blood, Jones won his first Super Bowl just three years later.
Seven years before Jones acquired the Cowboys, the NFL owners created the NFL Trust, to which all teams ceded their exclusive legal rights to commercially license their logos. In theory, this leveraged the NFL’s overall bargaining power to help it negotiate more lucrative licensing deals than each team could accomplish individually. But in 1995, Jones signed multi-million dollar sponsorship deals with Pepsi, American Express, and Nike (NKE), by routing the deal through the Cowboys' stadium: Texas Stadium Corporation. Jones staunchly justified his actions, pointing out how the Cowboys were responsible for at least ¼ of the league’s team-branded merchandise sales, yet it received just 1/30 of the take.
Jones' move technically didn't violate the terms of the NFL Trust, due to the fact that only the teams were part of the trust, while stadiums were deemed separate entities. But this didn't stop enraged NFL higher-ups from filing a $300 million lawsuit against Jones, who was quick to fight back. Not only did the Cowboys file and win a motion to dismiss the case against them, but Jones counter-punched by filing a $750 million antitrust lawsuit against the NFL, which ultimately resulted in a settlement. And when the dust cleared, Texas Stadium Corporation was permitted to keep all of its existing contracts. But more importantly, the Cowboys team was granted the right to directly enter into its own licensing agreements—separate from Texas Stadium Corporation. Furthermore, this opened the doors for other NFL team stadiums to enter their own sponsorship agreements.
This legal win resulted in extravagant revenue streams for the Cowboy organization, which helped Jones reboot his previous efforts in the pizza franchise space. Currently, the Jones family controls a 50% interest in 75 Papa John’s International Inc. (PZZA) locations throughout Texas.
The Bottom Line
Throughout the 30 years since he purchased the Cowboys, Jerry Jones has focused on his team with a passion rarely seen with other owners. His initial critics notwithstanding, his independent streak has benefitted his fellow NFL owners like nothing else has. (For more, see: The Pros and Cons of Sports Investing.)