There is a shift change in the way a stadium is perceived today. Beyond the matchday, a stadium today is the hotbed for commercial activities, from stadium tour to retail outlet to various conference locations. In future stadium designs, place for retail outlets, hotels and other leisure activities have been incorporated.
Why?
With the media rights value plateauing or in some cases struggling to command the appropriate value, the focus moves towards the commercial and stadium related revenue streams. These are under the control of individual clubs. Clubs with higher revenues are increasingly gravitating towards redeveloping their existing stadiums, either total reconstruction or partial redevelopment:
- Real Madrid with a massive renovation of Santiago Bernabéu.
- Inter Milan, AC Milan and Roma are all finalising designs for new facilities.
- Everton’s new 53,000 seater stadium at Bramley-Moore Dock is ready and will host their first game in the 25-26 season.
- Paris Saint-Germain, Chelsea and Manchester United are weighing up whether to upgrade or replace their cramped or ageing homes.
- FC Barcelona’s major overhaul of Camp Nou.
- The future of Lazio’s Stadio Flaminio depends on decisions the authorities will make in the coming months.
It’s not a surprise that stadium rebuild and renovation projects in European football are on the cusp of an explosion, the topic we are exploring in this blog.
Across European Top Division
There has been a substantial increase in fixed assets investment reported by Europe’s top-division clubs in 2023. As per UEFA Benchmark Report 2024, €2.2bn of new investment in fixed assets (majorly includes stadium investment and small portion of other fixed assets) were reported in Europe’s 700+ top-division clubs in 2023, which is actually double that of 2022. Further, the number of clubs reporting fixed asset additions of more than €10mn also doubled during 2023 and Four clubs added more than €100mn to their fixed assets. Multi-purpose stadiums are the catalyst for an increase in revenue and therefore the need for a complete rebuilt or a partial redevelopment arises.
At the end of 2023, 88 top-tier clubs (12% of the total) owned their stadium directly, while 62 (8%) reported that their stadium was owned by another company in the group or belonged to the club’s owner. A further 64% of top-division clubs’ stadiums were owned by state or municipal authorities, while the remaining 16% were under the control of other commercial entities.
Santiago Bernabéu
Perhaps leading the redevelopment saga would be the case of Real Madrid’s renovation of the iconic Santiago Bernabéu.
Firstly, the cost of renovation: Real Madrid’s interim accounts for the 2023-24 season reveal that the cost of renovating the Santiago Bernabeu stadium is €1.17bn out of which the outstanding loan is €1.155bn as of 30th June 2024. The stadium financing is spread across three separate loans, each with different interest rates. The completed stadium is expected to be ready and in operation in 2025.
The end benefits: The renovated Santiago Bernabéu is expected to bring in up to around €400mn annual revenue which is almost three times the matchday revenue recorded in 22/23. As a precursor to that, the stadium revenue has already doubled in 2024 from 2023 reaching €248mn. Also, in order to maximise the potential of the redeveloped stadium, Real Madrid has signed a deal with Legends and Sixth Street where for €360mn, they will hand over the operation of the stadium to them for twenty years. Further, Real Madrid will receive seventy percent of the revenue from their stadium, according to the terms of the agreement as per Football Benchmark.
The Spurs Model
Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019 stands as the benchmark for gold standard in European football grounds. It has immense impacted the club’s finances as the pandemic effects fade. As per a report by Casement Park, the average fan who would have spent less than £2 inside the ground on a typical match day earlier would now spend about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Increased capacity from 36,000 to 62,000 also added to the matchday revenues.
Everton’s New Stadium
After successfully passing security and other tests, Everton’s new stadium at Bramley-Moore Dock is scheduled to open fully from the 25/26 season. Built at an estimated cost close to £800mn, the stadium will seat 52,888 fans and will be the seventh-biggest in the Premier League. The need to build the new stadium is looking at the future prospects of the club and with an eye on significant revenue additions. As per experts, the Bramley-Moore Dock stadium is expected to add £60mn – £70mn in additional revenues to the club, which by any means is quite significant.
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In Conclusion
A thorough commercial evaluation backed by a strong financial control makes investment in fixed assets like stadiums a value add. In the near future, it is set to become a norm and more clubs will be looking at this type of investments in a positive manner.
