Reader Email
November 21 - 2006
Last week, as the Beckham-MLS link started to look more and more plausible, Jen Chang of ESPN delivered an article evaluating the prospect of a Beckham signing (we, on the other hand, predicted it outright). His verdict? The deal makes sense from a financial standpoint, meshes nicely with Beckham’s goals, and therefore would likely go off without a hitch.
One particular Soccernista reader (who wishes to remain anonymous) didn’t feel like taking Chang at his word, and wanted to know the specifics of the financial “sense” behind a potential Beckham signing. The entertainingly testy email exchange is after the jump, and our commentary follows.
(NOTE: To our knowledge, that’s not a picture of the real Jen Chang…but given our standards for photo-journalism, it damn well might as be. It came up, after all, on a “Jen Chang” Google image search.)
‘Nista-reader’s first email: I enjoyed your recent article arguing that MLS should sign Beckham. However, I feel your analysis is lacking. How much would he have to be paid? Who would pay it (club, MLS, sponsors)? Without that information, it’s not even worth having the discussion. You can’t say he’s definitely worth the cost until you actually know what the cost is. Your article makes no effort to even estimate this vital figure.
Chang: There’s no real way to know how much he would cost - since he hasn’t had a formal contract offer put to him - if you want real terms, he’d want at least as much as he’ s paid at Real Madrid which is in the region of $150k a week - and the rumor is a $100 million contract. The salary is moot, since the whole point of MLS’ new “Beckham Rule’ is that players will be paid outside the salary cap with the majority of the cost borne by the club. All these marquee players are going to command huge salaries to even begin to think about coming to America - so if one were to assume your stance on costs, it would have been pointless for MLS to implement the policy in the first place.
‘Nista-reader: Maybe I’m an idiot, but I still fail to understand how his salary is moot. The MLS is a business, right? Presumably, they would like to make money from the Beckham signing. If the salary is moot, shouldn’t the MLS also be signing Ronaldino, Wayne Rooney, and Cesc Fabergas?
Chang: I already explained in my piece how they would recover their money regardless of how much Beckham costs in salary. His jersey sales alone would see whichever team sign him make a profit. And yes, salary is moot - the point is now MLS is willing to pay what it takes to get European stars and for the first time it’s willing to pay competitive wage scales comparable to those paid in Europe. The question is will players like Ronaldinho, Rooney and Fabregas come over - the answer is NO. Beckham’s situation is different right now for the reasons I outlined - he’d prefer to come here when he’s 35 but due to what’s going on - MLS has a very real opportunity to sign him now as opposed to later.
In terms of the principle of signing players to hefty contracts - unless you want me to write a specific piece about the mechanics of franchises signing players to long-term deals, which apply equally to NBA, NFL, MLB contracts and not just soccer, there really isn’t any point talking about that. How many pieces have you read breaking down Peyton Manning’s contract and figuring out the discounted cash flow and net worth to the Indianapolis Colts because of that?
‘Nista-reader: You don’t see any stories breaking down the Manning contract because:
1) The Colts did not abandon the NFL’s salary cap to re-sign Manning
2) Manning will not make more money than the rest of his teammates combined
3) The Colts and the NFL are stable, highly profitable businesses swimming in cash.
Seriously, comparing those situations is ridiculous.
Chang: Perhaps the NFL is a poor example due to a strict adherence to the salary cap, the NBA and MLB are not.
Kevin Garnett makes more than the rest of the Timberwolves roster combined - again, you don’t see articles breaking down the Timberwolve’s net worth and compared to his contract. Having said that, given your obsession with Beckham’s salary - here’s a very simple breakdown:
Beckham makes about $7-8 million a year with Real Madrid -, shirt sales of Real Madrid shirts with the word ‘Beckham” emblazoned on them far exceed that on an annual basis. Real Madrid won’t release the figures, but in the first 2 weeks alone after they first announced his signings- they sold about $5 million worth of Beckham-related merchandise.
The team receives $1-2 million per offseason exhibition game they play in Asia, and they typically play 2-3 games in Asia (and only since they signed Beckham), the only reason they are invited to play in those games in Asia is because of Beckham.
The team receives 10% of all advertising and image rights associated with Beckham. Given that Beckham makes upwards of $40-50 annually in endorsements, that’s another $4-5 million that Real Madrid makes off him.
When you factor in the increased gates for whichever MLS teams sign him - the opportunity to sell MLS broadcast rights in Asia and Europe etc., like I said, Beckham will PAY for himself, or at the very least, mitigate a large part of whatever salary he receives. It’s fairly apparent to everyone in the industry but you it seems.
We have a couple of thoughts on the matter:
- First, off kudos to Mr. Chang for volleying with a faceless name in the crowd.
- Chang says of our reader’s stance, “if one were to assume your stance on costs, it would have been pointless for MLS to implement the (Beckham) policy in the first place.” But, and I think Chang comes to understand this later in the exchange, the whole justification for the Beckham Rule was based on judging costs and profits. In this context, Beckham’s salary certainly isn’t moot. In fact, it’s the front half of the equation.
- Chang bombs with the NFL analogy, and then offers up the Wild West salary world of the NBA and MLB as a parallel. He would do well to remember the MLS has more in commo with the Soviet Army Intramural League than any of those other organizations.
- Chang’s a good sport to toss some Beckham numbers out, but let’s be honest: those numbers are ridiculous. Beckham left what was, in 2003, the most important club in the world for the most glamorous club in the world. He was captain of England at the time, and sex-god to gay and straight alike. The latter he may still be, but times have changed, and Beckham’s earning power has changed as well.
- That being said, we’re of the mind that bringing Beckham to MLS is probably a sound plan. Though we’d love to get a look at the crunched numbers, it seems likely the profits and exposure would make Becks a profitable investment for the league. The utility of the Beckham Rule, however, seems to be a one-off: we can’t think of another player who would justify such a relative concentration of capital. It is possible to like Beckham in the MLS, and hate the Beckham Rule.
Chang and other US journalists have not had much occasion to write about the business side of MLS player acquisitions. In fact, the market-desk at the Havana Times gets more action. Accordingly, most Beckham-Rule articles have featured the “thank God the MLS is doing something” angle, and simply taken Garber’s “numbers” on faith. It’s nice to see some debate on the matter, even if it comes in the form of mildly abusive email. Well done all around.
Great job to soccernista-reader. I find Changs response predictably general. I once wrote an email to CNN (specifically a CNN Money writer) about the differences between the discount rate and the fed funds rate (although closely related definitely NOT the same thing) and got a similar response.
The analogy/comparisons to NFL, NBA, and/or MLB are absolutely ridiculous. Kevin Garnett was signed out of high school, Peyton Manning was a PROVEN college quarterback at Tennessee (and now arguably the BEST quarterback in the NFL), and Lebron James was a man at the age of 18….bottom line is, the aforementioned, as well as many others were signed at ages (young enough) that would allow their frachise/league to recoup the costs 100 times over (not to mention the popularity of that league compared to MLS).
MLS’s idea of signing former stars at the end of their careers seems silly to me. Let’s face it, Beckham was NOT good in the World Cup, he rarely proves to be a difference in any game (outside of hitting a free kick), and I can’t see him doing anything other than using MLS as a retirement gig (literally).
I want to watch MLS for the quality of the game, and bringing in Beckham along with other “aging” stars just isn’t going to do it for me.
Comment by LG — November 22, 2006 @ 11:20 am
Of course there’s an obvious response to Chang’s last email, but I felt like dropping it at that point…he was nice enough to respond, so I thought I’d be nice enough to give him the last word.
But if Beckham’s signing generates windfall profits for his club, then Beckham would/should demand a higher salary. If he’s worth X, why would he only ask for Y (where X is much greater than Y)? If he can’t get something closer to X, then he needs to fire his agent.
Comment by Anonymous — November 22, 2006 @ 1:26 pm
Obviously, if anyone (Beckham included) generates more revenue for his/her company they are worth more and thus can demand a higher salary (not that you’ll always get it). Is that really the issue though? Is bringing Beckham into the MLS going to help the league? No doubt that Beckham will generate short term interest but what about the long term. For those that understand the game and want to watch entertaining soccer Beckham does NOTHING! He sure as hell isn’t going to raise the level of play.
Comment by LG — November 22, 2006 @ 1:44 pm
I think what is most annoying to me about the Beckham rule and the apparent thrust by the MLS to bring in ‘marquee’ (i.e. in this case at-one-point-in-the-distant-past-marquee) players is that, basically, these are cosmetic changes that only appear to make the league ‘better’. For some reason, MLS seems to think they need to market the league to soccer moms and people who are not into soccer already. What is the point of this strategy? To bring in as many short-term fans possible? Why not cater to your current fanbase (people who actually enjoying watching good soccer already) first by working to build a quality product from the ground up.
MLS = argh.
Comment by jobicoppola — November 22, 2006 @ 4:36 pm
Okay, I have never liked the Beckham Rule. Moreso I’ve never understood the infatuation the American fan has with the rule let alone the player. Both are highly shallow, limited and over rated. To see it implemented and hailed as a cure for all that ails us drives me batshit crazy…
1) If one is going to bust the bank, one would do better to spread the mythical 100 mil over a greater area - 10 10 mil players instead of 1 100 mil player. Only that will raise the level of play in MLS. Not one player, be he young or old. And a player of limited use like Becks ain’t the one to bust a bank over.
2) Stars do not make a league. It takes 3-4 nearly nameless, faceless players for every so called star to do the grunt work on any team. Regardless of the pay scale of the spearcarriers, a team in any sport is more characterized by the ones doing the running, fetching, providing - giving the massive egos the space, time or opportunity to perform. Soccer moreso than most…
3) The salary of an Exception Player is a vital point no matter where the money comes from. Just because it doesn’t come from the league, it still has to come from somewhere and eventually the team, and the league, are going to have to scrounge up the lucre to make good. It doesn’t matter if Red Bull pays a player for, let’s say, endorsements - it’s still going to have to generate a return for Red Bull. The money is going to be real, not the etheral purse of neverending fullness that Chang implies is Out There. Signing Becks or any of the Legion of the Fat and Happy, is going to have real pockebook consequences for MLS.
4) Another reality check - any of the Legion of the Fat and Happy are not going to come to the US of A to play for the ML of S and set up housekeeping in lovely Kansas City. Or Salt Lake. Or Dallas, or Chicago or New England. Or, god help them, Columbus. No, they are coming to MLS with visions of Rodeo Drive, Broadway or Pennsylvania Avenue not sweltering in Houston. Figo is not going to sign if he has to live in Kansas, or Utah. Or, god help him, Ohio. Thus 90% of the teams are going to be left high and dry in the sweepstakes to land a member of The Over The Hill Gang and forced to trade their allocations for pennies on the thousands of dollars to the already endowed. MLS cannot afford that. This salient fact is every bit as relevant, and eeriely similar to the demise of the NASL, than the actual salary outlay. The Premiership is beginning to taste the bitter fruit of this kind of pyramid scheme. Scotland is already suffering from it. For MLS it is even worse - they need every fanny they can fathom in the seats, that includes the hicks from the sticks not just the glitz from the ritz.
5) Becks earning power is slipping even as I type (not to mention what little real skill he possessed). And the jump, or drop, to MLS is not going to do anything to cushion the fall. His exposure is going to plummet and Becks has always been more about exposure than skill. The imagined jersey sales that Chang conjures are not going to even approach the neighborhood of what Becks, or any player, is going to generate with Real Madrid. And the tours of Asia are even more of a mirage. LA, let’s say they “win” the Becks Sweepstakes, is not going to be able to just pick up and win the Pacific Rim like Real, it’s going to take actual toil, something that MLS in general and the Gals in particular, have a real hard time with. The Galaxy is not going to draw anywhere near the numbers of Real or Barca or MANU, even with his One-Footedness in a Galaxy shirt. The real draw has been a cast of thousands with, oh yeah, whosits Beckham along for the ride. Beckham + Roberto Carlos = Big Bucks. Beckham + Chris Albright = not so much. Very not so much.
6) Finally, having one one demensional over hyped pretty boy making more than the entire payroll of nearly the entirety of the league is not going to be as well accepted as Chang blissfully fantasizes. And his Kevin Garnett analogy is not at all relevant. For one thing KG may make more than the rest of his team, but he hardly makes more than the rest of the league or even individual players from other teams, which would certainly be the case should the One Trick Pony be saddled up and ridden in MLS. KG has been in the NBA for many a year, there’s been more than ample opportunity to recoup the truckloads of cash dumped on him by league and franchise alike. The T-Wolves have also not been able tap mysterious well-springs of magic money outside the cap that Chang and others imagine MLS has to foot One-Foot’s expected salary. And to further drive a stake in the KG analogy, just how many championships have Minnesota won with just one overpaid primma donna? Yeah, that’s what I thought.
The whole thing, like much of what passes for higher math in MLS, just doesn’t add up. It may make sense if the league is looking for some kind of blip on the radar but as far as making some kind of lasting impact - skillwise, financially or in public relations - it’s got damned little chance of actually working.
Can you say “Lothar Matthaus” boys and girls?
I thought you could…
Comment by Kelly — November 23, 2006 @ 11:07 am
Kelly = da truth
We are constantly comforted by the fact our readers are vastly more intelligent than we are. American soccer, someday, will be just fine.
Comment by garth — November 23, 2006 @ 1:04 pm
[...] I’m also reminded of our anonymous reader’s clash with ESPN’s Jen Chang. I’d really, really like to see The Changer crunch the numbers on a 5 year, $250million deal. Because this is fantasy land. [...]
Pingback by soccernista.com » Holy Mother of god — January 11, 2007 @ 2:11 pm
xanax…
news…
Trackback by xanax — March 18, 2007 @ 3:37 am
xanax online with delivery online xanax
Comment by online xanax us — June 28, 2007 @ 6:56 pm
Hello! Good Site! Thanks you! rejhofmmtmn
Comment by hexyrdsyhp — July 6, 2007 @ 5:38 pm