David Beckham Leaving Manchester United
This was the question posed on the front page of the Financial Times on 11 June after United announced that they were planning to sell their most valuable playing asset, David Beckham, to Barcelona for a fee estimated at £30m. In the final outcome, Beckham went to Real Madrid for a basic fee of £25m (£17.6m) payable over four years with a further £10m conditional on Real’s performance in the Champions League.
After the initial announcement, the club was immediately plunged into a row with Beckham’s advisers who said that he did not want to go to Barcelona. What was quickly apparent was that was going to leave Old Trafford. The tensions with Sir Alex Ferguson about his celebrity lifstyle had become too difficult to manage. The Financial Times compared Sir Alex Ferguson’s famous ‘mind games’ which involved keeping Beckham on the bench in key matches as ‘more like the ritual humiliation practised by Maoists during the Cultural Revolution.’
The markets certainly thought that the club is strong enough to survive Beckham’s departure, marking up the shares by 4.6 per cent. The club would be realising a large sum on an asset that was produced through their youth system and does not appear on the balance sheet. The argument that United would sell fewer shirts if Beckham left does not stand up. The club’s £303m thirteen-year shirt and merchandising contract with Nike pays yearly, guaranteed returns regardless of which players are employed by the club.
Nevertheless, there are marketing downsides to his departure. It means that the club will probably depart on their debut American tour next month without their most bankable asset. Beckham is one of the most iconic individuals in global sport and arguably he would be going before the club had used his potential to the full. His fame in Asia, especially Japan, is unparalleled. Losing him would be a blow to the club’s Asian plans.
The Financial Times commented, ‘He is now a fully fledged sports brand of his own, with his pop-star wife Victoria, his unique fashion sense and ever-changing hairstyles extending his appeal well beyond the pitch.’ He could probably earn even more at Real Madrid, a club that has a less rigid wage structure because it is not bound by the confines of a public company. They might also be able to make better use of his image. The club has pioneered a number of unique ‘image rights’ deals with top stars such as Figo and Zidane. It has used such deals, whereby it organises marketing endorsements for the players, and takes a share in the profits, to justify the huge outlay required in buying them.
FutureBrand, the brand consultancy, estimates that 30 per cent of non-European football fans follow clubs because they like individual players. ‘If Beckham leaves, the number of United international supporters will probably decrease’, claims FutureBrand’s Samantha McCollum. Such a fall would have a knock-on effect on the of television audiences for United matches screened oustide the UK. However, the club’s media rights deals at home and overseas are currently agreed collectively. The club wants eventually to take control of overseas media rights and sell them itself. Selling Beckham could therefore have an effect on these potential revenues.