Step Into The Arena: What The $608 Million Manchester Arena Deal Means

When Secure Income REIT, a real estate investment company, bought Manchester Arena from Mansford LLP, also a real estate investment firm, on March 15 as part of a $608 million deal, many in the business had one very legitimate question: Why?

Manchester Arena – Manchester Arena

The world-class arena is ranked No. 3 on Pollstar’s Worldwide Top 200 Arenas for 2017 with 1,072,079 tickets sold behind only O2 Arena and Madison Square Garden Arena. With a capacity of 21,000, (the largest indoor arena capacity in the UK) some of the venue’s bigger individual grosses recently reported to Pollstar include Kendrick Lamar’s Feb. 10 show promoted by Live Nation, which grossed $1.4 million; and Queen + Adam Lambert’s gig, which brought in $1.6 million in a December show promoted by Phil McIntyre Entertainmnent.

Add in that Manchester Arena, which sits on an 8-acre site and includes 160,000 square feet of office space and will produce some
$8 million net income per year (expected to rise another $350,000 when the arena’s rent increases in June), according to Secure Income’s accounting, and that question of why becomes even more salient.

Part of the rationale behind the sale is clearly profit motive: Mansford stands to make some £52 million ($72.9 million) from the deal. The firm sold its portfolio to Secure Income for considerably more than it paid for it.

Mansford spent £82 million ($114 million) for Manchester Arena in 2013, and some £90 million ($125 million) for the pubs, hotels and other assets in the portfolio, for which Secure Income paid £224 million ($313 million) in total. The deal is expected to be completed in July.

Built in 1995, Manchester Arena has always been in private hands from real estate companies to AEG, which bought it in 2004 and sold it in 2006. Since then, it’s been owned by multiple developers.

In the U.S., where thanks to the popularity of professional arena sports leagues like the NBA and NHL, buildings are generally owned by municipalities and leased to (and sometimes owned) by a sports team. In Europe, where arena sports are less popular, typically municipalities own arenas because of the expense of operating.

“In Manchester, there are more assets than just the arena,” said one source. “If you look at the transaction, it’s a property play. They look at rental rates [of the bars, hotels and event spaces tied to the sale] you may see them increasing, which is a benefit to them like a normal property owner. You renovate those buildings and increase the rates.”

In the near future, however, the sale will have little impact on managing Manchester Arena. A spokesperson for SMG, which manages the building, said that while there’s a new landlord, nothing changes as far as the underlying lease is concerned, which has a “long number of years to run” – 27 to be precise.

“SMG has always benefitted from a warm and constructive landlord relationship in the past and looks forward to the same relationship with the new landlord. It is a strong sign of confidence both in the Manchester market and Manchester Arena in particular,” the spokesperson added.

While the deal will not affect the arena’s day-to-day operation, it may help secure a new naming-rights sponsor.

Nick Leslau, one of Secure Income’s non-executive directors, told Pollstar, “the Manchester Arena is a genuine, world-class asset and the naming rights have become available. We are really excited to be working with SMG, the arena operators, to identify a sponsor befitting such an important, high profile venue.”

The arena had various naming sponsors in the past, including British cable TV company Nynex (1995-98), Manchester Evening News (1998-2011) and Phones 4u (2013-15).

While the sale looks like a sober business decision on paper, it also carries deeper significance because of the place Manchester Arena holds in Mancunians’ – and indeed many people around the globe’s – psyche. The venue was the site of a senseless terrorist attack on May 22, 2017, when a bomb was detonated in the arena’s foyer just as fans started to flock toward the tube station after an Ariana Grande concert, killing 22 and injuring more than 100.

The live music industry – especially concert promoters SJM and Festival Republic, as well as Ariana Grande’s manager Scooter Braun – reacted boldly, alongside the city of Manchester and its inhabitants: only two weeks after the attack, a star-studded “One Love Manchester” benefit concert took place at Manchester’s Emirates Old Trafford cricket stadium. The concert raised some $13 million dollars for the We Love Manchester Emergency Fund.

Another fundraising concert took place at Manchester Arena itself. Dubbed “We Are Manchester” and headlined by Noel Gallagher’s High Flying Birds, it not only officially reopened the venue Sept. 9 but raised some $367,500 toward a memorial, which is expected to be built in the city center.

A person with knowledge of the Manchester Arena deal told Pollstar the sale had nothing to do with the May 22 attack. “This is normal, run-of-business for a company like Mansford. Property companies are regularly adjusting or selling on their portfolios in that world. This is just part of that business as usual.”

– Manchester Arena Foyer
The scene of the May 22 crime

Sandy Gumm, another of Secure Income’s non-executive directors, confirmed this: “The Arena was not sold alone but as part of a portfolio. We do not believe it has anything to do with the events of 22 May.”

After a series of terrorist attacks, specifically on live events starting with the Nov. 13, 2015, attack on Le Bataclan in Paris, the Manchester attack was a catalyst for industry changes. It prompted the team behind London’s ILMC to last year launch a new security event for the industry, dubbed Event Safety and Security Summit (E3S) which debuted at London’s O2 in October.

Some 200 delegates attended the first edition where it became clear that the European events industry had to work more closely together when it came to sharing best practices around anything relating to venue security. Long before these events, the venue was highly influential. “Manchester Arena is important to England,” said John Barrow, an architect with Populous and director of services for the European Stadium & Safety Management Association. “It’s always been one of the top arenas for shows,” he said. “It has excellent facilities and access.”

Barrow, who said he used Manchester as a “reference point” for his designs of the O2, said the venue could use some “inward investment and a bright new face.” This he said before adding, “I hope it works.”