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Following the news that Real Madrid’s loan agreements for the redevelopment of its Santiago Bernabeu stadium have now reached $900 million, with the majority of the loan to be paid back over a 30-year period at a maximum 2.5% interest rate;
Patrick Kinch, Sport Analyst at GlobalData, a leading analytics and data company, offers his view:
“Real Madrid’s anticipated $169 million uplift in annual revenue from the completed Santiago Bernabeu stadium will allow the club greater bargaining power in the transfer market. La Liga forces clubs to spend only 70% of turnover on salaries, so the greater a club’s revenue, the greater its salary budget, and the better positioned they are to attract better players (with higher salaries). However, this will be slightly offset by another La Liga rule that salaries should also be influenced by club debt levels.
“Madrid will surely be aware of the state of stadia in Italy’s Serie A, which are in dire need of modernization. The last time these saw any development was in the early 90s, a time when Italian sides were more regular European Cup winners and Italy hosted a World Cup. Madrid wants to ensure it remains among the ‘soccer elite’. The club currently boasts the largest commercial deals value, with partnerships estimated to be worth $297 million annually.
“Securing the most recent €253 million loan extension with JP Morgan and Bank of America strengthens the ties between these parties. This follows after Real, along with Barcelona and Athletic Bilbao, suggested an alternative to La Liga’s proposed financing deal with CVC Capital Partners, offering a $2.25 billion package with the two American banks at an interest rate cost of 2.5% and 3% over 25 years.”