COVID-19 cast a shadow on Valencia stadium deal

Article posted by Coliseum, April 7^th, 2020

Image: visitvalencia.com

The Spanish professional football club Valencia recently pulled back from an exclusive deal with ADU Mediterráneo, which had aimed to pull down the LaLiga club’s home venue – 55,000-capacity Mestalla Stadium – in a move that would have allowed the Spanish team to pursue a project for a new home.

Both parties have now mutually agreed that the present COVID-19 circumstances do not allow for the formalization of the agreement and the alliance has now been terminated with immediate effect.

March 31 had been set as the deadline for guarantees to be presented to Valencia and it had earlier been reported that the club would receive a single payment of between €115m (£103m/$127m) and €120m for the Mestalla site in July 2022. If that would have been the scenario, the club would have been bound to deliver the stadium to ADU Mediterráneo for work to start on the Residencial Acequia de Mestalla project.

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March 31 was supposed to be a major date in the history of Valencia CF. The club was supposed to seal the sale of Mestalla to ADU Mediterráneo, based on agreement reached in May 2019. However, ADU failed to secure financial guarantees for the €113 million transaction.

ADU informed the club that the coronavirus scourge has come in the way of its efforts to provide financial guarantees. With the deal put off, ADU no longer enjoys the exclusive rights to buy the land with Estadio Mestalla. Valencia CF can now keep their doors open for talks with other entities once more. Way back in 2018 and 2019, more than 20 investors had reportedly evinced keen interest, but with the current COVID-19 situation, it is doubtful how many investors would come forward to pick up the tab.

However, the deadline lapse does not mean ADU is no longer interested in the transaction. On the contrary, the company is working with an American fund to oil its financial wheels once again.

As the deal now stands terminated, Valencia is examining different options for a new stadium. ADU will be at liberty to look around for adequate financial guarantees for its residential project.

Remarked Valencia President Anil Murthy, “Unfortunately, it means that they (ADU) cannot comply with the purchase conditions that we had agreed upon, they have told us that they cannot and they are looking for alternatives. For this reason, it is evident that we cannot maintain the exclusivity of this project, something that we have already formally notified you of.”

Murthy added, “We do not want to sell false expectations. Of course, ADU will continue working to try to find the financial guarantees that Valencia CF demands and needs. From now on, other alternatives are opened to carry out the project as a whole, which means completing the construction of the new stadium.”

Murthy, who said a new stadium, which is “fundamental” both for the club and the city of Valencia, further observed, “We will re-evaluate different alternatives. For a long time, especially in the last 12 months, a lot of work has been done, there is a part that helps us a lot. The reality, however, is that you have to see it with the perspective that the global pandemic of Covid-19 has created a lot of uncertainty and pressure on the global financial situation both for football clubs and in general. The current horrible situation is impacting everyone and is going to be a great economic blow to investment plans, especially in infrastructure. No one knows when, in Spain and throughout the world, the economy will regain some normality. We cannot wait for that and from this very moment we continue searching for the best options.”

Valencia struck a deal with ADU in April last year as it was keen to push forward its long-running plans for a new facility. The club was hanging on hope for a new venue for some time now, with construction work on the Nuevo Mestalla having been suspended in February 2009.

Nuovo Mestalla is a partially built 54,000-seat football stadium in Valencia, Spain, intended as a replacement for Valencia CF’s current stadium, Estadio Mestalla. The basic concrete structure of the stadium was built between August 2007 and February 2009, but work was then stalled due to financial reasons.

Estadio Mestalla has been Valencia’s home since 1923. In May 2018, Valencia employed professional and financial services company Deloitte, which is serving as a key partner for the amended plans for Nuevo Mestalla.

As part of Valencia’s pact with ADU, it was laid down that the club would need to move into the 61,500-seat Nuevo Mestalla ahead of the 2022-23 seasons but the termination of the agreement has cast a shadow on the entire project.

All said and done, it is being suggested that general contractor (FCC) will likely enter the scene later this year and take up the reins of the now abandoned construction site, delivering a new 55,000-capacity stadium in mid- to late 2022.

Spain is reeling under the coronavirus impact with 136,675 cases reported to date and 13,341 deaths.

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