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Messi turned down $1.9B to play in Saudi Arabia. He's set to make even more in the US.
To understand Messi's (genius) decision, we have to rewind to 2007.
David Beckham was on top of the European soccer world. He had had won 6 Premier League Titles with Manchester United. He was playing for Real Madrid.
Then, he left for the MLS. Beckham's annual salary went down 70%, from $20M to $6.5M. The papers had a field day, calling him an "idiot" and "financially incompetent."
They turned out to be the incompetent ones - in the short and long term. In the short term, between Beckham's revenue share, new US endorsements, and salary, he managed to earn $50M+ per year.
Of course, that's still peanuts compared to $1.9B. Where Beckham really made his money was in the long-term, from a relatively underreported clause in his contract: he had the option to purchase an MLS expansion team.
It wasn't even a very cheap fee. Toronto FC had just joined the MLS for $10M. Beckham's fee was $25M. But it turned out to be an enormous deal.
The MLS grew exponentially since Beckham's deal. When he made the deal, the MLS was on a $8M TV deal. But in 2014 it signed a $90M deal. And in 2022, it signed a $250M deal with Apple TV. These deals skyrocketed the value of MLS teams.
In addition, US sports franchise valuations in the US generally have skyrocketed. Earlier this year, the Denver Broncos sold for an eye-watering $4.65B.
The growth of MLS and the appreciation of sports franchises have led to Beckham's team, Inter Miami, to be valued at $585M in 2022.
It only played its first game in 2020. That's in insane 24x return in a few years.
And that's not all. Since Messi's joining Inter Miami, ticket prices have already increased more than 5x. The team is gaining over 100K social media followers per hour.
Those gains are going to flow to Inter Miami's valuation. Some analysts believe its valuation has already doubled to more than $1B since Messi joined.
That means that Beckham turned $25M into $1B with his Inter Miami investment. A truly incredible 40x that's set to keep on growing.
Messi has the same opportunity. In his contract with the MLS, he has an option to buy a team. That's why he he's headed to the US over Saudia Arabia or Spain. He's set to make much more than $1.9B from his new MLS franchise.
In addition to the option to buy a team, Messi's contract has provisions for him to earn a share of Apple's revenue generated by Season pass and a share of Adidas profits from his MLS arrival.
It's truly a genius financial move.
Rev share & equity > cash
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