VARIOUS: SOCCER STAR DAVID BECKHAM AGREES TO TRANSFER TO SPANISH GIANTS REAL MADRID

Record ID: 645895

  • Title: VARIOUS: SOCCER STAR DAVID BECKHAM AGREES TO TRANSFER TO SPANISH GIANTS REAL MADRID
  • Date: 19th June 2003
  • Summary: (EU) LONDON, ENGLAND, UNITED KINGDOM (JUNE 18, 2003) (REUTERS) CHART OF MANCHESTER UNITED SHARE PRICE, SHOWING A SPIKE ON NEWS OF BECKHAM REAL MADRID DEAL (SOUNDBITE) (English) HENK POTTS SAYING "Manchester United financially could well be hurt from the back of this. It is a very fine balancing act, of course, for Manchester United. They know that the prices of the players are falling quite rapidly. They've got a player pretty much at the top of his game or coming close to the top of his game. They know he is worth as much as he is ever going to be now. The question is, do they cash in now or they try to exploit the brand value? They've obviously decided, with all the managerial problems, that cashing on Beckham is obviously the right way to go today."
  • Embargoed: 4th July 2003 13:00
  • Keywords:
  • Location: LONDON AND MANCHESTER, ENGLAND, UNITED KINGDOM; MADRID, SPAIN; TOKYO, SAPPORO, JAPAN
  • City:
  • Country: Japan United Kingdom Spain
  • Topics: Sports
  • Reuters ID: LVAD4X8V1QFHQWA0LFKKF4BGND56
  • Story Text: Months of speculation over the future of British football star David Beckham have finally been put to rest. The Manchester United player has agreed to a move to Spanish giants Real Madrid for a transfer fee totalling 35 million euros ($41.3m) which will be paid in instalments over the next four years.
    Beckham is expected to earn around six million euros a year plus bonuses on a four year contract.
    There are questions about how Manchester United will replace their midfield star and about whether Beckham will win a regular first team place with Real Madrid, which is the dominant force in European club football having won the Champions League, Europe's top trophy, in 2000 and 2002.
    But aside from the sporting debate there are also commercial question marks. Will Beckham's departure damage Manchester United's brand appeal and marketability and will it enhance or damage David Beckham's marketability. Henk Potts, investment analysts at Barclays Private Clients, believes Beckham is taking a risk.
    "This is a hugely risky move for David Beckham, I have to say. Remember, David Beckham brand is driven by exposure. Now, joining the world class team, that have done some fabulous performances, he has also got to come up against some great names in that team. He may not be necessarily the shining light he has been at Manchester United. Ronaldo, Zinedine Zidane - all world class great players.
    "If David Beckham is not receiving that same amount of exposure he was getting at Manchester United, you'll se the value of the David Beckham brand fall quite rapidly. So unless he does significantly well at Real Madrid, you can well see the David Beckham brand diminish quite quickly," added Potts.
    Manchester United said late on Tuesday (June 17) that it and Beckham had agreed terms with Real Madrid, after weeks of speculation the England captain would leave the club he joined as a schoolboy.
    United will get the full 35 million euros ($41.3 million) transfer fee for David Beckham only if Real Madrid reach the Champions League quarter-finals in each of the next four seasons.
    The 28-year-old England captain agreed a four-year contract with the Spanish club on Tuesday (June 17), but just
    5 million euros of the fee will be paid up front with another 17.5 million euros over the next four years in equal instalments, the English champions said in a statement.
    Another 1.25 million euros will be due each time Real Madrid qualify for the Champions League over the next four seasons, and a further 1.25 million euros is payable if the nine-times European champions advance to the quarter-finals.
    Proceeds from Beckham's sale will be used to support Manchester United's business development, including playing success at the highest level, said club's Chief Executive Peter Kenyon.
    Shares in Manchester United rose over three percent on Wednesday (June 18) on the news of the Beckham deal. By 0900 GMT, shares had risen 3.5 percent to 150 pence.
    There's been speculation that Beckham's individual commercial activities and high profile off the field annoyed Manchester United manager Alex Ferguson. But while the Manchester United board judged it was time to cash in its chips on the Beckham investment, Henk Potts believes, it was still a hard decision for the club.
    "Manchester United, financially, could well be hurt from the back of this. It is a very fine balancing act, of course, for Manchester United. They know that the prices of the players are falling quite rapidly. They've got a player pretty much at the top of his game or coming close to the top of his game. They know he is worth as much as he is ever going to be now. The question is - do they cash in now or they try to exploit the brand value. They've obviously decided, with all the managerial problems, that cashing on Beckham is obviously the right way to go today," said Potts.
    Real Madrid could be the biggest winner from all this.
    The transfer fee is not as high as some expected, payment is spread over several years, and some of it is only payable if Real does well in Europe's Champions League. In addition there's a neat fit between some of Real's sponsors and Beckham's; both have deals with the likes of Pepsi and sports wear manufacturer Adidas.
    Potts said: "Undoubtedly Real Madrid is well ahead in terms of this deal. Real Madrid will be able to use the merchandising aspects of David Beckham to go into this growth area of Asia. We know it's one of their key areas they've been looking at. And of course you have all these Manchester United fans. They may well say: "Look, we love David Beckham." We've seen all these tears across the front pages of the British tabloids. All these fans saying: "Look, we wanted David Beckham to stay." Now he has gone to Real Madrid, he may well find half of Manchester United fans start supporting Real Madrid as well.
    "You know what happens when that goes through? They start buying the shirts, they start going to the games. TV interests become more, and that generates further funds for the likes of Real Madrid. So, out of all this deal Real Madrid have paid a good price for a world class asset, fantastic merchandising opportunities. This looks pretty good for them," added Potts.
    In the meantime David Beckham was welcomed in Tokyo on Wednesday by hundreds of screaming fans trying to come to terms with his switch to the Spanish club.
    In an astute stroke of timing news of his transfer came just before his tour of Asia, home to millions of his most free-spending fans and a potentially lucrative market for the already star-studded Real Madrid team.
    The near god-like status Beckham commands in Japan and other Asian nations was a major reason for Real's interest in him as the club looks to win over more fans in the soccer-mad region.
    Beckham's trip to Asia is less about his football skills than his bankability as a one-man marketing industry in commercials for products as diverse as chocolates and beauty treatments.
    After three days in Japan the Beckham bandwagon will move on to Malaysia, Thailand and Vietnam. Beckham could be back in Japan on August 5 for a pre-season friendly between Real and J-League club FC Tokyo.
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