The David Beckham tidal wave is making Major League Soccer look like a good investment for entrepreneurs, according to Bloomberg. As one measure of its rising success, the 13-team league tripled its franchise fee this year to $30 million. The league plans to add three teams in the next three years, and is already generating a ton of interest from investors representing cities across the country.
Beckham, of course, has done much to raise the league’s visibility — both nationally and globally. Financially, “The idea of bringing Beckham to the U.S. has the potential of paying real handsome dividends,” says Randy Campbell, managing director Societe Generale, a New York investment bank. “It wouldn’t surprise me if eight to 10 years down the road, it will cost you $100 million to buy into this league.” The numbers don’t lie: more than 250,000 Beckham jerseys have been sold as of July 31, according to the L.A. Galaxy, his team. Tickets to Galaxy away games have already sold out in venues like Toronto and Washington, D.C., forcing fans to buy five-game to half-season ticket packages just to see the Galaxy play.
While the league’s “vital signs are pretty good,” Rob Tilliss CEO of investment bank Inner Circle Sports, says there’s still big risk. “How do you determine what’s a fair price to pay? That’s what determines whether this is a great investment opportunity. Are you paying for their current earnings or the earnings you hope they’ll generate if things go right in the future? The latter scenario is how bubbles are created.