The group operates Borussia Dortmund, a leading German football club, DFB Cup winners in 2016/17 and competing in this season’s UEFA Champions League (quarter-finalists in 2016/17).
Investment summary
Clear Bundesliga leaders and unbeaten in all but two of their last 27 matches in all competitions, Borussia Dortmund looks to be going from strength to strength under new head coach, Lucien Favre. The recent €64m Pulisic deal not only all but guarantees very strong gross EBITDA in the current year (our forecast is subject to review at the close of the January transfer window), but acts as a reference sale for Dortmund’s sustained ability to generate high levels of transfer income, hopefully without sporting detriment. Q1 results may seem pedestrian by comparison (EBITDA down 72%) but the bumper transfer of Dembéle made Q118 a hard act to follow and pre-transfer revenue up only 3% was largely a matter of fixture timing. For the full year we still expect robust pre-transfer revenue growth (c 12%), driven by international TV marketing.
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.
