Friday, January 12, 2007

Asia a factor in LA Galaxy FC's Beckham signing

The United States’ leading football entrepreneurs had Asia on their mind when they signed Real Madrid midfielder and former England captain, David Beckham to USA Major League Soccer club Los Angeles Galaxy for five-years. Tim Leiweke, president of AEG, the entertainment conglomerate that owns the Galaxy, said the club hopes Beckham will draw attention from overseas. "We become more of a global brand," he said. "We have begun to work on an Asian tour, that I guess will be in the (northern) spring of 2008. We've already been offered a lot of interesting opportunities. We already have a tournament set up with Chelsea coming to the Home Depot Centre (Galaxy's ground). We will absolutely market the Galaxy brand as a world brand. I think you will see a new logo and a new image for the Galaxy by summertime. You will see a new business plan that is very involved in expanding the Galaxy brand around the globe," he said.

With Beckham headlining, Asian promoters reportedly paid Real Madrid US$6 million per match for similar exhibition matches during a 17-day tour of Asia shortly after Beckham's 2003 signing and Real Madrid sold 210,000 club shirts.

"They're not signing him as a soccer player. They are signing him as a domestic ambassador of the sport, to be the face of Major League Soccer and help the league instantaneously rebrand itself as a major player on our sports landscape," David Carter, a sports marketing professor at USC, told Scott Reid of The Orange County Register. MLS commissioner Don Garber told Reid he has already been approached by companies looking to purchase the league's global TV rights and Adidas and another company are in a "multimillion-dollar bidding war" to have their logo on the front of Galaxy shirts this season. "For Madison Avenue," Carter said, Beckham "has immense untapped marking value when you combine his celebrity status with brand recognition."

While Beckham's MLS contract is reported to be worth US$10 million a season, Leiweke projects the Beckham brand could bring in US250 million in salary and endorsements over the course of the five-year deal. "I have heard what industry experts are saying, which is that David has the opportunity to earn up to a quarter of a billion. I think he can. A lot of that will be on the commercial side," he said. With Beckham retaining his naming and likeness rights under the deal, his package should dwarf the $18.4 million in endorsements he currently receives annually. During Beckham's career, adidas has posted $20 million in sales of a football shoe that bears his personal logo. "If adidas can shave off (US) market share from Nike, that's worth it in itself," Carter said.

Real Madrid's income was $260 million in 2002, the year before the club purchased Beckham for $41 million from Manchester United. Three years later Real's annual income reached $515 million, nearly half of which came from marketing and merchandising. Beckham was signed under a new MLS designated player rule that allows owners to sign a player outside the strict salary cap structure of the 11-year-old league. In winning the 2005 MLS Cup, the Galaxy became the first team in league history to turn a profit, albeit in the $500,000 range, but didn't even make the MLS playoffs in 2006.

AEG is Beckham's partner in the David Beckham Academy which opened in the Home Depot Centre, Carson, Los Angeles in November 2005, simultaneously with one in South-East London, England (as part of the redevelopment of the Millennium Dome site). The Home Depot Center is one of AEG's Southern California properties and the company is developing The O2, a 23,000 indoor arena located within London's Millennium Dome as well as an adjacent sports and entertainment district.

In July 2006 Beckham, AEG and Simon Fuller's 19 Entertainment Ltd (creator of American Idol) said the LA and London academies had already "reached record levels of participation and attracted unprecedented levels of sponsorship from top Fortune 500 companies" and the partnership was now "focusing its efforts on Asia as the best location to build". In their joint statement, David Beckham said he'd "always had fantastic support from people in Asia and it is an honour to have an Academy there."

"We're looking from the Pacific to the Middle East and anywhere in between. It's not a matter of which city wants it, but of where's best to put it. We'd like it to be a hub for children from all over Asia," Ed Cunningham, managing director of Asian Strategy and Operations of AEG told Reuters. "It's not for elite kids, there may be kids with promise but alongside them there'll be kids who haven't played much. It's basically run from corporate sponsorship which David allocates to the academy.

"It's an expensive business. The build-out on the London academy was about 9.0 million pounds ($16.55 million). David Beckham commits a lot of time each year to the academy," he added. "We don't want to stretch David too much. This isn't the kind of academy that has David's name but he never shows up. He's involved in every detail of the planning."

"In China, the cities we are looking at are Beijing, Shanghai, Guangzhou, Shenzhen, Hong Kong and Tianjin," Cunningham told the China Daily. "China may be a good place to develop soccer because first of all you have fan bases that love soccer. I mean this country loves soccer. You've got so many great young athletes," he said. "Finding good facilities is not a big problem in China because there are so many great facilities ... So I think you can almost pick any major city in China that we could develop its venue into a fairly top-level academy. To be the site of the Academy, the city should also be the hub of cities all over Asia and a right partner should also be found in the city."


UPDATE (17 Jan)

David Beckham has generated US$45-58 million a year for Real Madrid according to a study by two Spanish university professors quoted by Reuters. The study, put together before Beckham announced he was leaving the club to sign a five-year deal with MLS side Los Angeles Galaxy, based its conclusions on the impact he has in the media. Beckham was responsible for more than 35 percent of the news written about Real Madrid in the Japanese language and nearly 29 percent in English.

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