Borussia Dortmund — London calling

Borussia Dortmund (FRA: BVB)

Last close As at 18/06/2024

EUR3.48

−0.03 (−0.86%)

Market capitalisation

EUR384m

More on this equity

Research: Consumer

Borussia Dortmund — London calling

Borussia Dortmund’s Q324 results demonstrated some phasing but it has made good progress year-to-date. The focus of attention now is the team’s progress to the Champions League final for the first time since 2013, having beaten more-favoured (by the bookmakers) and higher-funded teams along the way. Despite being less successful than usual in the Bundesliga, the club will take part in the Champions League next season as well as the revamped FIFA Club World Cup in the summer of 2025, which are all helpful in increasing the club’s global exposure and appeal.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Consumer

Borussia Dortmund

London calling

Q324 results

Travel and leisure

21 May 2024

Price

€4.13

Market cap

€456m

Net debt (€m) at 31 March 2024

56.8

Shares in issue

110.4m

Free float

67.2%
(includes 4.7% holding of founding football club)

Code

BVB

Primary exchange

Frankfurt

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

9.4

14.9

(7.1)

Rel (local)

3.4

4.5

(19.4)

52-week high/low

€5.88

€3.33

Business description

The group operates Borussia Dortmund, a leading football club, placed second in the Bundesliga in 2022/23, DFB Super Cup winners in 2019/20 and DFB-Pokal winners in 2020/21. The club has qualified for the Champions League in 13 of the last 14 seasons.

Next events

FY24 results

27 September 2024

Analysts

Russell Pointon

+44 (0)20 3077 5700

Richard Finch

+44 (0)20 3077 5700

Borussia Dortmund is a research client of Edison Investment Research Limited

Borussia Dortmund’s Q324 results demonstrated some phasing but it has made good progress year-to-date. The focus of attention now is the team’s progress to the Champions League final for the first time since 2013, having beaten more-favoured (by the bookmakers) and higher-funded teams along the way. Despite being less successful than usual in the Bundesliga, the club will take part in the Champions League next season as well as the revamped FIFA Club World Cup in the summer of 2025, which are all helpful in increasing the club’s global exposure and appeal.

Year end

Revenue (€m)

EBITDA (€m

PBT*
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA (x)

P/E
(x)

Yield
(%)

06/22

351.6

83.8

66.3

0.61

0.00

5.7

6.7

N/A

06/23

418.2

123.2

104.1

0.63

0.00

3.8

6.5

N/A

06/24e

482.2

137.7

127.5

0.78

0.06

3.4

5.3

1.5

06/25e

456.8

121.3

111.5

0.68

0.06

3.9

6.1

1.5

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Fewer games in Q324

Borussia Dortmund’s Q324 revenue fell by c 3% y-o-y to €98.2m and EBITDA moved to a loss of €1.8m from a positive €8.1m in the comparative period. The main reason for the decline was one less home game played versus Q323, which naturally affects all match-day related revenues such as ticket sales and catering. Outside of these revenue streams there were good increases in Advertising (+4%) and TV Marketing (+8%), the latter boosted by the team’s relative success in the Champions League (see below). For the cumulative nine months (9M24), revenue and EBITDA increased by 10% to €354.7m and by c 9% to €119.8m, respectively, helped primarily by more home games (18) than in 9M23 (16) as well as the progress in the Champions League.

Reached Champions League final, another upgrade

Ahead of the Q324 results announcement, the first team qualified for the Champions League final versus Real Madrid CF to be played on 1 June 2024. The final will be played in London. This brought a further upgrade to management’s guidance for FY24 following upgrades in March 2024 and April 2024 as the team has progressed through the competition. The new net income guidance of €40–50m is €7m higher than the prior €33–43m, and significantly higher than €1525m from the start of the financial year. We have upgraded our FY24 estimate by a similar amount and believe success in the final would not have a significant positive effect on profit for the year. We have yet to include any financial benefit from the first team playing in the FIFA Club World Cup in our FY25 estimates.

Valuation: Significant discount to peers

Our asset-backed sum-of-the-parts valuation is unchanged at €10.4 per share adjusting for the Q324 results and changes in the valuations of the peer group and squad valuations (source: Transfermarkt.com). The prospective EV/sales multiple of 1.0x for FY24 remains at a significant discount to its main quoted European football peers, which trade in a range of 2.8–4.0x.

Exhibit 1: Financial summary

€m

2022

2023

2024e

2025e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

351.6

418.2

482.2

456.8

Cost of Sales

(22.6)

(24.1)

(24.3)

(25.1)

Gross Profit

329.0

394.1

458.0

431.6

EBITDA

 

 

83.8

123.2

137.7

121.3

Operating profit (before amort. and excepts.)

 

70.5

110.3

124.1

107.3

Amortisation of acquired intangibles

(87.4)

(89.7)

(83.8)

(83.8)

Exceptionals

(9.1)

(3.6)

0.0

0.0

Reported operating profit

(26.0)

16.9

40.3

23.5

Net Interest

(4.2)

(6.1)

3.5

4.2

Joint ventures & associates (post tax)

0.1

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

66.3

104.1

127.5

111.5

Profit Before Tax (reported)

 

 

(30.2)

10.8

43.8

27.7

Reported tax

(1.7)

(1.2)

(3.0)

(3.0)

Profit After Tax (norm)

64.6

70.0

85.7

74.9

Profit After Tax (reported)

(31.9)

9.6

40.8

24.7

Minority interests

0.0

0.0

0.0

0.0

Net income (normalised)

64.6

70.0

85.7

74.9

Net income (reported)

(31.9)

9.6

40.8

24.7

Average Number of Shares Outstanding (m)

105.6

110.4

110.4

110.4

EPS - normalised (c)

 

 

61.2

63.4

77.6

67.9

EPS - normalised fully diluted (c)

 

 

61.2

63.4

77.6

67.9

EPS - basic reported (€)

 

 

(0.30)

0.09

0.37

0.22

Dividend (€)

0.00

0.00

0.06

0.06

Revenue growth (%)

5.2

18.9

15.3

(-5.3)

Gross Margin (%)

93.6

94.2

95.0

94.5

EBITDA Margin (%)

23.8

29.5

28.5

26.6

Normalised Operating Margin (%)

20.0

26.4

25.7

23.5

BALANCE SHEET

Fixed Assets

 

 

361.9

440.7

481.3

461.2

Intangible Assets

127.8

169.7

159.9

147.8

Tangible Assets

172.5

182.3

183.6

175.7

Investments & other

61.6

88.8

137.8

137.8

Current Assets

 

 

96.6

71.1

67.1

101.2

Stocks

4.4

5.4

5.4

5.4

Debtors

45.8

38.2

38.6

39.0

Cash & cash equivalents

10.6

4.5

0.1

33.8

Other

35.7

22.9

22.9

22.9

Current Liabilities

 

 

(137.3)

(161.0)

(161.9)

(169.4)

Creditors

(132.6)

(144.5)

(145.3)

(146.2)

Tax and social security

(0.0)

(1.1)

(1.1)

(1.1)

Short term borrowings

0.0

(12.8)

(12.8)

(12.8)

Finance leases

(4.6)

(2.6)

(2.6)

(2.6)

Other

0.0

0.0

0.0

(6.6)

Long Term Liabilities

 

 

(48.0)

(68.1)

(63.1)

(58.1)

Long term borrowings

0.0

(8.8)

(8.8)

(8.8)

Finance leases

(12.5)

(10.4)

(5.4)

(0.4)

Other long term liabilities

(35.5)

(48.9)

(48.9)

(48.9)

Net Assets

 

 

273.2

282.7

323.5

334.9

Minority interests

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

273.2

282.7

323.5

334.9

CASH FLOW

Operating Cash Flow

79.6

117.1

141.2

125.5

Working capital

12.7

8.9

0.5

0.5

Exceptional & other

(56.9)

(70.5)

(85.5)

(76.7)

Tax

0.0

0.0

(3.0)

(3.0)

Net operating cash flow

 

 

35.4

55.5

53.2

46.3

Capex

(1.7)

(21.4)

(15.0)

(6.0)

Net investment in intangibles

(49.4)

(55.3)

(41.0)

0.8

Acquisitions/disposals

0.0

0.0

0.0

0.0

Net interest

(0.3)

(1.1)

3.5

4.2

Equity financing

86.5

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

(6.6)

Other

(61.6)

16.3

(5.0)

(5.0)

Net Cash Flow

8.8

(6.1)

(4.4)

33.7

Opening net debt/(cash)

 

 

76.2

6.6

30.1

34.4

Other non-cash movements

60.8

(17.4)

0.0

0.0

Closing net debt/(cash)

 

 

6.6

30.1

34.4

0.8

Source: Borussia Dortmund accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Borussia Dortmund and prepared and issued by Edison, in consideration of a fee payable by Borussia Dortmund. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Borussia Dortmund and prepared and issued by Edison, in consideration of a fee payable by Borussia Dortmund. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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