Spanish LaLiga football club Real Madrid has today (Wednesday) confirmed a second phase of financing for the redevelopment of Estadio Santiago Bernabéu, stating the conditions it has secured represent the “best ever obtained” for a long-term arrangement in the sports industry.
The announcement confirms earlier reports that Real had agreed a deal to raise the necessary funds to complete the redevelopment of the Bernabéu, and at a lower cost than the previous financing package it took out.
Real said it has signed an extension to a financial package taken out in April 2019 which will cover works not initially included in the Bernabéu redevelopment project through a new loan for a total amount of €225m (£191.2m/$253.1m), with a term of 27 years and a fixed interest rate of 1.53%.
Real said these conditions are the best ever obtained for long-term financing in the sport industry. The loan also includes a grace period for the repayment of the principal, so that Real will not start repaying the loan until July 30, 2024.
The financing was structured by J.P. Morgan and Bank of America, and will be utilised to resolve the challenges of accommodating a retractable pitch system in the new-look Bernabéu, ensuring that the stadium can fulfil more of a multi-purpose remit.
It was revealed in May 2020 that Real Madrid’s transformation project for the Bernabéu would include the installation of a retractable pitch, with such a system aiding the staging of events such as concerts.
The Reuters news agency reported last month that the addition of this element to the project is projected to boost the club’s revenues from the Bernabéu alone from the current figure of €150m per year to €400m per year.
Real said today: “The funding will be used for the construction of a large underground greenhouse which was not foreseen in the initial work due to its complexity and which was technologically resolved at a later date.
“This greenhouse will allow the automatic removal of the pitch and its preservation in optimal conditions and in perfect shape to be used when a football match is to be held. In this way, the number of events that can be held without impacting the grass will be maximised.”
Back in April 2019, Real approved a financing package for the redevelopment of the Bernabéu, with J.P Morgan and Bank of America Merrill Lynch leading the €575m loan.
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 was structured by J.P Morgan and Bank of America Merrill Lynch with the collaboration of Banco Santander and Société Générale. CaixaBank was the agent in the transaction.
The financing was 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 was 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.
Commenting on the latest financial arrangement, Real added: “It should be remarked that Real Madrid has closed this transaction without any type of mortgage guarantee nor any financial limitation which might affect the ordinary management of the club.”
Image: Real Madrid
