Daniel M. Snyder's $800 million purchase of the Washington Redskins and 80,116-seat Redskins Stadium is testament to his passion for the team. But the record transaction, the most ever paid for a U.S. sports team, also saddles Snyder with a tremendous financial burden that will demand almost immediate success to simply break even, much less turn a profit.
For now, Snyder and his partners, real estate and publishing magnate Mortimer Zuckerman and publisher Fred Drasner, hold the distinction of having by far the heaviest debt burden in the NFL -- estimated at roughly $50 million a year. Most NFL teams turn a profit of less than $20 million a year.
If Snyder is to meet his debt payments and ultimately transform the Redskins into a high-performing business, he must not only lead the building of the team that takes the field, he also must build the team that works on marketing, sales, sponsorship, advertising and local radio and television deals.
Although NFL teams compete fiercely on the field, they share equally in much of the revenue their competition creates. Each team gets an equal share of the national TV rights fees (the current eight-year deal is worth $17.6 billion). Teams also equally divide income from NFL Properties and NFL Films, regardless how well their particular T-shirts, jerseys, caps or videos sell.
Most ticket revenue from each game is shared, too, with the home team taking 66 percent.
To generate additional revenue -- over and above that which must be shared with other teams -- NFL owners have few places to turn: the stadium's club seats and luxury suites, which are exempt from revenue-sharing; local TV and radio rights fees; and local sponsorships and advertising.
"Virtually all of it has to come from his stadium," said Mark S. Ganis, founder of SportsCorp. Ltd., a Chicago-based consulting firm that specializes in sports marketing. Snyder "has got to sell local sponsorships that are significantly greater than what has been there before. He needs to sell the naming rights, complete the sale of club seats and potentially expand the suites. National revenues [primarily from the NFL's TV contracts] will increase as they are scheduled to, but most of that gets eaten up by player salaries. So you've got to look to your local revenue."
That is precisely where Snyder, 34, who built his fortune in marketing and communications, has begun making his mark. Much as Cowboys owner Jerry Jones did in Dallas decades ago, Snyder must find new ways of leveraging Washingtonians' love for the Redskins and corporations' desire to be associated with the team.
"He's in the right market," Ganis said. "If it can be done anywhere, I think, New York, Chicago, Dallas and D.C. are the markets where that kind of local revenue can be generated. It has to do with demographics, the wealth of the population, the need for entertainment-type activity and the passion for the team."
Snyder started drawing up a business plan for the Redskins even before his $800 million purchase closed. As he did his due-diligence on the team and stadium, he concluded marketing efforts to date were moribund. He looked at empty spaces in the stadium and saw opportunities for advertising. He looked at unsold club seats and imagined how amenities such as wait service and catered meals would enhance their appeal.
He tapped longtime associate Steve Baldacci, then a senior vice president of Snyder Communications, to develop a strategy for injecting new life into the Redskins' marketing operation even before top executives could be hired. Baldacci now is a leading candidate to become the next team president. By the time the sale closed, Snyder knew essentially where he wanted to go and who he wanted to bring aboard to take him there.
He began by firing roughly two dozen front-office employees, including the stadium manager, and hiring David Cope, who had built an impressive resume with the Baltimore Ravens, to be the Redskins' executive vice president.
Cope, 35, brought a wealth of experience and contacts in Washington-area sports marketing. Before joining the Ravens, he negotiated the MCI Center naming-rights deal as general sales manager for Abe Pollin's Washington Sports & Entertain-ment. He began his career with the Baltimore Orioles and was part of the team that opened Oriole Park at Camden Yards and organized baseball's first All-Star Week in 1993.
Cope was so valuable to the Ravens, his hiring by the Redskins prompted Ravens owner Art Modell to file a grievance with the NFL office.
Modell declined to offer an opinion for this article on how Snyder has done so far as an NFL owner. "It's new for him," said Modell, who bought the former Cleveland Browns for $4 million in 1961. "He'll find it's not a bed of roses."
But within two months of Cope's arrival, the Redskins' annual advertising revenue soared, according to Snyder, from roughly $5 million to $15 million. Snyder is tight-lipped about individual deals, but a cursory scan of stadium signs confirms several new "official" Redskins marketing partners: Cadillac, the new Amtrak high-speed train known as "acela," Bacardi rum, adidas and Bell Atlantic Mobile. The team also struck a deal with US Airways, now its official airlines.
To complete the sale of the stadium's roughly 2,000 remaining club seats, Snyder hired Dan Cohen, who had worked with the Washington Wizards, as vice president of sales. After staging two open houses that gave fans a chance to pick their seats and tour club-level amenities, team officials say fewer than 300 club seats remain. Snyder is considering installing more club seats this fall.
Like many NFL owners, Snyder also brought the production of the Redskins' local TV broadcasts, such as those for preseason games, and radio broadcasts in-house. That way, he can sell the shows' advertising and keep the proceeds. So he brought in Mark Burdett, formerly an executive at WJLA-TV-7, to handle broadcasting issues. Snyder also is considering creating a local Redskins' TV show, shopping its potential air time among local stations.
Snyder also has sought to make the former Jack Kent Cooke Stadium, which he recently described as "a fixer-upper," more hospitable.
Already carrying more than $600 million in debt, he invested several million dollars more to improve the game-day experience for fans. He got rid of railings that obstructed many views in the upper deck, upgraded the sound system, added concession stands and will introduce wait service for club-seat patrons at Sunday's season opener.
He changed the venue's name to Redskins Stadium and is seeking a buyer for its naming rights, which is expected to generate more than $100 million over the next 20 years.
A Redskins fan since childhood, Snyder was stunned to find that the team had no official fan club. So he will introduce one, in conjunction with a snappy upgrade of the Redskins' Web site, with an eye toward building relationships with future season-ticket holders.
But the surest formula for an NFL team's marketing success, Ganis added, is winning on the field.
"You can abuse fans' passion if you don't win," Ganis said. "So that's where the added pressure of fielding a championship-caliber franchise comes in."