Dad News: Why Messi Turned Down $1.2B of Guaranteed Cash from the Saudis
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Lionel Messi & The Saudis
This is a wild story about how Lionel Messi turned down $1.2B of guaranteed salary from the Saudis. But Why?
To pay credit where it’s due, this juicy story was just dropped by The All In Podcast, which has become a staple of our weekly diet.
The Gist:
First, know this: In 2007, David Beckham came to the MLS to finish his career. He passed up $25M in yearly salary for just $6.5M in salary AND a revenue share deal AND an option to buy a franchise for $25M. This was super interesting.
Upon retirement, Beckham exercised his option. He purchased the Inter Miami Franchise for $25M which is worth $500M+ today. Not bad!
One more interesting data point to add scale to the Messi situation. The entire PGA Tour will generate $1.59B in revenue in 2023.
Now to the Saudis. The Saudis are trying to diversify their oil wealth by buying into Silicon Valley tech business and various sporting businesses (see LIV golf).
Now to Messi. Messi was reportedly offered a three-year deal for $400M (b/w $375M-$600M) per year by the Saudis. He passed it up!
Instead, choosing to be more enterprising like Beckham, Messi agreed to…
a contract with Inter Miami for, reportedly, $50M per year
a share of the revenue generated by the MLS Season Pass on Apple TV
a high likelihood that his deal with Addidas will be renegotiated to include a share of the profits from his involvement in the MLS.
an option to become part-owner of an MLS team after his playing career ends.
Deeper Look
Chamath Palihapitiya, the co-founder of Social Capital, said on the recent episode of his podcast, All-In, that Lionel Messi is "the content" in the world of sports. He explained that Messi is so good at what he does that he is essentially the product itself. This means that people will pay to watch him play, even if the team he is on is not very good.
Palihapitiya gave the example of the Paris Saint-Germain soccer team, which Messi joined in 2021. PSG is one of the richest clubs in the world, but it has not won the Champions League since 2016. However, the team's popularity has skyrocketed since Messi joined, and it is now one of the most-watched teams in the world.
Palihapitiya believes that this is because Messi is such a transcendent talent that he can elevate any team he is on. He said that Messi is "the most valuable asset in sports" and that he is "worth more than the entire Dallas Cowboys."
Palihapitiya's comments about Messi being "the content" in sports are a reminder of the power of star power. In the age of social media and streaming, athletes have become more than just athletes. They are now brands, and their popularity can drive viewership and revenue for teams and leagues.
Messi is just one example of this trend. Other athletes who could be considered "content" include LeBron James, Tom Brady, and Cristiano Ronaldo. These athletes are so popular that they can generate significant revenue for their teams and leagues, even if they are not always winning.
As the sports industry continues to evolve, it will be interesting to see how the value of star power changes. However, it is clear that athletes who are able to capture the attention of fans will continue to be valuable assets for teams and leagues.
More Insight Into The Contracts
Here are some additional details about each of the deals:
The MLS Season Pass on Apple TV is a subscription service that gives fans access to all MLS matches. The cost of the subscription is $14.99 per month or $99 per year. Messi is expected to receive a share of the revenue generated by this subscription service.
Messi's lifetime footwear sponsorship deal with Adidas is worth an estimated $100 million. The deal is likely to be renegotiated to include a share of the profits from his involvement in the MLS.
Messi has been offered an option to become part-owner of an MLS team after his playing career ends. This would give him a financial stake in the league and allow him to continue to be involved in the sport after he retires.
These deals are a sign of the growing popularity of the MLS and the increasing value of star power in the sports industry. Messi is one of the most popular athletes in the world, and his arrival in the MLS is expected to boost the league's profile and attract new fans.