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Financing deal signed with Goldman Sachs for Espai Barça

Spanish LaLiga football club Barcelona has signed an €815m (£740m/$960m) loan agreement with US investment bank Goldman Sachs for the funding of its wide-ranging Espai Barça development plan.

Jordi Moix, Barcelona’s vice-president of finance and real estate and head of the Espai Barça project, yesterday (Monday) detailed plans to finance the development as the club announced losses of €97m for the 2019-20 financial year, largely due to the impact of COVID-19.

Barcelona said it has adopted an “innovative financial operation” for Espai Barça, which will remain in place despite the impact of the pandemic. The plan will ensure the development can be financed by selling part of the rights to future incremental revenue Espai Barça is expected to generate.

Espai Barça is a wide-ranging development plan that will see the capacity of the Camp Nou increase from around 99,000 to over 105,000, with a new roof to also be fitted at the iconic stadium. The project will also see the 7,500-seat Palau Blaugrana arena, which serves as the home of Barcelona’s basketball and handball clubs, be replaced by a new facility.

In August 2019, Barcelona completed the first phase of the project with the opening of Estadi Johan Cruyff, which serves as the home of the Barça B and women’s teams, as well as the U19 side when it plays in European competitions.

Barcelona has now confirmed that the financial operation will include Goldman Sachs, which has signed a loan agreement worth €815m. The loan will cover €725m for construction work and €90m in interest.

Goldman Sachs will loan the club money for the project and the bank will be repaid over 30 years (five years of construction and 25 years of management), with the 25-year payment period to begin from the 2024-25 season, when the project is scheduled for completion. Barcelona said the annual interest rate would be three to four per cent plus amortisation, with incremental income estimated at $50m annually.

“The formula for the operation is technically a sale of a part of the rights to collect the additional revenue from the Espai Barça generated by the club to an instrumental vehicle managed by Goldman Sachs,” Barcelona said in a statement.

“The club would return the investment over those 30 years in the form of €50m a year that it would obtain from the €150m extraordinary revenue that it would earn from the Espai Barça. The remaining €100m in revenue would be used for the club’s regular activities and to boost its competitiveness.”

The club said that the €150m revenue would come from title rights to the stadium and new sponsorship deals (€50m), VIP boxes and seats (€50m), and new visitors to the museum, greater ticketing revenue, new catering, venue hire and parking (€50m).

The initial budget for the project, which was approved in 2014, was €600m, which was to be split three ways between the club’s own funds, a stadium sponsor and a bank loan. The initial budget included the remodelling of the Camp Nou, as well as construction of the 10,000-seat Palau Blaugrana, 2,000-seat Petit Palau, an ice rink and the Barça Campus.

The construction costs have since risen to €725m, which Barcelona said is down to developments in the project and an agreement with the city council and municipal groups for an urban modification plan amounting to €50m, along with compensations to the council in the form of tertiary office buildings and hotels.

Other increases have been attributed to modifications of the planned facilities, such as a 15,000-seat Palau Blaugrana instead of 10,000-seat facility (€60m), and investments in other areas such as museum improvements and a new adventure experience (€15m).

Barcelona said the key to the new financial model is the increased income the Camp Nou will generate once its expansion is finished. In 2014, the project was expected to provide incremental revenue of €50m a year but work carried out by ISG Legends this year estimated that the club would earn more than €150m in additional revenue each season from 2024-25 onwards.

Moix confirmed yesterday that an application has been made to the city council for a license for the remodelled Camp Nou, with a tender for the project currently in progress. The club hopes to bring the draft for the new Palau Blaugrana forward and plans on completing the design and license application phase by the end of 2021, with construction planned in 2022 and 2023.

The new finance plan for the Espai Barça project will require approval from club members, with the matter to be put to a referendum towards the end of the first half of 2021 ahead of work beginning on the Camp Nou in the summer.

Image: Ayman.antar7/CC BY-SA 4.0/Edited for size