Wednesday, July 18, 2007

The Star of David Beckham

When the Los Angeles Galaxy signed David Beckham to a contract reportedly worth $250 million, they did so with the ultimate goal of increasing revenue and establishing a worldwide brand. In a matter of months, the Galaxy are on their way to achieving that goal.

To establish a worldwide brand, the first order of business was to create a new logo that would be instantly recognizable throughout the world, much like the interlocking NY of the New York Yankees. Done.

To increase revenue, the Galaxy has done everything from the obvious (increasing ticket prices) to the creative (signing new sponsors to a series of exhibition games). A big piece of the financial puzzle was selling sponsorship on the front of the team's jersey. Herbalife outbid other potential sponsors, including Citibank, with a $20 five year deal -- better than some MLS stadium-naming-rights. The deal also gave the Galaxy a chance to sell more than 75,000 jerseys to Herbalife product distributors and included a commitment to back other AEG Sports.

It will be very interesting to see if the Galaxy can recoup their investment. The Beckham publicity machine is in full motion, but hype can only get you so far. In two years, when the hype has died down, the Galaxy and MLS may find themselves back in the obscurity from which they started.

from Tripp Mickle of Street & Smith's Sports Business Journal

Alexi Lalas’ family vacation disintegrated last January. What was supposed to be a quiet week away from work in Palm Beach, Fla., turned into a week of nonstop, international phone calls and e-mails

Is it done? Lalas, president of the Los Angeles Galaxy, would ask every few hours.

We’re close, AEG Sports President Shawn Hunter would say. Still no signature.

But late on the night of Jan. 10 that all changed when Lalas got word that David Beckham had signed to play for the Galaxy. He immediately got on his computer to e-mail his staff the good news. After labeling the subject, “The Star of David,” Lalas wrote:

It’s a go. Let’s have some fun.

He hit send and felt a mix of pride and excitement as he thought about the historic significance of the signing. But those feelings quickly faded under the weight of his new responsibility.

The team had just signed the world’s most iconic soccer player to an unprecedented contract reportedly worth $250 million. It was a deal he would have to help make work not just for the Galaxy but also for all of Major League Soccer.