Real Madrid has approved a financing package for the redevelopment of Estadio Santiago Bernabéu, with US financial services giants J.P Morgan and Bank of America Merrill Lynch to lead the €575m (£496.9m/$650.6m) loan.

Confirmation of the nature of the agreement by the Spanish LaLiga football club comes after it was initially reported in February. It was approved by Real’s board of directors at a meeting on Friday, having obtained previous authorisation from delegate members at their ordinary assembly held in September.

Real will pay off the loan over a 30-year period, with a fixed interest rate of 2.5%. Key Capital Partners acted as the financial advisor and coordinator of the financing project for the club. The financing has been structured by J.P Morgan and Bank of America Merrill Lynch with the collaboration of Banco Santander and Société Générale. CaixaBank will be the agent in the transaction.

The financing has been structured through a loan with three tranches – July 2019, July 2020 and July 2021. A three-year deferral period for the principal of the loan has been agreed, which will result in Real Madrid paying an annual debt service of €29.5m, starting on July 30, 2023, and until maturity on July 30, 2049.

The redevelopment project is set to begin at the end of this season after club president Florentino Perez provided an update on the plans earlier this month. Through extensive renovations, Real is planning to modernise the 81,000-seat stadium, which has been its home since 1947.

In a statement confirming the loan, Real said: “It should be remarked that Real Madrid has closed this transaction without any type of mortgage guarantee nor any kind of financial covenants on the management or indebtedness of the club. The club will be therefore running its regular activities without being affected by the payments of the works.

“The new income generated by the renovation will not only finance the costs of the works but will also significantly increase the club’s recurring revenues, thus allowing Real Madrid to maintain its sports and economic leadership for the decades to come.

“This financing will be the stepping-stone towards achieving an authentic architectural innovation for our stadium, located in the heart of the city, improving the urban environment. The new, avant-garde Santiago Bernabéu Stadium will become a universal icon, a reference for 21st century stadiums around the globe.

“It will be more modern, more comfortable, safer and designed for entertainment with innovating shops and the latest technological developments. It will certainly be the digital stadium of the future.”

Image: Real Madrid