Real Madrid to sell “non-sporting” activities of the new Santiago Bernabeu for €400 million—report

Florentino Perez will not rest in his attempt to allow Real Madrid to compete with state-run clubs. The new Santiago Bernabeu will be the crown jewel of the Real Madrid president’s legacy. By developing the new stadium, the President helps to secure the long term financial health of his beloved club. In a report from El Confidencial, Perez plans to sell the “non-sporting activities” such as concerts, business trade-shows, fashion shows, and other events for €400 million.

The agreement has been secured with a private equity fund based in the US. The operation has been led and advised by Key Capital — a private investment firm based in Spain whom Florentino has a long business history. Key Capital was involved in securing the financing for the European Super League and have been partners in the re-development of the new Santiago Bernabeu. According to a report from The Athletic, French-Moroccan business associate, Anas Laghrari, who was all set to be named the European Super League’s secretary-general, is a partner at Key Capital. Laghari is the son of a former business colleague of Florentino Perez from the 1980s where they worked on ACS (Florentino’s construction company) projects together.

It’s unclear whether the €400 million investment from the US based firm will be paid upfront or over a number of years in installments, but either way it improves the club’s immediate cash flow and puts them in a better position to deploy capital for player acquisition, employee costs, other new ventures, and general overhead.

The club already has an agreement in place with US based firm, Legends International, who oversee the retail and digital strategy and will launch a new club store as part of the Santiago Bernabeu renovations. Legends is a company that has worked with the New York Yankees and the Dallas Cowboys and owned by an investment firm, Sixth Street, who were early investors in AirBnB. Both Real Madrid and Legends work together to “create innovative, profitable and fan-focused experiences ”. One of the club’s highest priorities for the new stadium is to create an immersive experience that draws consumers and generates income outside of the general matchdays.

In addition to the deal with Legends International, the club transferred some of their sponsorship rights to US equity firm, Providence, in return for €200 million over four seasons. Couple all these deals with the terms of financing between J.P. Morgan and Real Madrid for the stadium re-development and it’s clear to see that the club have done a tremendous job in partnering with strategic allies as well as producing deals that provide stable and ratable cash flows. Few clubs, especially those not owned by state-run entities, will come out of the COVID-19 pandemic as strong as Real Madrid.