Real Madrid gets $380 million from Sixth Street

Real Madrid, the European soccer giant, has closed a deal in which the US-based investment firm Sixth Street will pay some $380 million for a 30 percent stake in the team’s stadium operations.

Thursday’s announcement came amid growing optimism among executives that 13-time European champions Real Madrid could complete a deal to sign Kylian Mbappe, one of the world’s most sought-after players, as a free agent in a contract that could make him the highest paid athlete in the history of Real.

Under the terms of the contract, Real Madrid, which won its 35th Spanish championship this month, would have no restrictions on how it spends its money. Capturing Mbappé would be a blow to Real Madrid, which has been hounding him since failing to persuade his current club, Paris St.-Germain, to accept $200 million for him during last summer’s postseason.

The deal between Real and Sixth Street also includes Legends, a US sports event management and hospitality company that is partly owned by Sixth Street. The association will last for 20 years and will be carried out through a joint venture that will contain all revenues in Real’s stadium, with the exception of season ticket sales.

The investment is the latest part of Real’s attempts to generate new revenue streams from its famed stadium, which is undergoing a $1 billion refurbishment, after which games will be played on a retractable field.

“The transformation of the Santiago Bernabéu Stadium will be a turning point in the history of Real Madrid,” Real Madrid president Florentino Pérez said in a statement. “This agreement reinforces the club’s goal of continuing to significantly increase the stadium’s revenue from both sporting and other events.”

While Real remains the dominant player in Spanish football and will compete in the Champions League final once again next week, they have faced pressure to keep up with the changing forces in the world football landscape. Despite generating more wealth year after year than virtually any other soccer team, the team has struggled to compete for top talent with clubs backed by wealthy, billionaire Arab states. Turning the Bernabéu into what club officials have likened to a version of Madison Square Garden may help it maintain its strength in the market.

The agreement also has some hallmarks of the one that the Spanish national league, LaLiga, signed with another investment fund, CVC Capital Partners, which Real rejected and is suing. CVC agreed to part with more than $2 billion in exchange for almost 10 percent of the league’s broadcast revenue over 50 years, a price that Real Madrid and the league’s other best-supported team, Barcelona, as well as Athletic Club de Bilbao, owned by its members. , thought was too steep.

Royal officials have noted that, unlike that deal, the deal with Sixth Street, which also owns a portion of the NBA’s San Antonio Spurs, is limited to the mutual fund’s share of profits, not revenues. , of the company.

“Real Madrid’s Santiago Bernabéu is hallowed ground in the world of football, and we are honored to join this partnership in investing in the innovative long-term strategic vision that has guided the club’s consistent success throughout its history. his story,” said Alan Waxman. , founding partner and CEO of Sixth Street.

Real benefited from the pandemic by moving into its training ground at a time when fans were banned from public events. He returned to the arena this season despite construction work continuing. The refurbishment of the stadium is expected to be completed in time for the start of the 2023-24 season.

The team’s finances are largely under control even though the stadium is nearly $1 billion in debt. Maintenance costs about $40 million a year. Sixth Street’s cash infusion will mean the club’s short-term debt will be wiped out and replaced with $260m available to spend.

Those finances could allow Real to add reinforcements if they manage to secure Mbappé. The striker recently said that he was close to announcing his plans for next season. PSG, his current club, has offered him a contract extension for much more than Real’s offer. But Mbappe has made several comments indicating his desire to play for Madrid, a destination and a team that have been magnets for top soccer talent.

Leave a Reply

Your email address will not be published.