October 1, 2022
How will Atlético-MG pay its debts to the stadium?  Understanding Financial Planning to 2029 |  sports business

How will Atlético-MG pay its debts to the stadium? Understanding Financial Planning to 2029 | sports business

The answer lies in the confidential materials that the club distributed to potential investors, for which General Electric He has access. Pay off debts provided for in the building Arena MRV It will consume revenue from the enterprise and will depend on the success of its work.

MRV Arena is already 75% ready inside – Photo: Pedro Souza / CAM

Atlético-MG estimates that the stadium will have it Total Revenue 114 Million Rls in 2023. Since the opening is scheduled for March, this value should be reached in about nine months. In 2024, revenue is expected to reach R$ 181 million.

These amounts take into account all arena revenue, including ticket sales, sponsorships, parking, lounges, corporate events, rentals, supporters, chairs and boxes. In each of these lines, the Atlético management worked with the buildings, that is, the conditions.

In order for an arena to have the expected revenue at the box office, for example, it would need almost full platforms. Of the total of 46,000 seats, after deducting boxes, chairs and members with access to games and lounges, about 33,000 free tickets will be on sale.

Expectations say so Tickets should cost an average of 62 riyals And with the need, as early as 2023, The occupancy of the stands is above 80%. As of 2024, Minimum occupancy drops to 75%.

Composition of the projected revenue for MRV Arena between 2023 and 2029 – Image: Reproduction

If the estimates made by Atlético-MG in relation to revenue are accurate, before debts are paid, it is necessary to take into account the costs of operating the stadium. Deductions for income, maintenance, security, and cleaning are included, among other daily expenses.

Expectations are that The sum of all expenditures will be R$44 million in 2023when there are only nine months of activities. in 2024with the entire calendar, Costs rise to 57 million Rls.

The difference between revenue and costs is what the market calls EBITDA, which is an acronym for income before depreciation, amortization, interest, and taxes. This is an important indicator to consider the feasibility of the business. If this number is negative, then there will be serious problems.

The last line of the net result shows the expectation when all of these items are considered. Arena MRV must appear with 16 Million Rls in 2023Then step into an ever-growing path of positive results, starting with A profit of R$36 million in 2024.

Millions of Brazilian riyals 2023 2024 2025 2026 2027 2028 2029 2030
Revenues 114 181 196 208 216 225 231 233
costs -44 -57 -61 -63 -67 -69 -71 -71
EBITDA 70 124 135 145 149 156 160 161
Depreciation and amortization of debt -21 -24 -24 -25 -25 -26 -26 -26
Financial result -65 -51 -40 -27 -12 0 15th 26
tax on profit 0 -11 -17 -22 -36 -44 -51 -54
net income -16 36 54 71 76 86 98 106

Atlético-MG sought two lines of credit to complete construction of its stadium. The first amount of R$200 million was raised in December 2021. A second fundraising is currently underway, and another R$ 240 million is expected..

The search for funds is made possible through the sale of Certificates of Real Estate Receivables (CRI). Investors put money into it with the expectation that it will be paid back, with interest, after a certain period. Guarantee of payment in the enterprise.

For this reason, Arena MRV accounts have been opened to potential investors. They check the numbers and listen to the explanations of the Atletica board of directors, to gain confidence in the business.

Both credits have grace periods. Atlético-MG will only start paying investors who have purchased certificates from October 2023, in both versions of the certificates.

From the beginning of the repayment until September 2029, the date of the last installment, as with a citizen financing an apartment in the long-term, the stadium will need to repay the debt and also the interest arising from it – which, in seven years, totals 302 million R$.

year Interest (Million Rls) Debt (million BRL)
2022 44 0
2023 71 18
2024 58 73
2025 48 73
2026 37 73
2027 26 73
2028 15th 73
2029 4 55
the total 302 440

The ability to pay off interest and debt is directly related to the operation of the stadium, which puts some pressure on athletic directors and executives. Arena MRV will need to meet expectations in terms of revenue and profit to close its account in the black.

Today, despite being unhappy with Mineirao’s rent, the club can use its box office profits and supporters into leading football. From the moment a portion of that revenue is channeled into arena funds, there will be an impact on finances.

Atlético-MG will be challenged to keep football competitive and to engage fans, while paying for the construction of their stadium. The process is also exposed to the Brazilian political and economic scenario, where interest rates fluctuate constantly throughout the 1920s.