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Beckham means business -- lots of it

1/12/2007

Of all the comments proffered in the wake of David Beckham's announcement that he will sign with the Los Angeles Galaxy, the silliest by far might have been issued by Sunil Gulati, the president of the U.S. Soccer Federation.

"I don't think it's just about glitz," Gulati said.

Of course it's about glitz. David Beckham the soccer player might no longer be able to crack his team's starting lineup on a regular basis. But David Beckham the mogul has his name attached to sneakers and sunglasses, not to mention an eau de toilette made from grapefruit, mandarin leaves, cardamon seeds and patchouli. David Beckham the international celebrity is married to Posh Spice and counts Tom Cruise and Katie Holmes as buddies. And David Beckham the sex symbol has such an amazing body that 39 TV stations around the globe televised his first physical exam with Real Madrid.

The man glimmers with glitz. And it's precisely Beckham's glamor that gives his pact with Major League Soccer the potential to be one of sports' all-time win-win deals, akin to Reggie Jackson signing with the New York Yankees before the 1977 baseball season.

While there's no chance Beckham will be wanting for money anytime soon -- he reportedly makes more than $30 million a year in endorsements on top of the $6.7 million he earns from Real Madrid -- there were signs his time at the top of the endorsement heap might have been nearing the end in Europe. Police Sunglasses replaced him as its spokesman (with Antonio Banderas) last fall, and there have been rumors that Gillette might do likewise.

By coming to America, Beckham will rake in a reported $250 million in salary and endorsements over five years, almost certainly more than he could get anywhere else in the world. He enjoys America so much he named one of his children Brooklyn. And he's likely to dominate his new league.

Victoria Beckham is another winner. She decided to suspend her singing career to promote DVB, the Beckhams'
fashion line, but had been criticized by the British media for her extravagant lifestyle as a "footballer's wife." Now she lands in Hollywood.

Also smacking its lips: Adidas, which pays Beckham about $6 million a year in endorsement fees. The German sportswear giant, which bought Reebok for $3.8 billion in 2005, has been looking for ways to compete with Nike in the U.S. If Beckham sees his popularity skyrocket in the States once he starts playing in America, Adidas will gain, too.

But the biggest impact of the Beckham deal is what it will mean to MLS.

Like any sport, American pro soccer has always needed three things to grow: audience demand, good management and top-notch competition. If a league has all three, like NASCAR or bass fishing, it will lure corporate sponsors and TV viewers, generate cash to develop better athletes and more exposure, and prosper. If a sport is missing even one of the three, like Arena football or bowling, its appeal will be stunted.

Soccer has always had a fan base in the U.S. Millions of kids play it, and millions more immigrants love it. And MLS is run by smart execs, from commissioner Don Garber on down. Over the past two years, the league has aggressively expanded its marketing efforts, which include a $150-million deal with Adidas to supply all MLS uniforms; and for the first time, it negotiated rights fees from TV networks (ABC, ESPN and Univision) to show its games. And it has kept pushing for soccer-only stadiums; by next season, seven of MLS' 13 clubs will play in dedicated arenas, which typically are located in suburban areas, closer than downtown stadiums to soccer fans.

These moves have been enough to nudge pro soccer toward profitability. The Galaxy went into the black in 2003, FC Dallas was profitable this year, and the league as a whole expects to turn a profit by 2010. But it was clear by the summer of 2006, when MLS got only a minor bump in attendance from the World Cup, that to keep growing, the league would have to find some way to offer fans better athletes.

Along comes Becks.

In Beckham, MLS chose the perfect star to which to hitch its wagon. He could hardly be more telegenic. He's dedicated enough to helping soccer develop in the U.S. that he already runs his own academy in Los Angeles. Maybe most important of all, he's a goal-scorer, meaning casual sports fans can easily appreciate his skills. And MLS officials clearly understood their window of opportunity. They know they have improved the sport's financial condition, but they also realize they're on something of a plateau; and absent better competition, overall revenues could start to shrink again.

But make no mistake about the magnitude of American soccer's bet on Beckham. He could well be worth the $250 million. MLS stands to draw more fans, sell more apparel and equipment, and maybe even demand some actual cash along with airtime from its TV partners. The league, however, has never come close to paying any player anything like that amount of money. And MLS was so eager to bring Beckham to America that the league has decided not only to bust its salary cap but to break with its long-standing principle that its franchises shouldn't compete against each other too strenuously for players.

So it won't be long before soccer's newer owners, like Red Bull in New York or Dave Checketts in Salt Lake City or Chivas Guadalajara in Los Angeles, decide the Galaxy shouldn't have a monopoly on superstars. And it won't be long, either, before these investors, unaccustomed as they are to MLS' old, cartel-like ways, start throwing money around to lure other international players to follow Beckham. Bringing Beckham across the pond is finally unleashing the market forces Major League Soccer had kept bottled up since its inception. As a result, its quality of play is likely to rise sharply -– and so are its costs.

Commissioner Garber and soccer's owners believe their game is at an inflection point in the United States. If they're right, the Beckham deal will entitle them to share in the wealth.

Peter Keating writes about sports business for ESPN The Magazine. His book, "Dingers: A Short History of the Long Ball," is available now on Amazon.com.