Financing a future one star at a time
Numbers still get our attention in sports. That's the main reason why the Los Angeles Galaxy of Major League Soccer (MLS) signed heartthrob David Beckham to a $250 million contract in January. And sure enough, the signing garnered media attention around the country - and the globe.
To put the number in perspective, Beckham's announced figure equaled the total salary budget in the league's first 10 years of existence. As the MLS embarked on its 12th season last week, one lingering question remained: Is Beckham worth it?
Talent evaluators are virtually unanimous in their opinion: Beckham is past his prime as a player. He played sparingly for his European team, Real Madrid, until a recent knee injury put him on the shelf indefinitely. But U.S. soccer isn't played at the same level as European soccer - think Double A baseball - and Beckham could contribute more to the Galaxy than he can to Real Madrid.
There's no way to overestimate the impact of star power in sports. And Beckham is a star, by any definition of the word. Married to one of the original members of the Spice Girls, he has the looks and magnetism to bridge the divide between 14-year-olds and adults. If ever an athlete was made for Hollywood, it's Beckham.
Beckham's impact on U.S. soccer - called "football" by the rest of the planet - will undoubtedly be greater off the field than on. The Galaxy reportedly sold 5,000 season tickets in the first 48 hours after the Beckham signing was announced. And other teams around the league have benefited as well. Most games against the Galaxy are sold out, even though Beckham's arrival in the states isn't expected until sometime in July.
While Beckham's 5-year deal captured the headlines, the contract is more reflective of NFL contracts than those in MLB, in that only $50 million is guaranteed. The remainder is tied to club profits (up to $50 million), a percentage of Galaxy jersey sales (up to $50 million), and expected sponsorships (up to $100 million).
Soccer is the number one youth participation sport in the U.S., but that popularity has never transferred to the professional level. Several leagues have come and gone, including the NASL, the predecessor to MLS, and the Women's United Soccer Association, which was founded after the success of the U.S. women's team in the 1999 World Cup.
MLS operates as a single-entity structure, with some revenues and expenses - including the Beckham salary - shared on a league-wide basis. The minimum salary is $28,000, although many players are signed to "development contracts" for as little as $11,700. Individual salaries are capped at $250,000 with two exemptions per team. In spite of the salary structure, the league has never made a profit. According to a 2004 report in Business Week, the league lost $350 million in its first eight years of existence.
Beckham isn't the only good thing happening to the league. After spending most of its existence playing games in large facilities built for other sports, MLS is gravitating to soccer-specific stadiums seating 20,000-30,000 (last year's attendance averaged 15,504). This year, seven of the 13 teams will play in their own stadiums.
The league has expanded north of the border, to Toronto, where the team capped season ticket sales at 14,500 in its new 20,000-seat, soccer-only stadium. There's talk of expanding to other cities around the country, including the Bay area, Cleveland, St. Louis, Portland and Phoenix. According to the league Web site, MLS hopes to expand to 16 teams by 2010.
If money and persistence guaranteed success, MLS would already be a winner. But it will take years for the league to break even, if it ever does.
Despite the optimism generated by the Beckham signing, professional soccer is still a niche sport in this country, registering a small blip on the professional sports radar. For now, and the foreseeable future, the NFL need not worry that MLS is overtaking it as the "football" of choice in the U.S.
(Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He currently teaches Sport Management and the Business of Sports at Eastern New Mexico University and the University of Wyoming. The Prescott Valley resident can be reached at firstname.lastname@example.org)