Thursday, January 18, 2007

Buying into it because of Beckham

It has been an unforgettable week for Major League Soccer. In the seven days since the Los Angeles Galaxy made David Beckham the highest paid athlete in the world, Beckhamania has dominated American media. The end result, the bottom line, between last Thursday’s announcement and Monday the Los Angeles Galaxy have sold more than 5,000 season tickets. And here’s where the real benefit lies, Toronto FC scheduled to begin their first in the MLS this year have sold more than 2,600 season tickets since Beckham agreed to head to the MLS, attributing most of the dramatic increase in season ticket sales to the awareness generated by David Beckham.

“The announcement of David Beckham's signing to play for the Los Angeles Galaxy this summer has generated more interest in Major League Soccer than any other event in league history,” MLS commissioner Don Garber said Tuesday. “We didn't sign David to sell tickets and jerseys. He was signed because he's a world-class soccer player.”

"The fact that there is an MLS team in Toronto means he will be visiting Canada," former Canadian national team coach Bob Lenarduzzi said in an Edmonton Sun report. "I think, in general, it's good for the game in Canada. I think it's going to benefit the game just by the exposure that the Beckham signing has generated. There's going to be a build-up to when he arrives in July and his first game will generate a huge stir."

The Houston Dynamo (owned by AEG, a wholly owned subsidiary of the Anschutz Company) also owns the Galaxy. The Dynamo, along with the Galaxy are two of three MLS franchises owned by AEG (the third are the Chicago Fire) reportedly saw a 200 percent jump last week over the previous week, and that was despite confusion among some potential ticket buyers surrounding Beckham's arrival date.

"We can develop a number of fans who've been on the sidelines because we got a guy like David Beckham, whom everyone wants to see (because) he's such an icon," Dynamo president Oliver Luck said in a Houston Chronicle report. "If (Thursday) is any indication from the number of phone calls we got, it's safe to say that when the Galaxy come to Houston with Beckham, we'll sell out Robertson Stadium."

D.C. United spokesman Doug Hicks said the four-time MLS champions sold 300 season tickets last week, which was “a little above normal,” and FC Dallas said it sold 115 on Thursday and Friday.

“Basically the phones were ringing off the hook,” FC Dallas spokesman German Sferra told the Associated Press.

However the real key to the Beckham deal for the MLS in the long run may have more to do with the league’s overall image among soccer’s elite.

“There were calls from [players] who would not normally set foot in this country,” New England Revolution coach Steve Nicol told The Boston Globe. "Are we going to sign them? Probably not, but the fact is, they are still playing at the top level.

"One call was from someone playing in one of the top leagues in the world, but it's not [at a position] we desperately need. I would say [Beckham] is going to help every other team in the league bring quality players over. They will see he's here and say it must be pretty good."

"The fact that it has happened is fantastic," Nicol said. "It will only open the league up more for players to come. The Beckenbauer and Pelé thing 30 years ago has held [MLS] back because the rest of the world doesn't realize we have moved on from there. We are producing players and doing well in the World Cup.

"The fact [Beckham] is coming here now at 31, hopefully, will get rid of that stigma and more players will be interested in coming here, as opposed to guys who are 35 and 36 years old. The guy is a football player. Obviously, he is a superstar, but the reason he got there is because of what he has done off the field -- all the rest of the stuff wouldn't happen if he hadn't been on the field for 10 years with Manchester United and five years with Real Madrid.

"Playing in the top places, in order to do that, you have to be professional and prepare yourself properly; all the young guys in LA are going to see someone like him making all this money and how he prepares professionally. It's going to be great for all the players and everyone in the league."

And even more intriguing, Nicol suggested to The Boston Globe money wasn’t the motivating factor for Beckham’s decision to travel across the pond to finish his football (soccer) career in Los Angeles.

"He has tons of money, but it's not about the money, it's pride," Nicol said. "I don't think he would be in a bread line if he retired tomorrow, but the guy wants to play. Players want to play. When you stop playing, it's not a good day."

"For me, I think it's awesome," Houston Dynamo coach Dominic Kinnear said to the Houston Chronicle. "First of all, the guy is a good player, and the media attention (for MLS) will be overwhelming at times, but it's going to be nice to have that."

"The only reservation that probably myself and some other players have is that he's going to come here and not take it seriously," Dynamo star forward Brian Ching said. "It'd be a shame if he did that. But everything I've seen or read seems to (indicate) that he's going to come over here and try his best.

"If he does that, it's going to be a fantastic situation for not only the level of the game here but also the attention and all the excitement that he's going to bring."

Tim Leiweke, the president and CEO of the Anschutz Entertainment Group, which owns the Galaxy, cleared up a number of contractual and business related issues with Sports Illustrated’s Grant Wahl.

“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."

“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.”

In understanding the ‘art’ of the deal, Leiweke mentioned the Galaxy are in the process of completely redesigning their uniforms (changing the teams colors from their current green and white look) and fully intend to take advantage of new MLS rules that allow teams to sell advertising of their uniforms. To date, only Real Salt Lake have announced their teams uniforms will feature a sponsor’s logo for the 2007 season. Leiweke, told SI even before the Galaxy had announced the Beckham’s signing two companies had expressed an interest in sponsoring the Galaxy’s jersey’s. In the last week a third (Leiweke hasn’t revealed any of the companies) company have joined the negotiations.

What was interesting, Leiweke made it clear not only did AEG chairman Phil Anschutz, the chairman of Anschutz Entertainment Group, not support the MLS decision to implement a designated player rule (nicknamed the Beckham rule), but as the owner of three MLS teams, the NHL’s Los Angeles Kings and several other sports teams and properties doesn’t believe sports teams can be built around marquee players, the opposite of a $250 million contract Anschutz agreed too last week.

"Phil doesn't believe at the end of the day that you build great long-term championship franchises around buying the biggest superstar," Leiweke told SI. "But when we finally got it passed in November, he turned to me and said, 'You're right, this is a good idea. We need to do this for the league, because if we're ever going to expand our rating and our audience and get credibility in our country we're going to need a star to break through."

The reaction from the British media hasn’t been very supportive of Beckham’s decision. Many English pundits have suggested David Beckham is a soccer player well past his prime.

"The timing of David Beckham's decision [to leave European football at the age of 31] means that he will enter Major League Soccer at a time when he is still capable of giving competitive performances at the highest level." Richard Williams, the Guardian (Manchester)

"Many Angelenos probably had no idea the city even had a soccer team, never mind one that was capable of luring Beckham." Chris Ayers, the (London) Times

“He wants to put sah-kurr up there with the Super Bowl and the World Series and the NBA Finals. He wants to change the face of American sport." Simon Barnes, the (London) Times

As much support those within MLS have for the Beckham signing, others close to soccer industry don’t feel the same way.

"It's a gamble, but the league has been stagnant and this is something that can energize things," said John McCluskey of New England-based 11 Sports Marketing. "You can debate whether Beckham is in his prime, but he definitely has two or three good years left.

"The league has really stepped up, and this is going to put people in the stands and corporate America is going to start looking at the MLS in a different way. The Hollywood set will come out, and so will the casual observer and the diehard soccer fan, but also the 12-year-olds -- they think he is cool. And that is why Pepsi and Adidas signed him. Beckham is a brand unto himself, and this is the final frontier for an athlete, to come and conquer America."

"He has the charisma and the ability to brand himself outside of his sport. That's something that many athletes have problems doing," Chris Stuart, of Encore Sports and Entertainment in San Diego, Calif. said in a Financial Post report.

"From a branding perspective, I think he will do very well over here. I think he'll be accepted by the mainstream and it helps that his wife has significant exposure in the pop culture here," he said. Beckham has marketing deals with Gillette, Adidas, Pepsi, Motorola and Coti Fragrances, which distributes both David and Victoria Beckham's fragrances. His new exposure in North America is expected to enhance his marketing appeal.

Nova Lanktree, of Chicago's CSMG International, a sports management group suggested to The Financial Post she believed long-term quarter of a billion dollar deal will end up benefiting David Beckham and not Major League Soccer.

"You had a player who had transcended himself. It could have done a lot to help the league, but it seemed to almost further the brand of Gretzky and didn't do much for the league," she said.

Still, Ms. Lanktree expects a lot of interest in Mr. Beckham by U.S. corporations.

"I know his name, I know his image, and I know how people respond to him. What you say is, 'this is the total package."

With the media attention finally calming down the real challenge now begins for the Los Angeles Galaxy and more importantly for the other dozen MLS franchises to leverage the opportunity they are being presented with. It seems at least after week one with Beckham MLS officials both on and off the soccer pitch seem to understand the amazing once in a lifetime opportunity the league has been given. The MLS appears poised to take full advantage.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Houston Chronicle, The Boston Globe, The Financial Post.

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