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The Ultimate Product Placement

YOU COULD BE FORGIVEN, in this town, for thinking David Beckham is just some English bloke who plays a sport most Americans don’t follow. You could also be forgiven for thinking that the five-year, $250 million package that will bring him to Los Angeles to play for Major League Soccer’s Galaxy this summer is completely loopy. After all, an entire Major League Baseball team can be operated with that kind of money — a sport that, unlike soccer, people here actually go to see.

But here’s the thing: It’s not about the soccer. Beckham may have only an incidental profile in California, including Los Angeles. He is, at 31, past his prime as a player. But in the world as a whole he is bigger than the pope, President Bush or any number of A-list Hollywood stars. Grown men and women scream at him anytime he walks in or out of an international airport. He’s a permanent fixture in international gossip columns, tabloids and the sports pages.

For four years he’s been a monster money-spinner for Real Madrid, the Spanish club he is now leaving — whether he has occupied center stage on the field or whether, as in the past few months, he’s been left dangling on the bench.

He’s now widely expected to generate further monster profits — a whole new industry, really — in L.A. and the United States.

A few years ago, Beckham was in Japan — where professional soccer has existed barely longer than in the U.S. — and one of his sponsors, Adidas, invited him on a private tour of its Tokyo flagship store. Adidas promised to keep the visit secret, and the store closed for an hour so that Beckham could have the run of the place. Shortly after he arrived, though, someone spotted him through a window. In 20 minutes, a crowd of 20,000 had spontaneously crushed together on the sidewalks, refusing to budge for five hours and leaving Beckham a virtual prisoner inside.

He is, in sports-marketing terms, John, Paul, George and Ringo rolled into one. When Beckham left his signature English club, Manchester United, for Real Madrid in 2003, jersey sales at the Spanish club jumped from 900,000 per year to more than 3 million. His team members were not unknowns. Beckham’s fellow players included Ronaldo, the Brazilian superstar, and Zinedine Zidane of France — arguably the two best soccer practitioners on the planet. But in marketing terms, neither of them could touch him.

On the first day the number-23 Beckham jersey was in stores, Real Madrid did about $1 million in business. The jerseys became almost an economic bellwether of the other cash Beckham generated — multimillion-dollar sponsorships from Adidas, Siemens, Pepsi and others, increased ticket receipts and increased revenue from television rights.

“What he did was boost the brand and the visibility of the club,” says John Carlin, author of White Angels, which chronicles the Beckham phenomenon in Spain. “Manchester United failed to get the point, which is why they let him go. They based their decision on their evaluation of him as a football player. But that wasn’t the point at all.”

The same may prove true in Los Angeles. Within days of announcing its acquisition of Beckham, Galaxy sold 5,000 season tickets — twice as many as it has sold in any past season. The American Youth Soccer Organization and other youth leagues consist of 22 million kids, and it’s a fair bet that a hefty percentage will want a Beckham jersey sooner or later. Adidas, which has been associated with Beckham for years, is into the third year of a 10-year, $150 million sponsorship deal with Major League Soccer — a price that looked awfully steep in 2004, but doesn’t look so steep now. Recently, three television networks — ESPN, Fox and Univision — acquired the broadcasting rights to Major League Soccer for a total of $20 million annually.

According to Jeff Bliss, a sports-marketing consultant who spearheaded marketing of the World Cup when it was hosted by the U.S. in 1994, the very announcement of the Beckham deal in January put Major League Soccer on the global map. He says a deal on global television rights is now much more likely — for highlights, if not for entire games — as are the prospects of luring other big-name players to the U.S.

“If you look at Beckham as just a soccer player, then they’re paying way too much. That’s absolutely correct,” Bliss says. “But he’s much more than a soccer player. He is a Tiger Woods, Michael Jordan, Jack Nicklaus type of athlete who doesn’t just transcend his own sport. He transcends sport itself. He’s going to attract a whole new demographic of casual sports fans — and of women and girls in particular. Even people who don’t care much about soccer. If he goes into the movies, the likelihood of success is very high.”

 

Yet the Manchester United executive who let Beckham go in 2003, Peter Kenyon, looked at his prowess on the field and figured 25 million euros up front ($32 million) was a good price to let Beckham go to Real Madrid. José Angel Sánchez, the Real Madrid marketing manager who was the first to see Beckham’s full commercial potential, couldn’t believe his luck. As he told Carlin, he and Real Madrid’s president calculated that Beckham was worth 500 million euros to them. Twenty-five million was cacahuetes— peanuts.

AND THAT’S HOW THAT DEAL is now regarded. Within a year, Kenyon had moved to another British team, Chelsea, and, in a fit of seller’s remorse, tried to reacquire Beckham. As Carlin recounts it in his book, Sánchez assured Beckham he would rather sell Real Madrid’s entire stadium than sell him.

At first, the profit power of Beckham seemed questionable to Phil Anschutz, the Denver billionaire who will now bear most of the risk of acquiring the soccer star. The new management team that took over at Real Madrid a few months ago no longer appeared to value Beckham as highly, and he was entering the twilight of his playing career, having been removed as captain of England’s national team and from the national squad.

“Anschutz was hesitant initially,” Bliss, who knows all the inside players, told the Weekly. “But he became enthusiastic after understanding the impact across all his properties.” Those properties include not only a big investment in Major League Soccer, but also Staples Center, Home Depot Center (Galaxy’s home in Carson), movie production (Walden Media), movie distribution (Regal Entertainment) and music-event booking.

Considering that Beckham’s manager, Simon Fuller, is the marketing guru behind Britain’s Pop Idol — forerunner to American Idol— anything seems possible. And if Hollywood is interested, Beckham already has the connections via his big bud, Tom Cruise. Beckham’s wife, Victoria, formerly known as Posh Spice, has been looking to revive her singing career and has just launched her own denim-clothing label, called DVB Style. She seems to be developing a career as an author following the publication of a 500-page autobiography, Learning to Fly, in 2001, and a second book last October, a fashion guide called That Extra Half an Inch: Hair, Heels and Everything in Between.

THE EXACT STRUCTURE of Beckham’s deal is unknown — Anschutz’s people are keeping completely quiet about it. Nor is it known whether the $250 million figure reported globally and by Los Angeles media — which hasn’t been contradicted since it first surfaced in the British press — is accurate. But experts say the best guess is that his salary accounts for no more than 20 percent of the total, and the rest will come from sponsorship and profit-participation deals (something along the lines of a 40 percent to 50 percent royalty on every jersey sold, a cut of the ticket sales and other income).

Tim Leiweke, chief executive of the Anschutz Entertainment Group, would say only that it is an “all-encompassing contract” including endorsements and royalties as well as salary. “It’s the most progressive contract in the history of sports,” Leiweke bragged — one that Leiweke is quietly sharing with other Major League Soccer teams in the belief that they’ll get motivated to go out and buy their own global megastars.

Insists Leiweke, “We will make money on this deal. David will make more money with us than he has made with Real Madrid. That is the unbelievable impact of David Beckham . . . We’re blazing new territory here.”

Could Leiweke and others crowing about this deal somehow be horribly wrong? There is certainly precedent to suggest it could blow up in their faces.

In the late 1970s, the precursor to MLS, the North American Soccer League, went on a spending spree of acquiring major international soccer stars, starting with the Brazilian legend Pelé, in a bid to expand the world’s favorite sport across the only remaining bastion of resistance, the U.S. Many of the biggest names were acquired by the New York Cosmos, under the ownership of Warner Communications, which became the soccer equivalent of the New York Yankees.

For a couple of years, the Cosmos crushed every other team in sight simply because it had a lot more money to throw around. The experiment failed. The league expanded way too fast, attendance plummeted nationwide, Warner sold its soccer interests (leading to a fire sale of the Cosmos’ celebrity players), and by 1984 the league was defunct.

Most media coverage of the Beckham deal has skipped over this sorry episode, portraying the acquisitions of a generation ago as the big boost that put soccer on the map in the United States, not the overhasty act that actually killed professional soccer in this country for 12 years. The executives behind the Beckham deal haven’t forgotten, however, and have taken care to learn from the North American Soccer League’s mistakes.

 

“Back then they all got stupid, and got stupid on lots of guys,” Leiweke says. Several things are different now. The league operates as a single entity, with Anschutz and others acting as investors in all the teams, not just their own. So the balance of talent is not expected to tip so far in favor of one or two teams that they’ll be able to pummel the others. The league also imposes strict limits on star players — just one or two per team — and limits its own liability to a $400,000 salary cap per player.

It is Anschutz Entertainment Group, not the Los Angeles Galaxy itself, that will foot the lion’s share of the Beckham bill. “There’s very little risk here,” Leiweke says. “The Major League has an agreement on what they can spend on players. Even if other owners want to go out of control, they can’t.” And if Beckham somehow turns into an unmitigated disaster, it will be Anschutz, not the league, who will take the hit.

A DISASTER AT THIS POINT, though, seems unlikely. Whatever mysterious “It” factor Beckham possesses, it has something to do with his grace, lack of pretension and knack for saying the right thing to please an audience. When he was caught having an affair with one of his assistants, Rebecca Loos, in 2004, it took little time for the Spanish fans to forgive him. (And no time at all for Victoria, who had resisted moving to Spain, to pick up herself and the kids and settle in Madrid.)

“He’s a very good ambassadorial character,” Carlin says, even if Beckham is not exactly brilliant. “He may not be very bright, but what he says tends to be very measured. He’s astute at projecting the right kind of image — like saying, shortly after he arrived in Spain, that he liked the ham. Clearly, he understood that Spaniards feel proud of their ham and this was a good way to please them.”

One U.S. soccer insider put it more bluntly: “Unless Becks gets caught with his pants down again, they’ve got a powerful marketing machine for the next five years.”

Victoria is a different matter. Of dubious talent, she has a reputation in Britain for being snotty, superior and tacky. In Spain, she had a low profile, spending a lot of time shopping in Milan or New York. In L.A., she’s been spotted at Marc Jacobs’ emporium in West Hollywood and at trendy celebrity restaurants like Koi and Spago in the company of Katie Holmes and other designer-bag-swinging glam girlfriends.

The Hollywood paparazzi are likely to have a field day. The execs at Galaxy, meanwhile, would probably much rather focus attention on the couple’s children — Brooklyn, Romeo and Cruz — who, unlike their parents, now speak perfect Spanish and might be a lure for Latino soccer fans who have so far resisted shelling out for game tickets at the Home Depot Center.

On the field, Beckham is likely to shine against the low standards of U.S. soccer, most of whose players are far from catching up with world-level players. As Carlin puts it, “He will be really good and he will score goals of raging beauty.”

However, as Bliss and others argue, Americans avoid professional soccer games not because they don’t like the game but because they want to see it played better. When Manchester United plays an exhibition game in the U.S., ticket sales skyrocket from the typically anemic 15,000 turnout to closer to 60,000.

For that reason, Beckham is only the beginning of the strategy dreamed up by Anschutz, Leiweke and Major League Soccer, experts say. At Real Madrid, he was one of a clutch of international superstars known collectively as the “galacticos,” who set their club on a continuous cycle of more thrilling play on the field, increased publicity and greater revenues.

The Beckham acquisition might open the door to something similar here. Claudio Reyna, the former U.S. team captain and arguably the best American player in the world, has already agreed to return home next season — to the New York Red Bulls. It might not hurt for some other homegrown players to come back — roughly 50 U.S. players have contracts with foreign clubs.

The key now, league officials say, is to try to attract as many high-profile Latino players as possible, since Latinos, with their footballing culture, are the biggest demographic target for any expansion of the game in the U.S. The league estimates that Latinos account for 35 percent of ticket sales, roughly three times their representation in the overall population.

 

L.A.’s second club, Chivas USA, tried to get that ball rolling two years ago, boasting that it would establish the first Latino-dominated club north of the border in conjunction with the Mexican Chivas team from Guadalajara. But Chivas’ owners have struggled, with players shuttling back and forth, and the team, as local sportswriters tell it, has not achieved stellar results.

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