Adidas Follows Beckham to L.A.

Marketer Already Has Endorsement Deal With Star, Will Sponsor MLS' Galaxy

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NEW YORK (AdAge.com) -- When David Beckham goes to Major League Soccer's Los Angeles Galaxy, Adidas will go too.
David Beckham is soccer's most visible star. Though observers say he has lost a step or two on the pitch, he remains a global marketing icon through deals with Adidas, PepsiCo and Gillette, among others
David Beckham is soccer's most visible star. Though observers say he has lost a step or two on the pitch, he remains a global marketing icon through deals with Adidas, PepsiCo and Gillette, among others Credit: AP


Executives close to the deal said apparel maker Adidas, which already has a separate $10 million-a-year endorsement deal with Mr. Beckham and a 10-year, $150 million deal as the official uniform supplier to all MLS teams, will take a sponsorship role with the Galaxy. As a result, the Adidas name and logo will be featured more prominently than the small logo that now appears on all team jerseys.

Won't emulate Red Bull
Red Bull Co. bought the New York-New Jersey franchise in the MLS last year and dubbed the team the New York Red Bulls. But Tim Leiweke, president-CEO of Anschutz Entertainment Group, which owns the Galaxy, said that the Galaxy name will remain in some form, adding that there are two companies with which he is negotiating.

"I expect in the near future a substantial agreement on a sponsorship for the Galaxy jersey," Mr. Leiweke said. "Obviously, the value of our jersey [now] becomes more equivalent with the rest of the soccer brands around the world."

Mr. Leiweke added that a new logo and image for the Galaxy will be done by early summer. The MLS season begins in April. He did not dispute a reported figure that Mr. Beckham will make $250 million over the five-year deal with the Galaxy. "He has the potential to earn a quarter of a billion dollars," Mr. Leiweke said, "but a lot of that will be on the commercial side."

Indeed, executives said this wasn't just a straight deal between the team and Mr. Beckham, who is leaving Spain's Real Madrid team in June. Mr. Beckham is a client of Creative Artists Agency, Los Angeles, and Simon Fuller's 19 Entertainment, London, both of which were involved in the negotiations.

Global icon
Mr. Beckham, 31, is soccer's most visible star. Though observers say he has lost a step or two on the pitch, he remains a global marketing icon through deals with Adidas, PepsiCo and Gillette, among others.

When he first joined Real Madrid three years ago, the sales of team jerseys and other merchandise went up 67% over the previous year.

He is coming up on his option year with Gillette, with whom he signed a three-year deal in May 2004. "He's been the face of Gillette in 150 countries around the world," a Procter & Gamble spokesman said (Gillette is a unit of P&G). "He's being used now in Europe and Asia and the Middle East. ... We're very excited that he and his family are coming to the U.S. He's been a great ambassador for soccer."

Losing his value?
People familiar with the company and the deal, however, said Mr. Beckham's move to the U.S., where soccer is a minor sport, combined with the fact that he could lose some appeal in Europe by jumping to the MLS, would make him less valuable to Gillette than he had been in the past.

One person familiar with the deal said it would expire July 1 of this year unless it is renewed by Gillette for an option year. If Gillette decides to keep him on for a fourth year, Mr. Beckham would receive $5 million to $6 million, far more than he's making per year under his current Gillette contract, which pays him a total of $10 million to $13 million over three years. That $5 million to $6 million would be more than Gillette pays annually for naming rights for Gillette Stadium in Foxboro, Mass., and would be hard for the company to justify under current circumstances, said the person familiar with deal.

Gillette declined to comment on payments or an option year in the Beckham deal.

Mr. Beckham becomes the highest-profile player ever to join the MLS, which will start its 12th season in April. Almost two-thirds of the season will have been played by the time Mr. Beckham joins the league in July or August -- his contract with Real Madrid ends June 30 -- but it represents a huge coup for the league.

Lacked a superstar
The MLS has enjoyed slow but steady growth in the U.S., securing national TV contracts and building soccer-specific stadiums for its franchises. But one thing the league has lacked since its inception is a bona fide superstar. In its fledging days, the league put a cap on salaries, which helped with expenses, and instituted a rule in which a franchise could sign one player a year above and beyond the cap numbers.

Mr. Beckham's deal is far and away the most lucrative player contract in the MLS. But it could pay off for the league.

"David Beckham coming to MLS provides the league with an athlete capable of raising awareness and interest in soccer in the U.S. to the next level," said Derek Aframe, a VP with Octagon sports-marketing agency. "Beckham has the cache to further legitimize MLS in the eyes of potential fans, investors and sponsors."

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Jack Neff contributed to this report.
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