EXPLAINED: How Manchester United might use Real Madrid's playbook to fund its massive stadium build

New Old Trafford is risky and expensive but will be transformational for the club and half of Manchester if they can pull it off

Manchester United's ambition to construct a new 100,000-seat stadium, as opposed to renovating Old Trafford, apparently carries a massive £2bn price tag. This headline figure appears conservative with inflation and interest rates remaining stubbornly “higher for longer”. With existing net debt at approximately £635m as at 31 December 2024 and annual interest payments of almost £40m (the highest in the Premier League), a multi-faceted and innovative approach to funding the project is going to be essential.

Somewhat surprisingly, Omar Berrada, United’s recently appointed, and first time CEO said it was too early to set out how the stadium would be funded - “Right now it’s still very early days. We’ll be looking at all the options.” Ironically, Berrada may well need someone like former banker and United CEO, Ed Woodward to help him navigate such a huge infrastructure project (joke).

Real Madrid's successful Santiago Bernabéu stadium transformation and other recent builds such as those by Spurs, City Football Group, Everton and Arsenal highlight some of the ways United may look to fund such a huge project and what it may cost to do so.

1. Multi-tranche, staggered (and staggering) debt financing

United are likely to mirror, or at least pay close attention to, Real Madrid's strategy by looking to secure staggered, long-term loans from global banks and private equity firms:

• 2019: Real secured its initial €575m loan, structured by JP Morgan and Bank of America, featured a 30-year term at 2.5% interest, with principal repayments deferred until 2023.

• 2021: A second €225m loan in 2021 at 1.53% over 27 years funded an underground greenhouse for pitch preservation, enabling non-football events without grass damage.

• 2023: A third €370m loan extended total borrowing to €1.16bn, pushing projected costs including interest to nearly €2bn.

However, United need to factor in existing debt and transfer debt whilst negotiating loan terms that minimise short-term pressure. The £36m interest payment in 2024 was the highest in the PL. United’s current $425m, 3.79% facility is already going to need to be refinanced in the next year or so.

Such a refinancing is likely to be at higher rates than currently achieved and far higher than the facilities at Spurs or Real. CFG's loans from Barclays, HSBC and KKR are at US LIBOR plus 3-3.5% (a current, effective 8-8.5% pa).

These loans appear to be funding both the New York City stadium and the redevelopment of City’s North Stand (and its associated hotel and plaza). These significant rates are despite the fact that the CFG is owned 80% by Sheikh Mansour bin Zayed Al Nahyan and the rest, largely, by Silver Lake Capital (ie a very strong covenant).

At a much smaller lend, in February 2025, Everton borrowed £350m via JP Morgan at a fixed 7.38% (around 2.38% over US LIBOR). The oversubscription (c4x) allowed Everton to reduce its interest cost.

At, say, £2.5bn of total debt, interest would likely be around £150m pa (say, a blended 6%) to simply service the loan (ie before dealing with the repayment of any principal). In the years of building the stadium, United would not have the necessary cashflow from the new stadium so would want to roll interest obligations to the principal amount. This could easily mean borrowings of £3bn by the end of the build if all funded by debt.

2. Strategic partnerships and revenue quasi securitisation

• Legends-style/Barca lever deal: United may partner with a hospitality firm similar to Real's deal with Legends to secure upfront cash. As part of the long-term partnership, Real Madrid received €360m. Sixth Street acquired the right to participate in the operation of certain new businesses of the Santiago Bernabéu Stadium for twenty years (ie to receive an effective 20 year royalty). In addition, Legends was involved in utilising its skillset and experience in the operation of large stadiums, attractions and event spaces to optimise the management of the Santiago Bernabéu Stadium. This is, in essence, a form of securitisation of the type that was relatively common (albeit on a much more modest basis Leeds' 25 year securitisation 2001) in the 90s and early 2000s. It is also similar to a number of Barca's recent “levers” - ie a financial mechanism to bring forward revenue from the future. Unfortunately for Leeds, it ended in a disastrous administration.

• Naming rights: A naming rights deal is likely - a new stadium could command up to £30m per year for the virgin naming rights. But Spurs have never managed to find a partner prepared to pay the requisite amount. Would a Manchester based stadium really achieve a high naming rights deal?

• Maximise non-matchday income: United will want to create a stadium that is a year-round entertainment hub, mirroring the Bernabéu's retractable roof/pitch rotation and multi-use facilities as per Spurs. But Manchester is not London or Madrid and is already well catered for in terms of music, retail (and football).

3. Equity injection and ownership restructuring

• Ineos: further equity could be injected - but is that the plan?

• Glazers: looks very unlikely.

• A new equity partner: would sit alongside Ineos and the Glazers but would be highly dilutive if for, say, $1bn.

United issued a prospectus in September announcing plans to raise up to $400m though it is unclear what this money might be used for. It could be intended for other infrastructure improvements, a restructure of some of the debt or even just to provide further working capital in the short term.

4. Leverage the South Manchester Government regeneration real estate play

Whilst no public funds are (apparently) earmarked for the stadium itself, the regeneration project could attract private investment via infrastructure linked partnerships and related property deals. It is said that there could be plans for 17,000 homes on sites owned by United including when Old Trafford is demolished. Like Arsenal and now Spurs, these sort of developments could also leverage the value uplift from the stadium build and surrounding regeneration.

5. Boosted post build matchday and hospitality revenue

The new 100,000-seat stadium would boost matchday income dramatically but there are limits eg success on the pitch, football saturation, the capacity of the Manchester economy and communication routes out of Manchester for evening fixtures.

The key revenue uplift is likely to be from high ticket, luxury hospitality revenue - less prawn sandwich more NFL style VIP access to the best seats, pregame parties, and beyond. But Manchester/North West is already well served for corporates after this. And revenue is not profit.

6. Risks

• Super high leverage is dangerous: Over reliance on debt could push total liabilities to a dangerous level. The interest alone on debt could easily reach £150m pa if interest rates remain in the current range.

• On field performance and Champions League participation: Champions League qualification for United is likely worth close to £100m pa but the queue of teams battling for those places gets bigger each season. Building success on the field against a back drop of stadium development has been a challenge for every English side - Real was in some ways insulated by guaranteed CL participation.

• Inflation, Brexit consequences, cost overruns and external shocks: The increase in the cost of labour and materials will affect the long term viability of the project. Real faced cost overruns, with initial estimates almost doubling. United must build contingencies for unforeseen expenses and global economic shocks (inflation as well as geopolitical events).

• Government commitment risk: United seem to have gone early on the project to bounce central Government into action and to inject some momentum into the project. If that central Government enthusiasm wanes or is half hearted, this is likely to materially impact the viability of the project. United will be desperate to avoid becoming HS3 (or OT2).

• Old Trafford is falling down: 5 years is a long time. United will have some tough capex decisions as to the maintenance of the current stadium. Anything spent on Old Trafford will have very limited useful life and there will be obvious enthusiasm from the owners to "sweat the asset" alongside the huge retrenchments in the customer facing work force.

The funding of such a massive project by a publicly listed company with 3 main shareholder blocks and substantial existing leverage is a huge challenge. It will take much financial and operational skill to execute a project like this whilst keeping the "product" on the pitch satisfactory.

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