How Real Madrid use stadium to remain elite: Taylor Swift tour, shrewd Florentino Perez, Kylian Mbappe

If events go as expected at Wembley on Saturday, Real Madrid will be champions of Europe for the 15th time, winning their second Champions League title in three years. The promise of more to come is evident in Carlo Ancelotti’s young and vibrant squad.

And yet, for many in the Spanish capital, this week is more about the eras of Red, Speak Now and Evermore rather than Jude Bellingham and Vinicius Junior. An estimated 120,000 fans will descend on the Santiago Bernabeu this week to see Taylor Swift, the world’s biggest football club, host the most lucrative tour in history. It’s the kind of union that Madrid hopes never goes out of style.

On Wednesday and Thursday, the cash registers at the newly renovated land will ring during a three-and-a-half-hour show as Swifties stock up on merchandise, drinks and snacks. Barclays analysis said a quarter of fans would travel to a different city to see the world’s biggest pop star, and one in five would travel across the country. The average spectator of the American leg of the Eras Tour is said to have spent more than $1,300 in one night since their wildest dreams. When fans do the same in Madrid, experts estimate that around US$4 million could be earned by the hosts, although in this particular case, not all of that money would go to the club.

This was always Florentino Perez’s vision when, in 2010, he announced plans to renovate the Madrid home of the last 63 years. Nine years later, when work began, it promised “a great avant-garde and universal icon.” The Santiago Bernabeu would be “a modern stadium, with maximum comfort and safety, with cutting-edge technology, where fans will be able to experience unique sensations and also be a new and important source of income for the club”.

That last line was critical. A venue that held nearly 130,000 people in the 1950s would reduce its capacity to 80,000, but there would be more space for VIP bars, restaurants and premium seating. A stadium used infrequently for football matches – even when Real Madrid were riding high in the Champions League – is now hosting its first international concerts in a decade. Swift’s two nights will be followed by eight more shows this summer, including Karol G’s first four nights in Spain since her emergence as one of the world’s biggest artists. Next year, Spain’s first regular-season NFL game will take place at the Santiago Bernabeu, an even bigger blow to Los Merengues as they beat local rivals Atlético de Madrid in the fight for the prize.

Not bad for a club that is already classified the most valuable brand in world football, whose revenues in 2023 increased by 16%, exceeding 900 million dollars, making them the richest in sport. All without feeling the full financial strength of the new Bernabéu.

“We’re not yet seeing the full impact of the stadium on the balance sheet,” said Chris Wood, assistant director of Deloitte’s Sports Business Group. “These clubs now look at their stadiums as assets they can use all year round, not just on home match days: bringing people in to drive F1 cars, see shows, visit museums, all these things that turn their stadium into more than just a football field, more of a year-round attraction.”

The money generated by the Bernabéu will have to be shared. A $380 million deal with Sixth Street and Legends in 2022 gave the latter company the right to host events at the venue and saw both parties earn 30 percent of the new profits (excluding season ticket sales). in place for 20 years. If this sounds like the kind of levers Barcelona used two summers ago, it’s worth noting that a larger proportion of the cash injection that arrived at Real Madrid was used for infrastructure. A 21st century stadium is a much better long-term revenue driver than Robert Lewandowski.

Unlike their great rivals, Madrid emerged from the COVID-19 forest relatively unscathed. They exited the Cristiano Ronaldo deal at an opportune moment and for many years a squad of European champions in series only required investment on the sidelines. Rebalancing a team around Vinicius and Rodrygo, among other young talents, required significant fees but entirely lower salaries. Even with more and more young talent being signed, Perez kept a close eye on the purse strings. According to analysis by Swiss Ramble, Real Madrid’s 49% wage to turnover ratio is the best in La Liga. They should have no problem accepting UEFA’s team costs regime.

For all the intriguing questions about where Kylian Mbappe might fit into the Real Madrid camp, the answer on the balance sheet is altogether more straightforward. Quite cozy. Sources consider it unlikely that the club will feel compelled to make a major sale this summer to clear the books, although the cases of Casemiro and Raphael Varane serve as a reminder that there is always a cool clarity at the Bernabéu. If anyone wants to offer silly money to high-paid veterans, Real Madrid bosses will rule their hearts.

Its internal assets are managed in an equally robust way. Only one player who could reasonably be considered local has earned Barcelona more than $30 million, Cesc Fabregas, when he joined Chelsea in 2014, three years after his boyhood club paid a similar fee to bring him from Arsenal to House. Real Madrid, for its part, continues to generate a lot of money, both through academy graduates such as Achraf Hakimi, Marcos Llorente and Sergio Reguilon, and through players it signed in its formative years and moved on for a lot of money: Martin Odegaard and Varane are two of the most notable. .

Perez learned lessons from the extravagance of his first Galactico era, when the superteam that culminated in David Beckham’s arrival in 2003 barely knew each other before moving into post-prime. When a lot of money has been spent, it has been on players whose prime years are ahead of them. Allocating the bulk of the $150 million to Bellingham seems pretty shrewd if the first year of what could be a decade-long reign at the top of world soccer is anything to go by.

Madrid exploits its attraction perhaps better than anyone else. This summer Bayern Munich will be in trouble, a situation they have known all too well for four years under David Alaba. Do they sell Alphonso Davies to the Spanish champions for whatever they can afford or hold out until the final year of his contract, hoping to get an extension but running the risk of losing him to Real Madrid for nothing? Outside the Premier League, even clubs that once considered themselves almost equal to the 14-time European champions seem unable to resist.

Swift and Madrid, then, could be a perfect match for each other. They kept up with the times more skillfully than many contemporaries who failed to maintain success. Both exist at a level of renown and commercial strength that separates them from the industry of which they are figureheads. And given that its revenue-generating power appears to only be growing, it’s hard to shake the feeling that its imperial era has only just begun.