I’ve had a couple of days to digest the major news from Thursday. The thing which kept getting to me was the money involved. So I did a little research. According to Grahame Jones in the LA Times, only about 20% of his $250 million is actually from a soccer playing salary.
Beckham insisted that the decision to come to Los Angeles, where he already has a youth soccer academy, was not based on the hefty size of the contract put together by AEG, an estimated 80% of which will come from commercial endorsement deals and image rights.
Now, paying him $10 million/year sounds a lot more realistic. It’s only 5 times the salary cap…and that’s with him hitting all of his incentives such as hitting attendance targets and games played.
Beckham’s pay raise is actually only about $1.5 million/year.
The other 80% of the $250 million is all on endorsement deals. Becks gets most of his image rights and the US is potentially a much bigger market than the UK, Spain or even Japan and Thailand. Playing in the US, Pepsi, Gillette and such are willing to pay him even more for his time (and endorsement). The US is king of all commercial markets.
Also, expect to hear about a massive shirt sponsorship deal LA will be getting soon. It’s a deal which wouldn’t have happened if Becks weren’t signing with LA. Looking at the numbers now, LA may have got the marketing tool for a bargain. Oh, and he should do alright on the pitch as well.
Now, add in the fact that LA sold 2000 season tickets on Thursday just after the announcement of his signing with LA. Now, I don’t know how many tickets are actually in each price range but let’s just say the average ticket price is about $600. That makes a nice little $1.2 million addition to the Galaxy’s bank account. Is it a coincidence that LA announced their season ticket prices just hours after the announcement on Thursday?
Now, add in all the merchandise he’ll sell–actually, AEG/MLS/LAG dropped the ball here by not having the 2007 shirts ready and available with Beckham’s name and number on it. Real made a mint within hours of signing Beckham. Missed opportunity there. Spice fans all over the world would have been entering their Credit Card numbers on MLSgear.com if there was merchandise for them to buy already. It’s not like they can blame Nike for not coming through. Adidas is their supplier now and they have a vested interest in making money off Beckham as well.
So, with a couple well chosen words, MLS has made this deal appear to be very different than it is. Well done by them. It got a bit of extra attention from the hostile US media. Of course, the negative stuff is flying around. The British in particular have some kind of fear that the sport will eventually catch on in this country. The media bias there than the US is void of real “football” and American’s want to change the sport is almost as bad as the anti-soccer bias we have in the media here. This should be fun to follow.
Now with Posh in LA house hunting, it looks like Dave’s days in Madrid may be over sooner rather than later. How much of a transfer fee will Real want? I’m now leaning towards him being in LA before the season starts…even better news?
I’ve a feeling this story will be worldwide news for a while. Seems to me that the investment is already paying off.