How David Beckham Turned $6.5M into $500M and Revolutionised MLS
Explore the story of David Beckham's lucrative journey in Major League Soccer, turning a $6.5 million salary into over $500 million while revolutionising the league and boosting its valuation.
Wednesday May 10, 2023,
3 min Read
When David Beckham left Real Madrid in 2007 to sign with the LA Galaxy of Major League Soccer (MLS), the world was stunned. He was only 31 years old and took a 70% pay cut to join the league. Many called him foolish, but the details of his contract would ultimately prove his critics wrong. Beckham's strategic move not only made him the world's highest-paid player, but it also paved the way for the meteoric rise of MLS.
A Bold Leap into the Unknown
Beckham's decision to leave the glamorous world of European football for the relatively obscure MLS was met with disbelief. He traded his $20 million salary for a $6.5 million paycheck. Yet, the headlines failed to mention two unique clauses in his contract that would change the game for him and the league.
Earning a Percentage of Team Revenue
As part of his contract with LA Galaxy, Beckham negotiated a percentage of all team revenue, which ranged from merchandise and tickets to sponsorships, hot dogs, and beer sold at games. This drastically increased his overall earnings. By the end of his five-year stint with the team, Beckham had made approximately $255 million, including his salary, endorsements, and revenue share. This equated to over $50 million annually, making him the world's highest-paid player at the time.
The Right to Buy an MLS Expansion Team
In addition to his earnings, Beckham also negotiated the right to buy an MLS expansion team for $25 million upon retirement. Although this seemed like a significant investment at the time, considering Toronto FC had recently paid $10 million to join the league, it would turn out to be a masterstroke.
Beckham's Impact on MLS
David Beckham's arrival in the MLS ignited a transformation for the league. Attendance increased by 40% since his debut, and the annual TV deal skyrocketed from $8 million in 2006 to $250 million. The league also expanded, adding 23 new franchises since Beckham's arrival.
As a result, the average valuation of MLS franchises surged from $37 million in 2008 to $582 million in 2022, marking a 1,472% increase. Beckham's decision to buy an expansion team at a discounted rate of $25 million proved to be a wise investment, as the expansion fees for new teams have risen dramatically.
Launching Inter Miami CF
Beckham's team, Inter Miami CF, played its first game on March 1st, 2020. Within a short period, the club's valuation reached $585 million, making it the 10th most valuable MLS club. This is an astonishing 2,240% increase from the $25 million expansion fee Beckham paid.
A Win-Win for Everyone
David Beckham's bold move to join MLS not only turned his $6.5 million annual salary into more than $500 million, but it also revolutionised the league. Attendance, TV rights, and valuations have all seen significant increases, making Beckham's gamble a resounding success for everyone involved.
David Beckham's leap of faith into the MLS world demonstrated his foresight and business acumen. His decision not only elevated his career and earnings but also played a significant role in reshaping the landscape of football in the United States.