U.S. soccer league banking on Beckham for big payday
As David Beckham moves from a Spanish soccer pitch to delivering a polished sales pitch in his new role as American soccer idol, he will need to make both the Los Angeles Galaxy and its business partners prosper as he collects a hefty paycheck, starting with his guaranteed, $6.5-million salary.
Beckham, who was met by a crush of reporters and cameras at Los Angeles International Airport upon arriving Thursday night from London, will be formally introduced today on the field at Home Depot Center in Carson. But the British star already has proved he will have an impact at the box office, in stores and in the media.
Beckham’s personal payday at the end of his five-year deal with the Galaxy is expected to reach or top $250 million on the strength of that guaranteed salary, his existing corporate sponsorships -- worth an estimated $20 million per year -- with such companies as Motorola and Adidas, as well as profit-sharing deals negotiated with the team and its corporate partners.
In order for Beckham’s payday to pencil out, however, Major League Soccer’s sports marketing machinery will have to grind out an even bigger number.
“There’s going to be a billion-dollar impact,” said Tim Leiweke, chief executive of AEG, the Galaxy’s parent company. “No question about it.”
Leiweke’s bold assertion covers a range of soccer-related business dealings that arguably will be shaped by Beckham’s presence.
Jersey and ticket sales will be relatively easy to compute. But future media rights fees, naming rights deals, and the revenue generated by additional MLS franchise fees will take longer to measure. And the benefits to such companies as Creative Artists Agency and 19 Entertainment Inc., which represented Beckham in the Galaxy deal, might never be fully understood.
But start with the shirt on Beckham’s back and Leiweke’s calculus begins to take shape.
If Beckham can help to sell 200,000 Galaxy jerseys at $80 a pop, that would represent $16 million at retail and give business partner Adidas a powerful edge in its battle with Nike.
Ring up another $25 million, which is what Herbalife is paying to put its name on Beckham’s chest -- and then wait to see what other corporations will pay for similar real estate in other MLS cities.
Herbalife’s logo will be seen by thousands of additional fans across the country. Galaxy ticket revenue alone has doubled in recent months and advance sales for five road games with Beckham in uniform averaged 26,419 as of Wednesday, well above the league average of 15,089.
Other MLS teams will share in some of the Beckham-created bounty because league rules call for some ticket and product licensing revenue to be shared.
Beckham also will get credit for such off-the-field developments as the Spice Girls reunion tour featuring his wife, Victoria, that will touch down here and in Las Vegas, New York and London -- on stages owned by AEG.
Team owners also are anticipating that Beckham’s arrival, when coupled with new soccer stadiums being built and a stronger television presence, will drive up franchise expansion fees. Two years ago, the league sold rights to an expansion team in Toronto for $10 million. Leiweke and other MLS owners believe it’s possible for the league to sell four new franchises in coming years for $30 million or more each, which would represent a premium.
That expectation “seems to be both credible and, possibly, conservative,” said Andrew Zimbalist, a Smith College economics professor and author of “National Pastime: How Americans Play Baseball and the Rest of the World Plays Soccer.”
“It’s not outlandish in my view. ... There clearly is growing interest in the MLS.”
Beckham’s new business partners know that a 32-year-old athlete can’t carry an entire league in a country where home-grown sports continue to dominate. And MLS remains a relatively minor league in a global soccer industry dominated by such titans as Britain’s Manchester United, which two years ago sold for $1.4 billion.
“David Beckham is not our definitive moment,” Leiweke said. “The definitive moment is when the U.S. wins the World Cup. But I don’t know if it’s going to happen during my lifetime or my daughter’s lifetime.”
MLS is taking a calculated risk by allowing its teams to pay relatively large salaries to a handful of star players. Only two of the league’s 13 franchises are believed to be turning a profit. Beckham’s annual salary also risks upsetting players in a league where many players earn $17,700 or less.
“This league is ready to move forward and become more significant in international play,” said Bob Foose, executive director of the players union. “The league is generating sufficient revenue to pay players a living wage, and not have compensation artificially capped, which is the current situation.”
Salaries eventually became an issue for the now-defunct North American Soccer League during the 1970s when international soccer star Pele joined the New York Cosmos. Clive Toye, who was president of the franchise during its glory days, says that the Pele deal initially penciled out.
“When it didn’t begin to add up was when ordinary players were being signed for not much less than Pele,” Toye said. “The money that we brought in on Pele was going out the door on good but not special players.”
That history isn’t lost on MLS owners. Even so, they are betting Beckham will deliver the kind of a bump that Mark McGwire and Sammy Sosa generated a decade ago for baseball. “The question is whether we as owners are going to be wise enough to do other moves and other things that give us another bump and then another bump,” Leiweke said.
Given the groundwork laid since Pele played, sports marketers agree that Beckham could help to elevate MLS play.
The league “has a ways to go,” said Jeff Knapple, president of Los Angeles-based WMG Marketing, which structures naming rights deals for sports franchises. But when a U.S. team wins a World Cup, he added, “MLS’ credibility around the world is going to be elevated.”
Little about Beckham’s arrival in the U.S. has been left to chance. The only thing Beckham was guaranteed in the deal announced in January was the salary. But an AEG news release trumpeted the $250-million potential value of Beckham’s contract over its five-year life.
The news release was crafted by Simon Fuller, the British marketing wizard who helped transform the Spice Girls into an international phenomenon, dreamed up “American Idol,” and has represented Beckham in prior business dealings.
Media outlets worldwide ran with the $250-million figure.
“The [Beckham] roll-out has been and will continue to be extremely calculated,” said David Carter, executive director of the USC Sports Business Institute. “Everyone involved is going to be trying to maximize what’s in it for them. And to fully appreciate it all, you’d need nothing short of John Madden and a Telestrator.”
The Galaxy opted not to introduce new home and away jerseys at the start of the season, banking on a Beckham deal getting done. So, on Wednesday, Sports Illustrated put Beckham and the new Galaxy jersey on its cover. And, on Thursday, the Sports Authority became the first retailer to sell Beckham’s No. 23 jersey.
The carefully plotted introduction extends to three arranged-for-television matches that will be broadcast live in many parts of the world. Beckham’s first game on July 21 will be against Chelsea, an English club, rather than an MLS team.
“The Galaxy versus the Chicago Fire might have been picked up by English TV, but this is Chelsea and David Beckham and it will be shown live in England,” Leiweke said. Subsequent games against two Mexican teams will introduce Beckham to Latino fans in the U.S. and build bridges to futbol fans in Mexico and South America.
The full-court media press in advance of Beckham’s arrival has included coverage from such publications as People Magazine and syndicated entertainment shows on television. Today’s introduction has attracted media from all over the world; about 700 credentials were issued.
The media blitz is “something you are not seeing with any other current U.S. athlete, short of Tiger Woods,” said Eric Wright, a vice president with Joyce Julius & Associates., which tracks sports media coverage.
For existing Galaxy and MLS sponsors, Wright said, “It was like winning the lottery.”
Times staff writers Helene Elliott and Grahame L. Jones contributed to this report.