Spanish LaLiga club Real Madrid has sealed a €360m (£305.3m/$380.6m) deal with global investment firm Sixth Street and premium experiences company Legends which will lead to the formation of a new entity aimed at enhancing the non-football activities at the revamped Estadio Santiago Bernabéu.
The objective of the deal is to elevate the Bernabéu as a “unique venue and a worldwide benchmark” for leisure and entertainment. Real said the funds it receives can be invested across any of its activities, with Sixth Street acquiring the right to participate in the operation of certain new businesses of the Bernabéu for a 20-year period.
Legends will contribute its experience in the operation of large stadiums, attractions and event spaces to optimise the management of the Bernabéu. Sixth Street invested in a majority stake in Legends in January 2021.
Through the deal, a new company will be established to manage the Bernabéu, with Real to receive 70% of the proceeds from this venture and Sixth Street the remainder. Spanish sports business website 2Playbook said the three parties had originally contemplated a 25-year deal with Sixth Street taking 20% of the proceeds.
It added that revenue generated through the new company will depend on the profits generated by the staging of concerts and other events at the Bernabéu, as well as the operation of hospitality, the club museum and other commercial areas.
Florentino Pérez, president of Real Madrid, said in a statement: “The transformation of the Estadio Santiago Bernabéu will be a turning point in the history of Real Madrid. This alliance with Sixth Street and Legends, world leaders in their respective disciplines, will be fundamental in providing unique experiences in a stadium where multiple events can be hosted throughout the year.
“This agreement strengthens the club’s goal of continuing to significantly increase the stadium’s revenues from both sporting and other types of events.”
Sixth Street brings extensive investment experience with leading companies in the world of sports and in sectors such as real estate, infrastructure, and consumer, including NBA basketball franchise the San Antonio Spurs, Airbnb, and Spotify.
“Real Madrid’s Santiago Bernabéu is hallowed ground in the world of football, and we are honoured to be joining this partnership to invest in the innovative, long-term strategic vision that has guided the club’s consistent success over its storied history,” said Alan Waxman, co-founder and CEO of Sixth Street.
“The flexible, solutions-oriented capital and comprehensive capabilities provided by our team at Sixth Street, combined with the deep expertise Legends offers in venue and sports brand operations, will support Real Madrid in its mission to compete and remain a leader in global sports for many years to come.”
News of Real potentially strengthening its ties with Legends first emerged in January. At that time, Legends was said to have outlined that the Bernabéu has the potential to generate around €400m to €440m per year in revenue through the staging of events and other commercial activities at the stadium.
This is a significant increase compared to Pérez’s projections. Pérez has previously talked of the new Bernabéu’s potential to add a further €150m per year to its current income levels of around €200m.
Legends holds an existing relationship with Real. The club in July 2020 teamed up with Legends to launch a programme that included a new flagship store at the Bernabéu.
The company has worked with Real since 2018, when it was appointed to provide strategic insight and guidance on optimising commercial opportunities during the redevelopment of the Bernabéu.
“We are proud to expand our existing relationship with Real Madrid,” said Shervin Mirhashemi, CEO of Legends.
“Legends’ operational and sales acumen and experience, across match day and non-match day, combined with the iconic Real Madrid brand and Sixth Street’s flexible capital deployment is a new and innovative approach to modernising the Bernabéu, one of the world’s greatest sports, entertainment, and cultural venues.
“With this long-term management relationship, Legends continues to grow its global footprint, while investing in regional expertise with best-in-class brands worldwide.”
Real in December confirmed a second phase of financing for the redevelopment of the Bernabéu, stating the conditions it had secured represented the “best ever obtained” for a long-term arrangement in the sports industry.
The redevelopment project is expected to be completed next year, with the costs having increased beyond the originally intended budget to between €800m and €900m. Real last month agreed a multi-year partnership with audiovisual systems manufacturer Daktronics, which will kit out the new-look Bernabéu as part of its ongoing redevelopment project.