Spanish giants, Real Madrid announced via a club statement that it has secured a new loan for a total amount of £225 million for the ongoing development of their stadium, Santiago Bernabéu. The loan was secured for a new phase of remodelling work which was not initially planned for the redevelopment of the stadium.
The loan has a term of 27 years and a fixed interest rate of 1.53%. It also includes a grace period for the repayment of the principal, so that the Spanish giants will not start repaying the loan until 30 July, 2024.
It means to fulfill their obligation in the contract, they must repay the loan before 2048. The loan doesn’t have any type of mortgage guarantee nor any financial limitation which might affect the ordinary management of the club.
What will the loan be used for?
The funding will be used for the construction of a subterranean pitch-removing greenhouse. The new phase of remodelling work was not initially planned for the redevelopment of the stadium due to its complexity.
The Spanish giants said the greenhouse will allow the automatic removal of the pitch and its preservation in optimal conditions and in perfect shape. In this way, other events will be held at the stadium without impacting the grass.
What you should know
Real Madrid has retained Key Capital Partners as financial advisor and coordinator of the financing and Clifford Chance as legal advisor. The financing was structured by J.P. Morgan and Bank of America.
Plans for the redevelopment of the Santiago Bernabéu was initially unveiled in April, 2019 where Real Madrid secured an initial loan of £575million from JP Morgan and Bank of America and also signed a deal with sponsorship sales agency, Legends to help in securing additional funds for the redevelopment, according to SportsPromedia.
The project will include a retractable roof, a 360-degree video scoreboard and a surrounding skin of steel bands which will allow images to be illuminated and projected on the exterior surface of the stadium.
Work is not expected to be completed until the end of 2022.