🇺🇸 David Beckham to LA Galaxy: The Greatest Deal in British Sporting History

Tyson Fury is the Heavyweight Champion of the world and one of the highest paid athletes we have in the UK.

Since he became the WBC Champion he has been extremely strategic with his choices. He has managed to amass close to £100m in three fights despite none of those fights being against “top” opposition (Dillian Whyte, Derek Chisora and Francis Ngannou 🥴).

Alot of money for very little perceived risk!

The most fascinating thing about Tyson Fury to me however, was the damp launch of his energy drink. In February 2022, Tyson launched Furocity - an energy drink to rival Prime and Red Bull. He was seen promoting it in his fight with Dillian Whyte.

Since then however, we’ve barely heard a peep. No promotion during fights. No news of its performance, no evidence of it existing in stores or Direct-to-Consumer.

With his his hit Netflix show, his brother making significant moves in YouTube Boxing and his star power at an all-time high there is no better time to promote a beverage. Yet he hasn’t taken many steps to do so.

I wonder if Furocity makes a return to the limelight in the months to come. We have seen athlete-led beverages be extremely lucrative ventures for many!

Alas, today we breakdown one of the greatest business moves in British sporting history from someone who is no stranger to the limelight.

David Beckham moving to LA is the greatest deal in British Sporting history.

I don’t recall another British athlete having such an impact on their fortunes and the arena they operate in than Beckham being in LA.

The recent Netflix documentary did a good job of highlighting the whirlwind lifestyle he had as a player in Manchester but did little to speak on the economic impact of his career so far.

The move to LA was magical for many ways. In my opinion there are 2 key reasons as to why and today I break them down for you. The first being:

The Designated Player Rule “Beckham Rule”

When Beckham signed for LA Galaxy he was paid $6.5m/yr for 5 years.

At the time however, the MLS Salary Cap was $2.1m.

The reason why Beckham was able to move and earn the money he did was because the MLS created a rule to allow him to join the league and earn those wages.

The rule allowed teams to sign one player outside of the salary cap structure and pay them whatever they want.

The only kicker being that the Designated Player chosen by any MLS club had to incur a $400,000 cap hit. To give an understanding of how this worked in Beckham’s instance see below:

• Salary cap in 2007: $2.1m per year for all players and coaches

• David Beckham Salary: $6,500,000 per year

• Amount of Salary contributing to cap: $400,000

• Amount paid to Beckham by LA outside of the Salary Cap: $6,100,000 per year

This rule was not only a win for LA Galaxy but it also allowed other MLS Clubs to attract talent from around the world. More importantly though, it allowed the League to get David Beckham playing football in the United States.

You see David Beckham joining LA Galaxy wasn’t just good for LA Galaxy, it was pivotal to the growth of the entire league. It’s no surprise that all clubs were unanimous in their willingness to be flexible on this topic.

Since its introduction, the Beckham Rule has been expanded so MLS clubs can sign three players outside of the Salary Cap structure. Many notable players have taken advantage of this. Three key examples:

• Thierry Henry @ New York Red Bulls: $5.6m/year in 2012

• Wayne Rooney @ DC United: $3.5m/year in 2014

• Kaka @ Orlando City: $7.1m/year in 2017

It hasn’t slowed down either - to date there have been 209 Designated Players in the MLS!

$25m MLS Expansion Option

The main reason why I think this transfer is the best deal of all time is because Beckham’s contract also had a clause which allowed granted him the option to buy an MLS expansion team for $25m.

In layman’s terms, this clause meant that Becks had the choice to buy a new MLS team when one became available for just 25 million bucks.

That might not sound like a game-changing deal, but if you fast forward 15 years to today David Beckham is now a majority shareholder in Inter Miami and the club is reportedly already worth $600m.

Think about that for a second:

• Bought in 2014: $25m

• Founded in 2018 Opening valuation: $100m

• Valuation in 2023: $600m

What’s crazy is since then, the cost for an expansion team has skyrocketed. In May 2023 there were heavy rumours that San Diego is set to be the home of the next MLS franchise. Mohammed Mansour is set to pay $500m for the rights to do so.

That is 20x what Beckham paid in 2007 just 15 years ago!

Inter Miami almost never came to light, but with persistence and a lot of hard graft, David Beckham now sits pretty amid the helm of one of the most exciting teams in global sports.

Of course, The Beckham Rule was recently used to sign Lionel Messi to the club once again raising the profile of the league to new heights.

So, was this a success for the MLS? Well lets compare:

• TV Rights in 2007: $8m/year via ESPN

• TV Rights in 2023: $250m/year via Apple TV

• Valuation of MLS Club in 2007: $37m

• Valuation of an MLS Club in 2023: $579m

Average attendance is up. Average corporate sponsorship revenue per team is up. The level of talent in the league is up. Also, the next edition of the World Cup will be held where… yes exactly, the United States!

Was this a success for David Beckham?

I don’t even need to answer that question. Becks is comfortably the wealthiest footballer to ever come from the UK and with the current rapid growth of the MLS I see no reason as to why that will slow down any time soon.

Interestingly, Beckham ended his partnership with Haig Club whiskey this summer as he is set to launch his own product!

I’ll be right back here with that story as it develops too!