Guild Esports renegotiates with David Beckham to cut $16.5M deal in half
London-based organization Guild Esports has renegotiated with David Beckham to significantly reduce the amount it owes the former footballer.
The amendment: Beckham has been the mainstream face of the brand since its launch in June 2020.
- Guild Esports initially entered into a five-year deal with David Beckham's image rights company, Footwork Productions, for a minimum fee of $16.5M (£15.25M).
- While the British organization has already paid two of the five annual payments, it's since renegotiated with Beckham to reduce the amount he'll receive in cash. It'll still pay $3.2M (£3M) for 2022, but its payments of $3.8M (£3.5M) and $4.3M (£4M) for 2023 and 2024 respectively are now off the table.
- Instead, as part of the new agreement, Footwork will receive 20% of revenues made from merchandising and sponsorships instead of an annual payment. This will "significantly" reduce Guild's cash requirements while allowing Beckham to still serve as its ambassador.
- This means that the minimum payments made to Beckham over the course of the five-year deal will be reduced by $8.1M (£7.5M), almost half of the entire initial amount.
But why? No reason was given by either party but some inferences could be made.
- Guild Esports is losing a lot of money and it hasn't raised any capital since the $21.6M (£20M) it received in its IPO in mid-2020.
- In its latest financial report, covering the six-month period ending March 31, 2022, it posted a pre-tax loss of $5.4M ($5M). This renegotiated deal could be necessary to help the organization stay afloat during the current rocky economic landscape.
- There's an argument to be made that Beckham's willingness to renegotiate a lucrative deal such as this could be due to a misalignment in the results of the agreement. Perhaps Guild isn't getting enough bang for its buck from the former England footballer?
- Interestingly, Beckham's business partner David Gardner stepped down from Guild's Board of Directors in June 2022 and has yet to be replaced by another person aligned with the ambassador. This could be an insight into the evolving relationship between Guild and Beckham's DB Ventures, especially when you also consider this renegotiation.