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In the 2002 British movie, Bend It Like Beckham, an aspiring 18-year-old soccer player explains to a friend that “no one can bend it like Beckham,” a reference to soccer star David Beckham’s amazing ability to score by “bending” the ball and making it swerve as it flies through the air.
With the recent announcement that Beckham has signed a landmark sports contract worth an estimated $250 million to play soccer with the Los Angeles Galaxy over a five-year period, Beckham’s knack for bending conventional approaches to soccer, business and his own lifestyle appears remarkably intact. Not only is he considered one of the world’s best-known soccer players, he is a recognized global brand, with lucrative celebrity endorsements that have included Adidas, Gillette, Got Milk?, Pepsi, Snickers Candy Bar and Motorola. His marriage to former Spice Girl Victoria “Posh” Beckham, coupled with his highly publicized friendships with movie stars like Tom Cruise and Katie Holmes, have only added to the allure.
But what some Wharton marketing and sports experts wonder is whether Beckham can live up to the hype surrounding the deal and his move from Spain’s Real Madrid soccer team to the Los Angeles Galaxy. Can Beckham, whom some consider to be in the twilight of a brilliant career, produce enough star power to not only boost the team’s revenue, but also raise the profile of Major League Soccer (MLS) in the U.S.?
“It’s risky. But there’s always a risk when so much is riding on an individual, when everything is centered around the brand of one person,” says Wharton marketing professor Lisa Bolton. “But the thing about Beckham is that he can cut through the clutter. The team doesn’t have to feature him with its own advertisements in order to raise awareness of soccer. And he is already making headlines in entertainment news. It’s a good fit for sports as entertainment, particularly L.A. entertainment.”
Kenneth L. Shropshire, Wharton professor of legal studies and business ethics and director of the Wharton Sports Business Initiative, notes that Beckham’s contract is one of the biggest in North American sports. The package catapults him into a rarified league with athletic stars like golfer Tiger Woods, who makes a reported $100 million a year, and racecar driver Michael Schumacher at more than $60 million a year. Beckham’s $50 million a year contract from a combination of salary, franchise royalties, advertisements and endorsements actually puts him ahead of basketball legends Michael Jordan and Shaquille O’Neal; football quarterbacks Peyton Manning, Michael Vick and Matt Hasselbeck; baseball’s Alex Rodriguez and seven-time Tour de France winner Lance Armstrong.
What might be one cause for concern in terms of the business angle, Shropshire says, is that the deal comes “from the sport that generates probably the lowest revenue among the leagues in the U.S.” But Shropshire also added that he wasn’t criticizing the league’s decision to hire Beckham. “These are very savvy people leading the MLS. I’m certain it’s a strategic move, but one — and this is from the commissioner — that is not meant to be the magic bullet that turns things around and makes soccer as popular in the U.S. as it is in the rest of the world. It is part of an apparent strategy. And Beckham is probably the one global name in soccer. Even if you don’t know soccer, you know Beckham.”
Extra 15 Minutes of Fame
In this blending of sports and entertainment, Beckham, who played for England’s Manchester United until he moved to Spain in July 2003, more than stands out. “Part of what makes Beckham a unique brand is that he is one of the few sports icons who combines this whole package of a glitzy and glamorous fantasy world — a good athlete, Hollywood good looks, a good-looking wife,” says Wharton marketing professor Americus Reed II. “He started building the brand in the context of the world’s most popular sport. Moving his brand to the United States gives him the opportunity to extend his 15 minutes. It’s a smart move on his part, but it could be tough. Soccer is not as popular in the U.S. as football, baseball or basketball.”
Great celebrity brands, he adds, “constantly reinvent themselves. Madonna is the classic case in the music industry; she is always changing her approach to her image, her fashion style, her music. That’s what Beckham is doing, hoping to import that massive global popularity to a new arena.”
Reed says he can’t point to anyone in basketball or baseball “who has risen to Beckham’s height of global appeal. Everyone wants a piece of this. Beckham’s global appeal is so large; it’s a crazy, ‘Beatle-esque’ kind of thing. People who aren’t even curious about soccer are suddenly interested. Once you cross that threshold and achieve that critical mass, the curiosity about you as a brand builds on itself. It is extremely rare.”
It is also extremely risky. In what many observers are calling “star economics,” Beckham has been tapped to boost a team’s popularity and success, a trend not unlike when a corporate board hires a high-profile chief executive officer to rescue a failing company. But a new CEO rarely carries expectations of rescuing the future of an entire industry. In Beckham’s case, his assignment — one that he openly embraces — is not only to increase the profile of a team but to push the sport of soccer to new levels in a country where it remains a distant cousin to other sports. The tactic has been tried before, and it didn’t work. An international soccer star like Pele couldn’t save the New York Cosmos in the 1970s, and star European soccer imports couldn’t save the North American Soccer League before it declared bankruptcy in 1984.
Seeking to avoid these well-chartered mistakes since it was formed in 1996, the MLS has carefully controlled expenses and player salaries within its 13 league teams — until now. Last year, the league changed its salary rules to allow each team to sign a player outside the salary cap, a move that is now being referred to as “the Beckham rule.” And in a deal that the Anschutz Entertainment Group (AEG), which owns operating rights to the Galaxy and two other MLS teams, has described as “the biggest in sporting history,” Beckham’s $250 million five-year pact even includes a percentage of team jersey sales and ticket revenue, a buy-in Beckham sought but never secured in Spain.
The addition of Beckham is just one of the latest moves made by MLS to enhance the 11-year-old league. In the last few years, MLS has added three new teams, six new owners and four new soccer-specific stadiums. The League plans to add two additional teams by 2010. In contrast to the Pele era and its lack of broadcasting appeal, the MLS recently signed long-term television agreements with ESPN, Univision and Fox Soccer Channel to broadcast MLS games. But perhaps nothing compares to the arrival of Beckham, a unique player who appeals to men, women and youth.
“David Beckham is a global sports icon who will transcend the sport of soccer in America,” said MLS Commissioner Don Garber the day Beckham’s deal was announced. “His decision to continue his storied career in Major League Soccer is testament to the fact that America is rapidly becoming a true ‘Soccer Nation’ with Major League Soccer at the core. The addition of David Beckham represents another significant step forward for the MLS and the sport.”
Garber’s declaration underscores what Wharton marketing professor David J. Reibstein describes as a huge gamble. “What they have done is bet the farm,” he says. “And when you bet the farm, when you are that risky, you get a lot of attention. They have done it with the most visible name in the sport. This is the perfect team for David Beckham. He is so L.A., he is so Hollywood — both he and his wife. He is a celebrity and this is huge for the sport. The U.S. Soccer Association has been trying for years to build its awareness and popularity in this country. We have been talking about soccer exploding since Pele. It didn’t happen. Then came the Olympics; they are on the map for a week and then the Olympics end. So this is a bet: If we get the most visible and attractive player in the sport, maybe, just maybe this will catapult soccer into something huge. And if that happens, this could be a really good move for everyone in the sport.”
Beckham’s high price tag was “intended to be a shock,” argues Reibstein. “I see some parallel with this and Sirius Radio hiring Howard Stern, the most visible radio representative out there, by throwing a ton of money at him. Overnight, it legitimized Sirius Radio. The only place you can listen to Howard Stern now is Sirius Radio. And the only home team that Beckham has now is the L.A. Galaxy.”
Is it worth it? “It’s going to be hard for me to say that it’s worth it,” says Reibstein. “But I think the hype is certainly going to pay off. Whether it’s enough to cover all the real expenses, I don’t know.”
Meanwhile, ticket sales for L.A. Galaxy have increased since Beckham signed with the team, no doubt helped by the extensive press coverage of both him and his wife. Before the ink on the deal was even dry, Victoria “Posh Spice” Beckham was rumored to have signed a mega-deal for her own fashion line, while David Beckham was rumored to be pursuing a Hollywood career.
And while everyone admits that it could happen, few marketing experts expect that Beckham’s high salary will be viewed negatively by other soccer players. “I don’t know if they see it as a win-win, and I’m sure there will be equity issues,” says Wharton marketing professor Patricia Williams. “But it’s hard to argue that any player on any team will have anything like Beckham’s global brand appeal. If that brings more money to soccer, to the extent that it pays off, I think it benefits everyone in the league.”
Does Scoring Goals Matter?
Will Beckham’s star power decline if he doesn’t play well in the United States? After all, he didn’t start for the majority of this season with Real Madrid, and the coach benched him after he announced his decision to join the Galaxy. Wharton professors Bolton and Reibstein argue that Beckham’s appeal isn’t dependent on how many goals he scores. “It matters a little,” says Bolton, “but this is sports as entertainment. Obviously, you want to see good plays. But does he have to be at his peak? No.” Adds Reibstein: “That’s not the issue. The issue is, we have a way to market the sport.”
At the same time, sports author and journalist Michael Sokolove, who recently published The Ticket Out: Darryl Strawberry and the Boys of Crenshaw, cautions that American sports fans should not be underestimated. “We think that sometimes it’s all about marketing,” says Sokolove. “But American sports fans — who sometimes seem like rubes — are really attuned to performance. They are smart enough to know that Beckham is fabulous and a global brand, but he is coming to the United States when his career is somewhat on the down side. No one has ever been a successful marketer and built up their sport unless they really delivered the goods on the field. And I guess there is some question about that with Beckham, at this point in his career. I don’t know how that will play.”