$250 million well spent

Words cannot fully capture the pleasure I now take in the fact that David Beckham has decided to spend the next five years playing soccer in the US. Don't let anyone fool you into thinking this is just some fiscally irresponsible grasp by Major League Soccer to lure the casual sports fan into watching there pre-teen league. This was a sound decision made by people a lot smarter than me, or any person who may end up reading this blog. Let me run through some of the common complaints and criticisms that have been thrown at this deal and address why they are wrong:

(1) $250 million... for a soccer player? I call this the Jim Rome criticism. It is what you hear from middle-aged, (mostly) white men who completely lack a general understanding of the world beyond America's borders. These people think that if you like soccer you are a wimp; a sissy; a "queer." These people are idiots.

What these people (by the way, I totally realize that the phase, "these people" make me sound like a jerk) fail to understand is that there are some 300 million people in America, and they aren't all, as Jim Rome calls them, "clones." The United States has millions of immigrants from soccer-mad nations that are just dying to see top-flight soccer played in this country. On top of that, there are millions more non-immigrants, such as myself, who love the sport. Think about this: Football is supposedly the most popular sport in the US, yet there is only one all-football available on cable or satellite (the NFL Network). On the other hand, there are three (yes, three) all-soccer channels available on cable or satellite (Fox Soccer Channel, GolTV, and Setanta). Needless to say, there is a market for soccer.

(2) The MLS can't possibly afford that contract. To be fair, the $250 million figure is a bit misleading. Much of the money comes from sources other than MLS, and AEG (the owner of the Los Angeles Galaxy). Most of the money comes from endorsement deals signed with Adidas, Creative Artists Agency, and 19 Entertainment (the people that brought you American Idol) who ponied up the cash contingent on Beckham coming to America. According to SI.com, MLS in only on the hook for an amount in the single-figure millions, thought the league would not disclose the full details of the contract. The final thing to consider is, according to wikipedia, the fact that the team owner has an estimated net-worth of around $7.8 billion. I don't think money will be hard to come by.

(3) It is big contracts like this that sunk the NASL. The North American Soccer League (NASL) was the American pro soccer league that existed during the 70's and early 80's which came to collapse when owners far outspent revenues in an effort to keep up with their other free-spending owner brethren. The NASL was a nothing league until the New York Cosmos signed a then retired Pele to extraordinary sum of money, followed by signings of other world greats such as Franz Beckenbauer and Giorgio Chinaglia. It may be hard to believe, but this team routinely filled Giants Stadium. Unfortunately, the rest of the league spent money, hand over fist, just to keep up with the Cosmos. The massive debt incurred by these teams was too much to bear and ultimately led to the league demise.

Nowadays, the premier league in the United States is Major League Soccer. MLS differs from the NASL -- and most sports leagues -- in that it is a single entity. Team owners do not own their teams, so-to-speak, but rather own stock in the league, and own operating rights to a team. All players are paid for by the league, rather than the team. This prevents teams from engaging in the type of arms race that killed its predecessor. Furthermore, MLS has a loose salary cap to provide another check against free-spending.

This season the MLS introduced what has become known as, "The Beckham Rule", which allows a team to spend as much money as they want on a single player for which the team is responsible for the player's salary over $400k. In addition, this Beckham Rule slot can be traded. I could go much further into the economics of Major League Soccer, but that would be long an boring. Suffice it to say that MLS has developed a business model which focuses on incremental change and conservative financial management. The MLS may not be a top league globally, but it will surely avoid the fate that befell the NASL.

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It should also be mentioned that the Beckham family is a virtual publicity machine. Everytime someone goes through a grocery store checkout they will be staring straight at a picture of Posh or Becks. As they say any publicity is good publicity.

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I would like to make one last point: MLS has recently signed a tv rights deal with ESPN. ESPN now has financial incentive to promote the hell out of the MLS as it must maximize ad revenue. This increased exposer for the league, and David Beckham particularly, will elevate the sport of soccer within the American sports culture. Soccer will replace Hockey as America's 4th major sport (I don't count NASCAR since a bunch of rednecks making left turns for 3 hours is not a sport). For all you soccer haters out there... be prepared to see lots of annoying MLS promos -- with Beck's face all over them -- on ESPN starting this April.

~Travis~