David Beckham shocked the footballing world in 2007 when he took a 70% pay cut and traded Real Madrid for MLS outfit LA Galaxy, but it turns out that the former England captain did very well for himself out of the deal.
Only 31 years old at the time, experts unanimously agreed that Beckham still had plenty to offer in Europe’s top leagues when he moved across the pond.
Used to winning major trophies regularly with both Manchester United and Real Madrid, many questioned Beckham’s wisdom in turning his back on European football in favour of the glitz and glamour of Hollywood, especially as he was taking a huge salary hit in the process.
However – as a highly informative recent Twitter thread from sports business expert, Joe Pompliano, proves – it was an inspired decision for Beckham and his family.
What was David Beckham’s salary when he joined LA Galaxy?
Per Pompliano, “many people thought Beckham was an idiot” as he “agreed to take a 70% pay cut (from $20 million to $6.5 million) to head to a league that was barely ten years old.
“But those were just the headlines,” he teases. “The details of the contract were much more lucrative.”
The contract clauses that helped Beckham earn over $500m
That $6.5m annual salary was, of course, a massive investment for an MLS franchise. By Beckham’s standards, though, it wasn’t particularly impressive.
Realising this, Pompliano explains that “Beckham was able to negotiate a percentage of all team revenue as part of his contract in LA.
“That included everything from merchandise, tickets, and sponsorships, all the way down to the hot dogs and beer sold at games. And it *drastically* increased his overall earnings.”
Yep, any time a fan purchased anything at an LA Galaxy home fixture, a percentage of that purchase ended up in Beckham’s pocket.
As you’ll see below, those hot dogs, beers and replica shirts soon added up.
Pompliano writes: “In total, when you add up salary, endorsements, and revenue share, David Beckham made around $255 million during his 5-years with the LA Galaxy in MLS. That’s $50M+ annually – and it made him the world’s highest-paid player.”
The good news didn’t end there for Beckham, either.
Beckham cashes in thanks to franchise ownership clause
The MLS knew that wouldn’t be able to convince Beckham and his family to move to Los Angeles on the basis of cash alone – and so they pulled out all the stops to make the deal as attractive as possible to the Englishman.
As such, Beckham was also able to negotiate the right to buy an MLS expansion team for $25m upon retirement.
Pompliano points out that the $25m figure “was 150% higher than the $10 million fee Toronto FC had just paid to join the league, so it didn’t initially seem like a big deal.”
However, Beckham’s arrival brought significant growth to MLS – and that’s only accelerated in recent years.
The year before Beckham signed, the MLS broadcast deal was worth just $8m-a-year. Today, it commands $250m – an increase of more than 3,000%.
Since Beckham departed the Galaxy in 2012, no less than 16 MLS franchises had been established.
In 2008, a franchise was worth around $37m. Around 15 years later, that same average valuation has skyrocketed to $582m.
All of which is great news for Beckham.
The Manchester United legend involved his right to purchase an MLS franchise, resulting in the formation of Inter Miami CF – who played their first game in March 2020.
