David Beckham's Contract Negotiations with LA Galaxy Led to Lucrative Earnings

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David Beckham's Contract Negotiations with LA Galaxy Led to Lucrative Earnings
David Beckham's Contract Negotiations with LA Galaxy Led to Lucrative Earnings

David Beckham's decision to join the Los Angeles Galaxy in 2007 was met with surprise and skepticism by many, especially considering the legendary Englishman's age and the fact that he was taking a 70% pay cut from his salary at Real Madrid.

However, Beckham's move to the MLS turned out to be a brilliant business decision that not only changed his own life but also had a significant impact on the development of football in the United States. 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”.

As part of his contract negotiations with the Galaxy, Beckham insisted on the inclusion of two clauses that ultimately proved to be extremely lucrative for him. The first granted Beckham a percentage of the revenue from all MLS teams, including profits from jersey and ticket sales, sponsorship deals, and even concessions such as hotdogs and beer.

This clause alone earned Beckham a substantial amount of money over the years. 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 second clause, which was truly visionary, stated that MLS would have to make room for a future team owned by Beckham, should he choose to exercise that option.

Additionally, the so-called "registration fee" for Beckham's team would be a significantly lower price of $25 million, compared to the hundreds of millions of dollars that other teams, such as St. Louis and Charlotte, had to pay to enter the MLS.

Beckham took advantage of this clause by founding Inter Miami, which is now worth many times more than the $25 million he paid to start the team. The two contract provisions we just spoke about have brought him well over $500 million in total.

When Beckham joined the MLS, there were a lot of skeptics, but over the course of the previous 15 years, he has proven to be a very astute businessman.

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