Beckham’s Bucks: A Good Deal For MLS. No, Seriously

By: Laurie | January 23rd, 2007

So when is $250 million actually $2 million?

When you’re talking about David Beckham’s five-year salary. Or at least the part that MLS is on the hook for.

Last week I read a fantastic article about the Beckham deal by Sports Illustrated’s ever-amazing Grant Wahl. (Truly. Whenever I read something he’s written, I feel like I should fall to the ground murmuring, “I am not worthy.”) If you have the time, read the whole article. If not, here’s the Beckham deal in a nutshell:

First off, the actual details are a closely guarded secret. But Beckham’s salary (meaning the dollars forked over by the LA Galaxy) is nowhere close to the media-reported $250 million over five years. It’s probably closer to $50 million, or $10 million a year. (Not pennies, but still small potatoes in the world of professional sports. Particularly if his body holds up for the entire five years.) And he’ll also get some percentage (maybe 40% to 50%) of merchandise revenues, plus a share of ticket revenues. Again, no small sum, but still. It would require a lot of Beckham jerseys to get to $250 million.

But here’s the great part. Thanks to the exclusions and limitations included in the “Beckham Rule,” (aka the designated player rule,) MLS is paying only $400,000 per year for Beckham. That’s it. Anything else, salary-wise, (meaning maybe $48 million) comes from the deep pockets of LA Galaxy owner Phil Anschutz. Who can afford the risk, since he’s currently worth $7.8 billion.

So what does this mean? As I see it, it means that MLS is not bearing the risk if the Beckham gamble doesn’t work out. That risk is borne by Anschutz, and by Beckham (and AEG, Beckham’s management firm.) They’re the ones betting that the financial return they’ll get from bringing Beckham here will be greater than the costs. They’re the ones who stand to lose out if the deal doesn’t live up to all the hype.

Of course, they’re also the ones who will reap the most benefits if all goes according to their plan. But since this is about soccer in the US, which is kind of notoriously fickle and uncertain…

Well, I’m good with that.

Some Related Galaxy Posts:

Category: Player News, Team News

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Laurie

And gnc, by the way, if you're reading Grant Wahl, you're at American soccer PhD level. Have a bit of tolerance for the little people. ;-)
Laurie

Thanks, Tab. We aim to please. Stay tuned for exciting stories, saucy pics, and far more Beckham news that the average person could stomach. (But I believe LA fans are a hardy breed who have developed a tolerance for this kind of stuff over time...)
Tab

Hey Laurie,
Thanks for clearing that up (for me, anyway). I didn't realize that the owner was forking over the vast majority of the money.
Laurie

Gnc, true, but the way it was played up in the popular (non-soccer) media, you would have thought that MLS was forking over the full $250 million. The actual "Beckham receives these $$ from MLS" was kind of an asterisk. Small print.

Because $400,000 is not NEARLY sensational enough.
gnc

I loved the Wahl article too, but it should be said that there was no question that MLS would only be paying $400,000 of Beckham's salary because that's the way the rule was created from the beginning. I don't think anyone figured that the league was paying any more than that, it was all a question of how much the team is actually shelling out salary-wise.