Hey Galaxy, Heave that Sigh of Relief

Only so much he can do at LAG

Only so much he can do at LAG

Yes, a sigh of relief. When the LA Galaxy first announced in the summer of 2007 that they had landed David Beckham, the brilliance of the move was only overshadowed by the price they paid for it. $50 million a year over five years, in addition to the transfer fee that went to Real Madrid. While a number of pundits screamed themselves hoarse over the seeming stupidity of the move - $1 million a week in wages does seem excessive, doesn’t it - very few people actually understood the finance behind it. Here’s why it made sense.

Within the first six months of his arrival at Real Madrid, the club sold a little more than 1 million shirts. While this might seem a miniscule number for a club the size of Madrid, it is significant when you look at their profits for the year; roughly $80 million. In the four year period that he spent at Madrid, the team’s merchandising sales grew a mammoth 137% to well over $600 million. At Madrid, it is quite likely that his presence didn’t lead to additional ticket sales; they already had a roster of high-priced big-name players to help them with that. However, a quite different situation could have been expected in LA. Shirt sales, ticket sales and image rights could all add up to much more than the $50 million dollars a year being paid to Becks.

However, things have now changed. His first full season saw the team fail to make it to the playoffs. And this with Landon Donovan at his side. It has been argued by a lot of punters that there wasn’t enough space in the dressing room for two big name players, and that the end of the season would see one of them leave. The hype surrounding Beckham has waned in the past couple of months, and so also, it is likely, have ticket sales. For a league that is still fledgling at best, success is the only sure way to get new fans, and make them stick. The MLS does not have the quality of play or the history to be able to afford the sort of mediocrity of performance that was so on display in LA.

With the financial turmoil that came to define 2008, it is possible that the cost of holding onto Beckham has become too high - it is just simple finance, the return on investment does not justify the risk any more - and with a rumored $22 million on the table, we can fully expect Beckham to continue wearing the #32 jersey. Unless, of course, he changes it.

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  • Ninad
    Spelling mistake!
  • Ninad
    Thanks Georgo; Actually, I'm working on a piece on that topic these days, it might even be the next revolver topic. I have had a lot of conversations with Deepak about this, especially because this is a huge and uptapped market so far, and I personally feel that the MLS has botched it up bigtime.
  • Good analysis Ninad. It would be wise for the MLS to sell Beckham. Financially, they stand to gain $22 or so million. They could use that money to invest in the league.

    Many have the misconception that Beckham's departure will be devastating to the MLS. I think the major consequence would be a large drop in ratings and attention, and of course ticket sales. But what we have to remember is that the MLS is only a 14 year old league. It is unrealistic to expect the MLS to be the next Premier League, Serie A or La Liga so soon. I remember that after the US' success in the 2002 World Cup, the MLS began to get much attention from the American media. All of a sudden, everyone had US soccer pride and more games were being shown on prime-time networks. Their early exit in 2006 cause many to lose interest. So, I think that if the national team could continue to emulate the 2002 success in 2010 and beyond, more fans will begin to notice and it will go a long way to putting US soccer on the map. For now, take the money from Beckham's sale and invest in football academies, in creating partnerships with foreign teams, etc. I'd love to hear you guys' take on how the league could improve.
  • With MLS commissioner Don Garber laying a deadline for the Beckham saga, it looks as if he might be returning to LA Galaxy against his wish unless Don Garber goes back on its word which seems very likely. Anyways,the future looks even bleaker for the Galaxy as it will lose both Beckham and Donovan.
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