The group operates Borussia Dortmund, a leading German football club, DFB Cup winners in 2016/17 and Round of 16 participants in this season’s UEFA Champions League (quarter-finalists in 2016/17).
Investment summary
The recent dip in form (one win in eight games) risks distracting from Borussia Dortmund’s highly successful season with a new head coach and a developing squad. While disappointment is understandable, given raised expectations, the share price upset (down over 25% from its November peak) appears exaggerated as Dortmund (BVB) remains well-placed for its Bundesliga title challenge and has already all but secured Champions League participation for next season, its overriding KPI. Moreover, we are now raising forecasts to reflect the buoyancy of international TV marketing and January’s bumper transfer of Pulisic. Transfermarkt.de’s new €45m upgrade in squad valuation, highlighted by Sancho (18) as most valuable Bundesliga player (€80m), suggests more to come, reinforcing EV/EBITDA of under 6x FY19e as unbecoming of BVB’s brand and financial strengths.
Unsustainable spend on wages and transfers is increasingly being penalised by UEFA Financial Fair Play requirements. A ‘break-even requirement’ obliges clubs to spend no more than they generate over a rolling three-year period. Sanctions vary from a warning to a ban from UEFA competition, fines and a cap on wages and squad size.
