(Bloomberg)-The surprise of Manchester United PLC this week on plans for a new 100,000-seat stadium was easy. Now you need to find money.
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Bankers discuss how difficult it could be to lend two billion pounds ($ 2.6 billion) needed to build a giant place. Lenders could provide between billions up to £ 1.5 billion, pounds of debt, according to people familiar with the financing market. This would leave a void that could be filled with capital, they said, asking not to identify themselves because any job would be private.
However, numerous recent development of the stadium – like Barcelona Spotify Camp Nou – are completely funded by the debt, and the Stas of Manchester United Club should be able to collect the capital he needs, said separate people. There is also the potential for financing a new government in the UK, which wants to encourage economic growth projects.
Manchester United Executive Director Omar Berrada said he would consider all financing options. While the club has been fighting in the field in recent years and is already burdened with at least one billion pounds of debt, the club is likely to have no financiers who are willing to help, given that one of the world’s greatest football teams is considered.
Goldman Sachs Group Inc. and JPMORGAN Chase & Co. Two banks are most likely in combination when it comes to finding a solution, people said, given that they helped co -owner Jim Ratcliffe to fight opposition to fighting the club in control of the club last year. Bank of America Corp. Another probable candidate as an existing lender is a club and financier of new stadiums for other teams such as Tottenham Hotspur and Real Madrid, they added.
Manchester United did not have to talk to the lenders yet, and the structure of any funding could change depending on the credit markets, the potential financing of the Government and the success of the club on the field, people said.
“The stadium transactions, if they are conservatively structured, are more attractive to investors than the teams themselves,” said Manuel Gutierrez, Vice President of Corporate Rating in Morningstar DBRS. “The revenues generated by the stadium are usually more resistant than in clubs, where they can rely on the sale of players or other fluctuating items.”
The challenge is that the credit markets have changed since the last collection of Manchester United. The borrowing has become more expensive after an increase in inflation in recent years, although central banks are now reducing interest rates.
The club is also expected to also refinance its existing debt as part of any agreement to raise funds for the stadium, which will consider its interest basically the double – that the lenders are more careful than overload, people said.
It is also not clear where any capital would come from, if necessary. Ratcliffe spent about $ 1.5 billion to get nearly a third of Manchester United and has since reduced his job and staff as he tries to get costs under control. In the meantime, the Glazer family still owns the majority.
Manchester United, Goldman Sachs, JPMORGAN and Bank of America refused to comment.
Football clubs are increasingly focusing on their stadium, partly due to softening to make money from the media rights market, along with the impact of regulations that bind the consumption of players on revenue. The remodeling of the stadium also shook the club’s financing, Morningstar DBRS said in the note earlier this year.
“The structures of top clubs can achieve credit rating of investment,” said Morningstar DBRS Gutierrez and Michael Goldberg, “provided that the subject of financing is a special purpose of the bankruptcy entity (Stadco).”
Creative options
Such a separate entity, secured by the sale of tickets in the new stadium, could be an option, people said. The expectation is that the club will have to increase debt through different ways, such as project financing loans, third-party units, municipal support-local mayor wants the aforementioned private placements so far, they said.
In 2015, the club raised $ 425 million bonds, reaching 2027, paying 3.79% when the reference interest rates were historically low. It has $ 225 million from Bank of America, plus around £ 300 million additional revolving credit facilities. It also owes around £ 300 million to players’ clubs.
The owner of a local rival Manchester City pays 7.4%on some loans sold in US credit markets, and lenders are unlikely to offer Manchester United United below 6%-7%, one of the people said.
On the other hand, revenues in clubs that have renovated or built stadiums in the past decade, such as Atletico Madrid, Tottenham Hotspur and Juventus, they saw that their day and commercial revenues were growing 2.3 times faster than the average team in a large five European lists, according to the morning center. Revenues from the day of Manchester United were £ 137.1 million in the 2023/24 season.
Ratcliffe has already increased ticket prices, and the club warned fans that they would need more. Such news comes at an inappropriate time: the team currently contains 14. Of the 20 teams in the highest level of English football – which would be his worst ending in 50 years if that level holds at the end of the season in May.
The plans for the new stadium, which will last for years, is an attempt to catch up with the modern facilities built by some of Europe’s largest clubs. Ratcliffe spoke about the construction of the “Wembley from the North”, references to the House of England in London. Once completed, the refinancing of more attractive concepts could occur, people said.
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