FC Barcelona receives a unique financing model for Espai Barça, based on incremental income from Camp Nou over 25 years

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The Vice President of Finance and Real Estate and Head of the Espai Barça project, Jordi Moix, used his speech to present the financial results of the 2019/20 season and at the same time to explain the current status of the Espai Barça project and the planned financing of the construction. This innovative financial operation remains in force despite the impact of the pandemic and is fully adapted to the needs of the club, respecting the red lines established in the referendum and allowing the Espai Barça to be financed through the sale of part of the rights to the future additional income that the Project is expected to achieve upon completion.

This operation is being conducted in partnership with Goldman Sachs, a leading global investment banking firm that has directly funded the infrastructure of 45 stadiums worldwide with more than $ 20 billion over the past few years, and other local and international financial institutions as well interested in participating in this promotion.

The terms of the new financing plan assume that the total amount of the agreement is 815 million euros (725 million for investment and payment of the work and 90 million for capitalizable interest over the five years of work plus the initial financial cost).

The contract period is 30 years (5 years of construction and 25 years of management) and the payment period is 25 years from the 2024/25 season when the project is completed. As for the interest rate, the estimated annual cost of an annual interest repayment plus amortization would be an estimated additional income of $ 50 million per year.

The formula for the operation is technically a sale of a portion of the rights to sell the additional revenue generated by the club from Espai Barça to an instrumental vehicle managed by Goldman Sachs. The club would repay the investment over those 30 years in the form of 50 million a year it would make out of the 150 million in extraordinary income it would generate from Espai Barça. The remaining 100 million revenue would be used for the regular activities of the club and to increase its competitiveness.

The additional 150 million would come from the new assets created through Espai Barça, such as the title rights to the stadium and new sponsorship deals (50 million), VIP boxes and seats (50 million) and new visitors to the new museum, higher Income from ticketing due to the expanded capacity, new catering, location rental and parking (50 million).

Moix pointed out that when the Espai Barça referendum was approved in 2014, the budget for the project was € 600 million, to be paid from € 200 million of the club’s own funds, and € 200 million from a sponsor whose trade name is related to that of Camp Nou (title rights) and 200 million from a bank loan. In the original funding plan, the club pledged not to cross three red lines: the work would cost the members nothing, the payment must never endanger the sporting side of the club and the club’s assets would never be encumbered as collateral.

Development of construction costs

The construction costs have increased from 600 million to 725 million since 2014. The original budget included the complete renovation of the future Camp Nou, the construction of a new Palau Blaugrana for 10,000 spectators, with a Petit Palau for 2,000, an ice rink for 500, and the Barça Campus.

The investment in the construction of Espai Barça has grown over the years with new costs arising from the development of the project and the agreement with the city council and municipal groups on an urban redevelopment plan (MPGM) of 50 million. further developed, plus compensation to the city council in the form of 49,000 m²2 of tertiary office buildings and hotels. The remainder of the cost increase is due to changes to the planned facilities, such as a new Palau Blaugrana for 15,000 instead of 10,000 spectators (60 million) and certain investments in the future Camp Nou to improve the services and thereby generate further additional income , such as improvements to the museum and a new experience (15 million).

Improved business plan and additional income

The key to this funding plan lies in improving Espai Barça’s business plan and the additional income the project will generate once the Camp Nou is completed. While in 2014 the project was expected to generate additional revenue of 50 million euros per year, ISG Legends, an expert in valuation of commercial assets in stadiums, estimated in 2020 that Barça would increase each season thanks to the additional revenue Espai Barça will earn more than 150 million euros from the 2024/2025 season. The construction process was also audited by a highly regarded international real estate advisor in the industry, JLL, who expressed absolute confidence in the management of the project and the schedule.

The club’s obligations

However, FC Barcelona takes on a number of obligations that must be met, such as always playing at Camp Nou, playing in one of the five best football leagues in the world, observing financial fair play, having a guaranteed maximum price stipulated in the building contract, to avoid budget variances and the right of banks to hire a commercial advisor if the club does not generate the expected additional income to repay the investment.

Another great benefit of this funding plan is that the club can use 100 of the 150 million annual grants that Espai Barça generates for normal use after using the remaining 50 million to pay back the funding structure. These revenues can be invested in strengthening and competitiveness of the club and allow Barça to offset the revenue growth that other rival clubs in Europe are already benefiting from as a result of improvements to their own stadiums.

In addition, through this operation, the club would protect its ongoing revenues by not taking away any amounts from contracts already signed, such as television rights and shirt sponsorship, nor ownership of its assets or delegation of their management.

In addition, the risk is borne by the funds. If the planned additional income is not generated, there is no claim against the association. The Fund could hire a commercial advisor to oversee the sale of the new assets.

These are two of the differences between this operation and what other leading clubs have been doing to fund their stadiums.

In short, with this new funding plan, the three red lines of the 2014 referendum will not be exceeded, the club’s current assets will not be used as guarantees (land and facilities, stadium tickets, TV rights and sponsorship), there is more flexibility to achieve the best title rights agreement When the Camp Nou is finished, the risk will be taken over by the financial institutions and banks and ultimately the competitiveness will be increased, as the additional income of 100 million euros per year can be used for other purposes.

Construction status and schedule

Jordi Moix also talked about the status of the current project, now that the Estadi The Johan Cruyff Stadium has been completed, an application for a license for the future Camp Nou has been submitted to the Barcelona City Council and the tender for the project is ongoing. Working on phase 1 of the external development (Avinguda Joan XXIII and the cemetery) has started preliminary studies of the car park, and the Barça Campus project and interior development plan in collaboration with the city council and local residents are also in progress.

The design project for the new Palau Blaugrana for 15,000 spectators and the preliminary design for the Petit Palau, the ice rink and the bus park are to be carried out in two phases due to the effects of underground line 9. The club hopes to move the design for the new Palau Blaugrana forward so that the design and license application phases can be completed by the end of 2021 and thus the new Palau Blaugrana can be physically built between 2022 and 2023.

All This work is being carried out in parallel with the fulfillment of the club’s sustainability goals, for which the Espai Barça project has already been awarded the DNGB Gold Standard pre-certification.

As for the revised schedule, it is envisaged that this new financial plan, which has yet to be approved by club members, will be submitted to a referendum towards the end of the first half of 2021 before work on the stadium can start next summer. Since there are presidential elections next March, Jordi will Moix offers applicants who wish to do so the opportunity to find out more about the project and the new financing plan so that a referendum can be called in good time so that work can start in the summer and thus keep to the planned schedule.

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