Real's €400m year stadium sponsorship deal

[bluebell]

@Beamrider
Looks like the era of Glacticos is back

[article]
US Company Legends agrees to pay Real Madrid €400 million a year—report
Florentino Pérez agrees with Legends the transfer of 20% of the Santiago Bernabéu for 25 years.
By Matt_Wiltse@MattWiltse4 Jan 28, 2022, 3:29am CET
32 Comments
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Photo by Helios de la Rubia/Real Madrid via Getty Images

Real Madrid and Florentino Perez have looked to guarantee a new stream of cash flow for the next 25 years. According to a report from MARCA and with details cited from Voz Populi, US based company, Legends, an expert in sport and event based experiences, has guaranteed Real Madrid €400 million a year in return for 20% of the new Santiago Bernabeu profits. It is expected that the agreement is for all non-football related events and experiences at the soon to be remodeled stadium.
The deal will see Real Madrid bring in €250 million more on annual basis vs the figures they were bringing in from the Santiago Bernabeu in pre-pandemic environment. Legends has guaranteed the miscellaneous events will bring in €400 million a year, and if not, will pay Madrid the difference. The US based firm believes they can guarantee the figure because they expect profits far in excess of €400 million a year.
This is not the first deal between Real Madrid and Legends. The US company already has an agreement in place to oversee the retail and digital strategy of the club 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 is 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.
The goal of Florentino Perez is to see Real Madrid become the first club to generate 1 billion euros in revenue.
[/article]

 

[kingjulian]

400m shall be the price of Mo Salah then...

 

[darkstarexodus]

400m shall be the price of Mo Salah then...

I don't like the idea of losing Mo, but if we aren't going to sign him to an extension, I want our suitors to roll out many large bins of money.

So Real getting their house in order might not be a bad thing. If it comes to that. Which I hope it won't.

 

[bluebell]

The question then becomes how anyone competes with Real? They're becoming seriously profitable now

 

[kingjulian]

The question then becomes how anyone competes with Real? They're becoming seriously profitable now

This is where the old oil money comes in...step forward newcastle!

All is well!

 

[StevieM]

There’s a few things in that article that need clarification or explaining in more detail.l, cause they don’t quite add up to me.

I’m not entirely sure what “bring in” means in this content - is it additional revenue? That’s not the same as profit - so I did a little digging.

Sure enough it’s an increase in revenue of €400m from which legends are guaranteed 20% of the profit for 25 years.

Seems it’s a new company?”, jointly owned - Legends inject some cash (somewhere between €150m & €440m) into the new company for their share of profits and RM have to deliver certain things in terms of stadium development.

So this isn’t RM banking €400m a year - its them banking 80% of the profit on €400m revenue.

I’d say the 25 year profit share agreement mitigates Legends investment.

Given that there are likely to be sizeable capital investment to start up - it could be a while before significant profits are realised to plough into the business.

 

[Woland]

So they're already bringing in 150 million a year from other stuff at the stadium, but they're going to more than double that. I wonder how much is going to clash with the core business of hosting footy matches?

How many events could they conceivably throw on in the middle of Madrid that would sell a zillion tickets and make 400 million in revenue? Say it's 20... How are they going to plan them before the fixtures come out? You're not going to book Adele or Metallica or whatever else sells stadiums out with a few months notice. I suppose sporting things can be moved round. NFL games etc. But 20 generating 20 million quid each, in an 80,000 seat stadium. That means an average ticket price of a hundred quid would result in 8 million, and I guess the rest through TV etc. It sounds like an expensive and quite risky business, not quite the money printing exercise it first seemed, but the spreadsheet guys who know infinitely more than me think 400 is the minimum they'll take, so I've definitely wasted my life doing stupid little shit things.

Realistically, if the stadium generates an extra 250 million a year and someone else is doing all the organising, wearing all the costs and all the risks, now much of that is going to translate into profit for Real Madrid? Guess about 10%? So probs more cash for the football side of things of around 25 million euros a year, about 20 GBP. Not to be sniffed at, but around one galactico salary, not a whole new squad.

 

[Halmeister]

Sounds a bit mad, but I'm happy about this if it means Real Madrid are a super power again. We could do with Barcelona and the Italian league sorting their shit out too. Footy is better and more interesting with the wealth and success spread around. Imagine how shite it would be with every team on its arse except for the English clubs, PSG and Bayern. And within that, mainly domination by City, Chelsea and eventually Newcastle.

 

[RedStar]

That deal makes no sense at all, €400m a year for 25 years guaranteed in return for 20% of the Bernebeu stadium profits. So the profits from the stadium would need to exceed €2bn per year just for Legends to break even on this deal.

As if that wasn't ridiculous enough, they've supposedly hammered out this deal in the middle of a global pandemic that has devastated sports and other live events.

Who makes this shit up

 

[StevieM]

That deal makes no sense at all, €400m a year for 25 years guaranteed in return for 20% of the Bernebeu stadium profits. So the profits from the stadium would need to exceed €2bn per year just for Legends to break even on this deal.

As if that wasn't ridiculous enough, they've supposedly hammered out this deal in the middle of a global pandemic that has devastated sports and other live events.

Who makes this shit up

I think you’re misunderstanding the deal.

I read it as, 20% of the profit on the new venture while Legends guaranteeing revenue IF Real Madrid meet certain conditions in stadium development.

It looks like Legends are operating the venture , guaranteeing revenue and giving RM the majority of profit because RM will likely have to invest more upfront to provide the facilities for Legends to drive the revenue.

The “revenue guarantee” sounds like Legends effectively covering running costs until they grow revenue enough to scale up the profitability.

The revenue probably allows RM to have their accountants some creative license with their accounts without it actually making any difference to the bottom line.

 

[peekay]

So they're already bringing in 150 million a year from other stuff at the stadium, but they're going to more than double that. I wonder how much is going to clash with the core business of hosting footy matches?

How many events could they conceivably throw on in the middle of Madrid that would sell a zillion tickets and make 400 million in revenue? Say it's 20... How are they going to plan them before the fixtures come out? You're not going to book Adele or Metallica or whatever else sells stadiums out with a few months notice. I suppose sporting things can be moved round. NFL games etc. But 20 generating 20 million quid each, in an 80,000 seat stadium. That means an average ticket price of a hundred quid would result in 8 million, and I guess the rest through TV etc. It sounds like an expensive and quite risky business, not quite the money printing exercise it first seemed, but the spreadsheet guys who know infinitely more than me think 400 is the minimum they'll take, so I've definitely wasted my life doing stupid little shit things.

Realistically, if the stadium generates an extra 250 million a year and someone else is doing all the organising, wearing all the costs and all the risks, now much of that is going to translate into profit for Real Madrid? Guess about 10%? So probs more cash for the football side of things of around 25 million euros a year, about 20 GBP. Not to be sniffed at, but around one galactico salary, not a whole new squad.

They are also missing a key risk factor. Once Everton have their stadium up and running, everyone Adele, Metallica, Snoop Dogg, NFL, will be queueing up and fighting with each other to play there instead of the Bernabau. Caching in on the worldwide exposure associating themselves with the "Nil Satis nisi Optimum" tagline.

 

[bluebell]

[article]
In 2021, Real Madrid was valued at $4.75 billion — ranking second among all soccer teams, according to Forbes. Given its latest move, the club could rake in even more cash this year.
The club recently inked a lucrative 25-year deal with sports company Legends, according to Spanish newspaper Vozpópuli.
Legends, already in charge of the team’s retail strategy, will also now be in charge of non-sports events at the club’s stadium, Bernabeu, that range from concerts to conferences.

• The contract could be worth $11 billion for Real Madrid over the 25 years.
• Annual revenues are projected to be between $447 million and $491 million, 20% of which Legends will keep.
• That’s a major jump from the $168 million the club made in non-sports events before COVID-19.

The news comes shortly after the team secured $255 million in extra funding to refurbish Bernabeu.
Portfolio Expansion

The deal is the latest move in the company’s “rapid growth mode,” as co-president and COO Mike Tomon previously told Front Office Sports.
The company just acquired 4Front for a reported $15 million to $20 million. Sixth Street purchased a 51% stake in Legends in January 2021.
Around that time, the company was valued at $1.35 billion.


[/article]

 

[rubans]

BARCELONA, Feb 7 (Reuters) - FC Barcelona are set to announce a shirt and stadium sponsorship agreement with Spotify, Catalan radio station Rac1 reported on Monday.
According to the Rac1 report, the LaLiga side have agreed a three-year deal with the streaming music platform worth 280 million euros ($320 million).
The deal will see Barca's men's and women's team bearing the Spotify logo on their shirts while the company will be the first brand to sponsor the club's Camp Nou stadium, with an official announcement expected on Tuesday, added the report.

Hope spotify go bust.

 

[bluebell]

I wonder how fans would feel if Anfield was sponsored?

 

[RedStar]

I wonder how fans would feel if Anfield was sponsored?

Seems somewhat inevitable doesn't it. I mean we tend to lag behind in some of these commercial deals but I assume once enough clubs do it then you can't afford not to.

The thing I don't get is why fans/journalists etc play along with it. Just call the stadium by it's proper name and ignore the branding.

 

[YNWA]

Seems somewhat inevitable doesn't it. I mean we tend to lag behind in some of these commercial deals but I assume once enough clubs do it then you can't afford not to.

The thing I don't get is why fans/journalists etc play along with it. Just call the stadium by it's proper name and ignore the branding.

There is an interesting article in today's Athletic regarding the supposed football stadium rights opportunity. It argues that in the context of European sports the opportunity is not as big as it is made out specially for legacy stadiums like Anfield, Old Trafford etc. vs American sports stadiums.

 

[bluebell]

Seems somewhat inevitable doesn't it. I mean we tend to lag behind in some of these commercial deals but I assume once enough clubs do it then you can't afford not to.

The thing I don't get is why fans/journalists etc play along with it. Just call the stadium by it's proper name and ignore the branding.

"This is Anfield" is kind of sacred.
Spurs has yet to find a sponsor. AFC signed a 5 year extension with the Emirates worth £200m which includes the Jersey and stadium, still way behind Man U's deal.
I would have guessed smaller clubs would be happy to rename their stadiums, but there aren't many.

 

[mom]

I wonder how fans would feel if Anfield was sponsored?

depends. If the owners laid out how much of the income would be spent on the squad year on year, and actually stuck to it, folk may be ok with it.
If it meant keeping Salah and blowing £100mill on Jude then I’m sure that would soften the blow.