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Real Madrid Secures $380 Million From Sixth Street

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Real Madrid, the European soccer behemoth, closed a deal wherein the investment firm Sixth Street, based in the US, pays about $380 million for a 30 percent stake within the team’s stadium operations.

The announcement Thursday got here amid growing optimism amongst executives that Real Madrid, a 13-time European champion, could complete a deal to sign Kylian Mbappé, some of the wanted players in world soccer, as a free agent on a contract that would make him the highest-paid athlete in Real’s history.

Under the terms of the contract, Real, which strolled to a thirty fifth Spanish championship this month, would don’t have any restrictions on the way it spends its money. Capturing Mbappé could be a coup for Real, which has been chasing him since failing to steer his current club, Paris St.-Germain, to simply accept as much as $200 million for him during last summer’s postseason.

The deal between Real and Sixth Street also includes Legends, an American sports event management and hospitality company that’s majority owned by Sixth Street. The partnership will last for 20 years and be run through a three way partnership that can contain all of Real’s in-stadium income, apart from season-ticket sales.

The investment is the most recent a part of Real’s attempts to grow recent revenue streams from its celebrated stadium, which is undergoing a $1 billion retrofit, after which games can be played on a retractable field.

“The transformation of the Santiago Bernabéu Stadium can be a turning point within the history of Real Madrid,” Real’s president, Florentino Pérez, said in a press release. “This agreement strengthens the club’s goal of continuous to significantly increase the stadium’s revenues from each sporting and other kinds of events.”

While Real stays the dominant player in Spanish soccer and can compete within the Champions League final over again next week, it has been facing pressure to maintain up with changing forces in the worldwide soccer landscape. Despite generating more wealth yr over yr than practically every other soccer team, Real has struggled to compete for the perfect talent with clubs backed by deep-pocketed Arab states and billionaires. Turning the Bernabéu into what club officials have likened to a version of Madison Square Garden may help it maintain its muscle within the marketplace.

The agreement also bears some hallmarks of the one Spain’s domestic league, La Liga, signed with one other investment fund, CVC Capital Partners, that Real rejected and is suing against. CVC agreed to part with greater than $2 billion in return for nearly 10 percent of the league’s broadcast income for 50 years, a price that Real — and the league’s other best-supported team, Barcelona, in addition to member-owned Athletic Club from Bilbao — thought was too steep.

Real officials have identified that unlike that deal, the arrangement with Sixth Street, which also owns a portion of the N.B.A.’s San Antonio Spurs, is proscribed to the investment fund’s sharing in profits, not revenue, from the enterprise.

“Real Madrid’s Santiago Bernabéu is hallowed ground on the earth of football, and we’re honored to be joining this partnership to take a position within the progressive, long-term strategic vision that has guided the club’s consistent success over its storied history,” said Alan Waxman, a founding partner and the chief executive of Sixth Street.

Real benefited from the pandemic by moving to its training stadium at a time when supporters were barred from attending public events. It returned to the world this season although construction work continues. The stadium’s refurbishment is predicted to be accomplished in time for the beginning of the 2023-24 season.

The team’s funds are largely under control although the stadium debt is sort of $1 billion. Servicing costs about $40 million a yr. The money infusion from Sixth Street will mean the club’s short-term debt can be worn out and replaced with $260 million available to spend.

Those funds could allow Real so as to add reinforcements should it manage to secure Mbappé. The striker said recently that he was near announcing his plans for next season. P.S.G., his current club, has offered him a contract extension price way over the offer from Real. But Mbappé has made several comments indicating his desire to play in Madrid, a destination and team which have been magnets for the sport’s best talent.

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