Real Madrid look for outside investors

Real Madrid president Florentino Pérez will this weekend push ahead with plans to bring in outside shareholders for the first time in the member-owned club’s 123-year history, as the Spanish team tries to reinforce its status against the growing financial might of Premier League clubs.

At Sunday’s annual meeting of members, Pérez is to outline the next steps of a plan to bring fresh capital into the club. That would allow an outside investor to take a 5 to 10 per cent stake in Real Madrid, in a test of the club’s valuation, according to a person with knowledge of the matter. While the meeting is a standard event, where members will vote to approve the annual accounts, Pérez’s speech will be closely watched for updates on potential changes to the club’s corporate structure, the way capital will be raised and the effect on members.

Changes to the bylaws will require members to meet and vote, potentially as soon as next year. The stakes are high following US investment firm Apollo’s deal this month to buy a majority stake in Real’s rivals Atlético Madrid, valuing the club at more than €2bn.

English Premier League clubs vastly outspent their Spanish rivals on new players this summer, upping the financial stakes for competitors in the Champions League, a tournament Real Madrid has won more times than any other club.

 The move is also a critical step in cementing the legacy of Pérez, a billionaire businessman whose identity in Spain is tied directly to his running of the club. People close to Pérez say the changes are intended to create a sense of ownership and accountability among members and a major investor to safeguard the club’s future. Like rival FC Barcelona, Real Madrid remains owned by about 100,000 individual members, or socios.

Pérez’s plan is to write into the bylaws that a stake of up to 10 per cent can be sold to private investors, keeping the club’s future in members’ hands, according to a person with knowledge of the matter. The person denied the possibility that the move could result in taxes for the socios because of the plan to change the business structure. Under its current corporate structure, Real Madrid is a non-profit that must reinvest in its own business.

 However, some Real Madrid supporters are already voicing their opposition. Miguel Otero, a club fan and political economist at the Elcano Royal Institute, said: “Real Madrid should not be for sale. Not 10 per cent, not even 1 per cent. It should belong to its members 100 per cent. This is what makes Real Madrid unique.”  Arguing that the club was “founded on trust and loyalty”, he added: “It should remain this way. By selling even a small percentage it puts a market value on Real Madrid. But this sets a bad precedent — Real Madrid is invaluable.”

The plan is the latest gambit by Pérez, who failed in an audacious but widely lambasted move to form a breakaway European Super League in 2021. Fans, rival clubs and politicians united in opposition to his proposal to upend the way football is run in favour of a closed format competition inspired by US sports leagues.

Real Madrid remains at loggerheads with European governing body Uefa, which runs the Champions League. A22 Sports Management, which has close ties to Real Madrid, has argued for structural changes to engage younger fans and strengthen clubs’ finances.

Pérez also oversaw the €1.2bn renovation of Real Madrid’s Bernabéu stadium, a costly project that has been roiled by complaints from neighbours. The revamp was intended to turn the Bernabéu into a world-class concert venue, but local complaints about noise from performances by the likes of Taylor Swift have forced the club to pause all music plans indefinitely.

Earlier this year, consultancy Football Benchmark valued Real Madrid at €6.3bn including debt, higher than any other club and well north of the €5.1bn ascribed to second-placed Manchester City. Pérez floated a valuation of more than €10bn at last year’s shareholder meeting. Real Madrid’s model makes it more complicated to raise capital.

Even so, the club has strong ties to the financial industry. It worked with JPMorgan on the European Super League proposal and the Bernabéu renovation, and raised €360mn through a stadium partnership with US investment firm Sixth Street in 2022. Real Madrid’s socios model stands out as private capital firms clamour for European football leagues and clubs. Clearlake Capital provided most of the capital for a £2.5bn takeover of English side Chelsea FC in 2022 — the same year RedBird Capital Partners bought Italy’s AC Milan in a €1.2bn deal. Oaktree seized rivals Inter Milan last year after its previous owner failed to repay debt. Apollo’s swoop for Atlético Madrid followed this year.