On June 17, 2003, Beckham signed a four-year contract with Real Madrid of Spain, potentially worth up to €35 million (£25 million, USD 41 million).

Apart from benefiting from his football ability, this transfer gives the Spanish club an opportunity to profit from merchandising, especially in the Far East, where Beckham is enormously popular, and Manchester United have until now had the lion's share of interest. It is probably no coincidence that Beckham was transferred just before Real started a far-eastern tour, but it would be very unfair to say that his marketing potential alone was the only reason for his transfer. At the time of the announcement of his transfer to Real Madrid, Beckham and his wife (Victoria) were on a week-long tour of Japan, Vietnam, Malaysia, and Thailand promoting beauty products, chocolate, motor oil, and mobile phones, which it was reported would earn them more than the entire first year of his Real Madrid contract.

He successfully completed the transfer on July 1 and was presented with the squad number of 23 on July 2. He is believed to have chosen the number as a tribute to his idol, Michael Jordan, who made number 23 famous with the Chicago Bulls. Real Madrid shirts bearing his name and number were sold out in Madrid on the day his transfer was completed and Real Madrid were expected to receive €624,000 for the sale of the shirts.

His transfer to Real Madrid has proven very fruitful for both Beckham and the club. Beckham scored five times in his first 16 matches (including Real's 600th goal in the European Cup/Champions League, against Olympique Marseille on 26 November 2003), a higher scoring rate than his last year at Manchester United (11 goals in 52 games). He has become a favourite of the notoriously fickle Real Madrid crowd, and established an excellent playing relationship with Ronaldo.

During the summer of 2004, Real also signed Englishmen Michael Owen and Jonathan Woodgate.