It has been almost a week since the Los Angeles Galaxy drew the biggest headlines in Major League Soccer history by signing David Beckham to a blockbuster five-year contract.
Last Friday I sat down for a lengthy interview with the man who orchestrated the landmark signing: Tim Leiweke, the president and CEO of the Anschutz Entertainment Group, which owns the Galaxy. For more on my interview with Leiweke check out my article in this week's Sports Illustrated, but for now I wanted to answer five pertinent questions about the Beckham deal.
1.Is Beckham's contract with the Galaxy really worth the reported $250 million? No, and it's not even close. Leiweke refused to discuss the details of Beckham's deal, but league sources confirmed that Beckham's guaranteed salary will be around $50 million over the entire five-year length of the contract. That's hardly chump change, but it's still less than the salaries of a lot of U.S. sports stars.
Nor will Beckham's salary bankrupt MLS. Per the league's new designated-player rule, MLS's owners (who otherwise share the costs for all player salaries) only have to contribute $400,000 a year for each of the league's 13 designated-player exceptions. (Right now Beckham is the only one.) The rest of Beckham's salary comes from Galaxy owner Phil Anschutz. The result: Anschutz is on the hook for around $48 million guaranteed with Beckham, while MLS owners only have to pay $2 million.
Don't worry about Uncle Phil's ability to pay: He has a net worth of $7.8 billion, according to Forbes.
There is more to Beckham's deal than the guaranteed salary, however. Beckham will also earn 40-to-50 percent of Galaxy jersey sales and an undisclosed share of ticket revenues. And that's not all. "There are certain aspects of the deal that are ultimately about the upside value of the league as a whole that David can participate in," says Leiweke. "Our partners all had to sign off, and they did. We had a couple of interesting board calls, but they did."
Long story short: Beckham may or may not earn $250 million over the next five years, but the majority of his income will continue to derive from endorsements and not from the Galaxy or MLS. From my perspective, it's a shame that the phrase "$250 million contract" became gospel in the media, because it's terribly misleading and just not correct.
In any case, Leiweke feels confident about the agreement. "This is an economic deal that makes sense for everybody," he says, and as long as Beckham doesn't suffer a serious injury or become a total bust on the field, I'm inclined to believe he'll be worth the investment.
2.Why should fans hold off buying a green-and-gold Galaxy jersey with Beckham's name on the back? Simple answer: because Becks will never wear green and gold with the Galaxy. The team is deep into the process of rebranding itself with new colors, a new shield and new uniforms. "We made a decision that it was time to start thinking through how we create a more worldly brand," Lewieke says. "We have a good name. Galaxy works. But we need a more legendary, traditional kind of look that's more of a soccer look."
Leiweke predicts the new jerseys will be available in the next two months. What color will they be? "The last time I checked, when you're looking at a Galaxy it's not green or yellow. It's either black or dark blue," Leiweke says. Galaxy GM Alexi Lalas is more specific: "When I think of the Galaxy I think of dark blue."
Then there's the issue of a shirt sponsor, which MLS rules are allowing for the first time this season. Leiweke had said two companies were in the running last Thursday, but he told me on Friday that a third company was now in the mix for what will surely be a multi-million-dollar sponsorship. A deal will be made in the next 30 days, he said, and probably sooner rather than later.