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The Business Impact of Beckham

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(alternate text)Regular readers of this blog are well-acquainted with my soccer obsession. So I was thrilled about the news that David Beckham signed to play for the Los Angeles Galaxy in America’s Major League Soccer. When an athlete signs for $250 million, it’s the kind of event that is guaranteed to generate headlines and conversation. And ticket sales. The Galaxy sold 1,000 new season tickets on Thursday morning.

Normally, I would be ecstatic for soccer to be a lead story on the sports shows. But today’s Beckham news reveals the unfathomable ignorance of so many sports “experts” that are compelled to comment on something they know nothing about. On ESPN’s Around the Horn, Chicago Sun-Times columnist Jay Mariotti talked about Beckham joining the “LA Express.” At the end of the show, he managed to eke out a correction that he had the name of the team wrong and then explained his mistake by saying “I don’t care about soccer anyway,” or something to that effect.

On ESPN’s NFL Live show, former Dallas Cowboy compared Beckham to Terrell Owens because “he’s never won a championship.” When, in fact, Becks won several titles while at Manchester United. Actually, during the 1998-99 season, his United team completed the treble by winning the English Premiere League title, the FA Cup, and the Champions League. All total, his team won the Premiere League title five times, the Champions League once, the Toyota Cup once, and the FA Cup twice. We can forgive Woodson’s ignorance because, after all, he played a sport that has the audacity to call the Super Bowl winners “world champions” even though they don’t play anyone from any other countries.

If this is the type of coverage we are going to get, I’d almost be more happy for soccer to go back to being ignored by the mainstream sporting press.

Now, the $250 million figure is almost certainly inflated. That’s not just his soccer wages from the Galaxy, but also includes endorsement cash and other payouts. Fox Soccer Channel’s Jamie Trecker (a sports journalist who actually knows about soccer) reported that the “MLS is responsible for only $400,000 of Beckham’s paycheck.”

Here’s the key question in all this: Is he worth that kind of money? On the field, that’s questionable. Beckham has undoubtedly lost a few steps so his critics would say he’s not worth the cash. Others would argue that his devastatingly accurate free kicks are in fact worth it. The on-field argument is something we’re not likely to solve any time soon.

But what about off the pitch? Is David Beckham worth a quarter of a billion dollars? Based on the evidence presented in John Carlin’s illuminating White Angels: Beckham, the Real Madrid and the New Football, the answer is a resounding yes! Consider these examples from the book:

  • Real Madrid’s Director of Marketing Jose Angel Sanchez estimated that was worth 500 million euros to the team. That’s $644,913,210 with today’s conversion rate. 
  • “Within a week of Beckham signing for Real Madrid the eighty shops in Singapore that sold the team’s shirts reported they were running out and desperate for more. Adidas Singapore reported that due to Beckham’s arrival they expected to sell forty per cent more Real shirts over the next three months.”
  • A major Japanese television station snapped up the rights to broadcast Real games and paid “eight million euros for a thirty second spot Beckham did.”
  • Prior to Beckham’s arrival, Real Madrid charged 1.5 million euros to play an exhibition match in Asia. After his arrival, the going rate was 5 million euros per game. One tour of “two or three games” was to net the team 14.5 million euros.
  • In 2000/2001, Real Madrid’s income was 138 million euros. In 2003/2004, after Beckham’s signing, the income was 240 million euros. Ticket sales over that same period of time increased 50%.
  • 40,000 people in Ho Chi Minh City filled a stadium to watch Beckham ride around in an open-topped car.
  • One particular store in Madrid was having trouble selling a particular team tracksuit. Beckham gave an interview in that suit and the store sold 4,000 of the garments within 48 hours of the interview.
  • In 2003, Real Madrid sold one million shirts with Beckham’s name. More than all the other players on the team combined.
  • Market research experts proved that Beckham enjoys 90% name recognition in Japan.

Many of the sports media naysayers point out America’s long-standing reticence towards soccer. Quite a few of them bring up memories of Pele and Beckenbauer gracing NASL fields in the late 70’s. They chuckle that if Pele couldn’t inspire soccer madness in America, then how is Beckham going to do it? Well, for one, that argument is worthless because it’s a completely different era today. Go back to the days when Pele was running on a dirt field spray-painted green (as wonderfully recounted in Gavin Newsham’s Once in a Lifetime), drive out to the suburbs, and count how many soccer fields in sight. Practically none. But today, more than 20 years after Pele played for the Cosmos, youth soccer fields are everywhere. There is a more receptive, more knowledgeable audience for soccer in 2007 than in 1977.

But even if Beckham fails in his quest to raise the profile of soccer in this country, just the interest (and dollars and yen and euros and rand and so forth) from other countries will still justify his contract. Regardless of how well he plays, attention from all over the globe will follow Beckham and American soccer. And that attention is invaluable. For example, Jesus Gasanz was the president of Audi in Spain when Beckham signed with Real Madrid. There was no advertising, no logos, no posters. Just footage of Beckham and his entourage riding around Madrid in three Audi cars. “If Audi had tried to carry off an equivalent ad campaign — one in which we received so much exposure on prime time TV and on front pages of newspapers in virtually every country in the world — it would have been, quite simply, unpayable,” Gasanz told White Angels author Carlin. “In order to pay for that quality of advertising we would have had to sell the company first! I repeat, what we got during those thirty-six hours was unpayable. Unpayable!”

He might get hurt. He might not score a single goal. He might spend more time on Hollywood movie sets than in free kick sets. But, David Beckham will, undoubtedly, generate more than enough money to pay for his contract.

“Beckham football shirts were for sale, an intrepid English traveller friend of mine reported, in a place remoter still thank Kigali — in an open-air stall in a little town on the northern tip of Madagascar that according to my well-travelled friend fitted the description ‘the end of the earth’ better than anywhere else he knew,” Carlin writes.

So let me give you a challenge. And you don’t even have to travel to remote portions of Africa to do it. Just try to find someone walking down the street in Brooklyn wearing an Alex Rodriguez jersey. Sometimes a quarter of a billion dollars isn’t very well spent, as the Texas Rangers and New York Yankees can tell you. But with Beckham, it’ll be worth it.