David Beckham's contract at LA Galaxy included two clauses that helped him earn $500 million, it's genius
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David Beckham was ridiculed by many when he agreed to take a 70% pay cut to join LA Galaxy, but two 'unique' clauses in his contract at the MLS club would change everything.
It remains one of the biggest transfers in football history. At the age of 31, then-England international Beckham decided to embark on a new challenge in the summer of 2007 when he left Madrid for the glitz and glamour of California.
He'd spent the past 15 years playing against Europe's elite, winning trophies with Manchester United and Real Madrid, so when he packed his bags for a league that was barely 10 years old, people asked questions. And rightly so.
But what many people don't know is that Beckham made an incredibly business-savvy decision in the boardroom. Let us explain.
As pointed out by the brilliant @JoePompliano in a Twitter thread, Becks was able to negotiate a percentage of all team revenue as part of his contract in Los Angeles, meaning his earnings skyrocketed in the coming weeks, months and years.
And to be clear, that revenue included everything from merchandise, tickets and sponsorships, as well as hot dogs, beer and nachos sold at games.
In total, when you add up salary, endorsements and revenue share, Beckham made $255 million during his five-year spell with LA Galaxy [$50M annually].
That's right. He may have been laughed at for taking a 70% pay cut but the Manchester United academy product would become the world's highest-paid player during his time in California.
And in addition to the above, he also negotiated the right to buy an MLS expansion team for $25 million upon retirement, which was a genius move as Major League Soccer continued to grow in stature.
6) David Beckham brought immense growth to MLS.— Joe Pompliano (@JoePompliano) January 4, 2023
Attendance is up 40% since his arrival, and MLS has seen its annual TV deal go from $8 million in 2006 to $250 million today — that's a 3,025% increase.
And more importantly, the league has expanded. pic.twitter.com/cjyv6iFBea
As a result of Beckham making the league more popular, with attendance figures continuing to rise on a regular basis, the MLS would add seven new franchises by the time he left the league.
Now, the average MLS franchise is valued at $582 million, which is +1,472% increase on what it was worth in 2008 [$37m].
To put this clever business move into further perspective, St Louis paid $200 million for an MLS expansion fee in 2019, while Charlotte paid a massive $325 million.
And Beckham, of course, exercised his $25 million option upon retirement and reaped the rewards.
"In the end, the numbers don't lie," Pompliano says. "David Beckham took a huge risk and was rewarded by turning his $6.5 million annual MLS salary into more than $500 million.
"But MLS also benefited — attendance, TV rights, and valuations are all up big. That's a win-win for everyone."
9) David Beckham's team, Inter Miami CF, officially played its first game on March 1st, 2020.— Joe Pompliano (@JoePompliano) January 4, 2023
And here's the craziest part:
Inter Miami CF is already the 10th most valuable MLS club at $585 million.
That's 2,240% more than the $25 million expansion fee. pic.twitter.com/oRTuLjLTKG
The above has gone viral in recent days and it's easy to see why. Here's how social media reacted to the two contract clauses in David Beckham's contract at the Galaxy.
One said: "So smart and badass. Delayed gratification and it paid off," while another commented: "The man had a sharp vision which is now a reality. Great lesson learnt here. A well calculated risk is never popular."
A third wrote: "High risk, high return. Beckham is genius."
A fourth said: "This was genius by both Beckham and the MLS."