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Today At A Glance:

Lionel Messi shocked the world this week when he announced his intent to join Inter Miami CF of Major League Soccer. So today’s newsletter breaks down everything you need to know, including the events that led Messi to choose MLS over Barcelona and Saudi, the unique clauses in his contract that could make him $1B+, and more.

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Friends,

Last week, when Lionel Messi announced that he wouldn’t be returning to Paris Saint-Germain next season, he became a free agent with three exciting opportunities.

The first and most logical option was FC Barcelona. Messi signed a contract with the Catalan club on the back of a napkin when he was just 13 years old. He then played 778 matches across 17 seasons, scoring 672 goals (club record) and winning six Ballon d’Or trophies (football’s most prestigious award). And Messi only left the club in 2021 because they didn’t have enough of a wage budget left to offer him a new contract.

And Saudi Arabia was a logical choice, too. Messi already has a tourism ambassador deal with the country that pays him $33 million annually. And with Saudi’s $620 billion sovereign wealth fund taking over the country’s four largest soccer teams, Messi was reportedly offered a 3-year, $1.6 billion deal to play in the Saudi league — the largest contract in sports history and significantly larger than Cristiano Ronaldo’s deal.

But Messi ultimately decided to join Inter Miami CF of Major League Soccer.

Many people were surprised, of course. From a talent perspective, MLS isn’t a Top 10-15 league in the world, and Inter Miami is currently one of the league’s worst teams. Furthermore, Inter Miami brought in just over $50 million in revenue last year, a fraction of the $130 million PSG made off Messi’s jersey sales alone. And last but not least, Inter Miami had just 1 million Instagram followers. That ranked them second across all of MLS — but it’s less than half of what Lionel Messi gains in a typical week.

Instagram Followers

• All 30 MLS Clubs: 14 million

• Lionel Messi: 470 million

So if Messi’s decision wasn’t based on money or legacy, what made him choose Inter Miami and MLS? Well, to understand that, we need to revisit the mid-2000s.

David Beckham Puts Together The Blueprint

David Beckham was on top of the world in 2007. He had spent the previous two decades playing for clubs like Manchester United and Real Madrid, and he was a legitimate global celebrity after marrying Victoria Adams of the Spice Girls.

For example, when Beckham left Manchester United for Real Madrid in 2002, Real Madrid sold more than one million Beckham shirts in the following six months — and their overall merchandise sales increased by nearly $350 million the next year.

So, as you can imagine, everyone was pretty confused when Beckham announced that he was taking a 70% pay cut to leave Real Madrid and join the LA Galaxy of MLS.

Major League Soccer was only averaging 15,000 fans per game at the time, crowds nearly six times smaller than the 85,000 screaming fans in Madrid. And the league also averaged a meager 263,000 TV viewers in 2006 — a far cry from the millions of viewers averaged by other American leagues like the NFL, NBA, and MLB.

And that’s without even questioning the serious talent gap from La Liga to MLS; or the fact that his annual salary was dropping from $20 million to $6.5 million.

But David Beckham didn’t care. He saw the bigger picture, signing a unique contract that turned his $6.5 million annual salary into more than $500 million.

This happened primarily because of two clauses in the contract:

1. MLS had a $2.1 million salary cap at the time, so the LA Galaxy worked with the league to create a new “Designated Player Rule.” This allowed the LA Galaxy to pay Beckham $6.5 million annually (while only counting $400,000 against the salary cap).
   Designated Player Rule Explained

   • David Beckham’s total annual salary = $6.5 million

   • Annual amount paid by club owners = $6.1 million

   • Annual amount counted against MLS salary cap = $400,000

2. But more importantly, the LA Galaxy guaranteed Beckham an undisclosed percentage of all club revenue. That meant Beckham would get a cut of every dollar the team made during his tenure with the club — from merchandise, tickets, and sponsorships to the hot dogs and beer sold at games. 

3. In addition to a revenue-sharing agreement with the LA Galaxy, MLS sweetened the deal by inserting a clause in the agreement that allowed Beckham to purchase an MLS expansion team at a fixed rate of $25 million upon retirement.
   This didn’t seem like a massive deal at the time because $25 million was 150% higher than the $10 million fee Toronto had just paid in 2007. But with MLS attendance increasing 40% under Beckham and the league’s media rights deal going from $8 million annually to $250 million, MLS expansion fees have exploded, and the league’s most recent addition in San Diego paid $500 million.

So when you add all this up, it’s estimated David Beckham made $255 million during his five years in MLS through salary, revenue share, and sponsorships.

David Beckham’s Total MLS Earnings

• 5-year salary: $32.5 million

• Revenue share: $18 million

• Sponsorships & endorsement deals: $204.5 million

• Total MLS earnings over five years: $255 million

And the team that Beckham ended up paying a $25 million expansion fee to own, Inter Miami CF, is now valued at $600 million (the 11th most valuable club in MLS).

Average MLS Franchise Value

• 2008: $37 million

• 2022: $582 million (+ 1,472%)

So this is where it gets interesting — because MLS expansion teams are now going for $500 million, and the league can’t simply deploy the same offer to Lionel Messi.

MLS Works With Its Partners To Get Creative

MLS couldn’t compete with Messi’s love for Barcelona or Saudi’s bottomless bank account, so MLS Commissioner Don Garber and his partners had to get creative.

Here’s what we know about Lionel Messi’s MLS deal so far:

• Messi’s roster spot will be exempt from MLS salary rules

• Messi will receive a revenue share from all new MLS Season Pass subscribers on Apple TV+. Apple will pay this directly — the company’s recently announced 4-part docuseries on Lionel Messi is also rumored to be part of the deal.

• Messi will receive a profit share with Adidas for any increases in profit Adidas generates from Messi being in MLS, which makes a lot of sense considering Messi has been with Adidas since 2006 and signed a lifetime contract with the brand in 2017.

• Messi will have an option for part-ownership in Inter Miami CF upon retirement.

And while the overall terms of the contract (years, value, etc.) have yet to be finalized, Messi should still be in line to make hundreds of millions of dollars on this deal.

Take the revenue share with Adidas, for example. Barcelona was reportedly selling more than $200 million of Messi jerseys annually, And with leagues like MLS typically receiving about 15% of jersey sale revenue, the league stands to financially benefit too.

And the option to buy equity is also a nice kicker. The longstanding rumor was that Messi would buy 35% of Inter Miami at some point in the future. Now, I don’t know if that’s the official number, but I doubt he is doing it for less than 10% — and more importantly, he will receive a *significant* valuation discount when it happens.

That’s because A) minority stakes typically trade at a 20-30% discount, and B) it wouldn’t surprise me if Messi already agreed on the future price with Inter Miami (so he could financially capitalize on any growth that he brings to the club).

And last but not least, while many fans claim that Messi lied about not picking MLS for the money, he’s probably telling the truth. The MLS deal is lucrative, of course. But there are few things better than $1.6 billion guaranteed, up-front, in cash.

But still, Lionel Messi is the 7th highest-paid athlete in history and will be just fine.

Why Messi’s MLS Impact Is Bigger Than Beckham

Convincing Lionel Messi to sign with MLS is objectively a big deal. He has won over 40 trophies with Barcelona, PSG, and Argentina. He has 583 million followers across Instagram and Facebook and is currently the world’s most famous athlete.

But more importantly, this signing feels much different than David Beckham’s.

That’s because Lionel Messi is still at the top of his game. Sure, he’s 35 years old, and father time is undefeated. But Messi led Argentina to a World Cup victory just seven months ago, and he was even voted the tournament’s best player over Kylian Mbappé.

And for as big of a superstar as David Beckham was when he arrived, Instagram still hadn’t been invented yet. He also missed more than 50% of the LA Galaxy’s games during his first two years due to injury, and he was even booed after tearing his Achilles tendon while playing for AC Milan on loan during the 2010 offseason.

So my point is simple: Messi will put on a clinic, and MLS fans will love it.

Lionel Messi Career Stats

• 1,037 overall games

• 806 overall goals

• 704 club goals

• 102 senior international goals

• 303 club assists

• 43 career trophies

And as overall viewership continues to grow leading into the 2026 World Cup in North America, my guess is that Messi will end up drastically transforming the league.

Inter Miami’s valuation will probably double over the next few years — a 10x revenue multiple means they only need to increase annual revenue by $50 million. And don’t be surprised when MLS soon surpasses the NHL as America’s fourth most popular sport.

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Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 100,000+ others who receive it directly in their inbox each week.