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Borussia Dortmund’s progress to the semi-final of the Champions League brings a further upgrade to profit guidance for FY24. In addition to helping the financial results of the current year, the relative success of German teams against those of other nations in European competitions this season may ensure the club qualifies for the Champions League next season despite currently being outside the top four of the Bundesliga.
Borussia Dortmund GmbH & Co. KGaA
By winning Tuesday night's match against Atletico Madrid, Borussia Dortmund has secured a spot in the UEFA Champions League semifinals for the first time since 2013. With this advancement, the club can now anticipate additional UEFA prize money payments of at least € 12.5m.
With the first win in Munich since ten years BVB extended the gap to 5th place to three points. Moreover, UEFA recently disclosed the detais regarding the prize money distribution for the upcoming UCL season.
Borussia Dortmund’s first team was successful in progressing through to quarter finals of the Champions League, which naturally leads to an upgrade in profit guidance for the year, as reaching the ‘round of 16’ was in prior guidance. This follows confirmation that the first team will compete in the revamped FIFA Club World Cup to be played in the summer of 2025, which is likely to be significant for financial results and very helpful in the long-term development of the brand and fanbase.
We hosted a digital roadshow with BVB CFO Thomas Treß, which underpinned our view that the club is set to benefit from several structural changes going forward. Especially the new UCL format and the CWC are seen to provide compelling upside opportunities.
Following RB Leipzig´s UEFA Champions League exit against Real Madrid last week Borussia Dortmund is now officially qualified for FIFA Club World Cup 2025, which is providing substantial upside to our estimates.
Borussia Dortmund’s Q224 results reflect the positive effects of a more normal football season versus the disruption from the FIFA World Cup in the comparative Q223 period. The reiterated financial guidance for FY24 looks well underpinned given the phasing of games and with the excitement of the final stages of the Champions League to come. The share price continues to look very attractive versus our slightly adjusted sum-of-the-parts valuation of €10.40/share and its own historical multiples.
Borussia Dortmund released Q2 prelims, which came in significantly ahead of our estimates. Moreover, the team has good chances to advance to the quarterfinals of the UCL after a 1-1- draw away at Eindhoven.
In fall 2025, Hans-Joachim Watzke will step down as CEO after being in charge for more than 20 years. While finding a suitable successor is seen to be a difficult task, it will be also important for the team to find its form on the pitch again to get back into the Top-4.
Borussia Dortmund is a leading football club with a strong track record of success in its domestic league, making it a relatively consistent competitor in Europe’s top club competitions. This success has been achieved with a level of player investment that should be the envy of its peers. The first team, backed by a full stadium of fans (thanks to lifted COVID-19 restrictions), came as close to winning the Bundesliga in the 2022/23 season as is possible without actually winning it. This first season without COVID-19 restrictions led to the expected full recovery in financial results to pre-COVID-19 levels. Despite the recovery in profitability, the share price continues to trade at a significant discount to pre-COVID-19 levels, its quoted peers and our asset-backed valuation of €10.63 per share, suggesting significant upside to the current share price.
BVB secured its participation in the UCL knock-out stage with a crucial away win against AC Milan, thus securing almost € 10m in additional premium payments coming at a de facto 100% margin.
Since its formation in 1909, Borussia Dortmund has become one of Germany’s most successful football clubs and one of the most valuable global football clubs and brands. The corporate strategy has been to establish itself as the leading German football club after Bayern Munich, and to make its financial success less dependent on short-term sporting success by increasing the domestic and international marketing of the brand name to grow revenue. Over the long term, Borussia Dortmund has a proven and enviable track record of prudent investment in talent. Its investible free float is c 67%
BVB published a solid set of Q1 prelims, showing slightly lower sales follwing the belated start to the season as well as highly improved profitability thanks to the transfer of Jude Bellingham.
Borussia Dortmund’s headline (income statement) results for FY23 were ahead of management’s previous guidance and our estimates. The company enjoyed a year of recovery following the disruption of COVID-19 in the prior year and the first team enjoyed better sporting success than the previous season, although it fell agonisingly short of winning the Bundesliga. We will update our underlying FY24 estimates when the full financial statements are published at the end of September 2023 but, in the interim, we include part of the disclosed transfer profit on the recent sale of Jude Bellingham.
Borussia Dortmund’s Q323 results demonstrate the ongoing recovery of its financial results against a COVID-affected comparative period, with year-on-year growth from all its revenue streams and higher profitability. With two games to play, the Bundesliga is finely balanced. Our asset-backed sum-of the-parts valuation increases to €12/share from €11.3/share, highlighting the attractiveness of the current share price.
Borussia Dortmund’s Q223 results reflect the negative effects of the first time staging of the FIFA World Cup during the football season, offset by underlying improvements due to the absence of COVID-19-related restrictions. The company’s financial results are more dependent on H2 than in a typical year due to the changes in scheduling. However, the first team appears well placed in the Bundesliga and has made good progress in the Union of European Football Associations (UEFA) Champions League. Management has reiterated its FY23 guidance. The share price continues to look well supported by our asset backed sum-of-the-parts valuation, which has increased to €11.3/share (€10.5/share previously).
Borussia Dortmund’s Q123 results demonstrated the expected recovery in its more variable revenue streams as the club welcomed the return of more fans to the stadium versus the COVID-19-affected Q122. The return to normality was also reflected in a relatively busy transfer window in the summer with five player additions and three sales, involving a transfer fee. The team’s performance on the pitch is consistent with our existing financial estimates, therefore we make no changes to our forecasts. Our asset-backed sum-of the-parts valuation is unchanged at €10.50 per share.
Borussia Dortmund is one of the most successful football clubs in Europe. It has a consistent record of success in its domestic league, which enables it to participate regularly in the financially lucrative European competitions. It is well positioned to benefit from structural growth drivers of growing global interest in football, which should enable it to continue growing its multiple revenue streams domestically and in international markets. After a relatively disappointing sporting performance and some unexpected disruption due to COVID-19 in FY22, management expects a strong financial recovery in FY23. Continued profit momentum with relatively good visibility on a number of revenue streams, unlike many other consumer-facing business, is attractive given Borussia Dortmund’s valuation multiples are low relative to its own history. It continues to look well supported by our asset-backed valuation of €10.50 per share.
Borussia Dortmund’s football season finished on 14 May 2022 with another (comfortable) second place in the Bundesliga confirming qualification for the Champions League in the 2022/23 season. Management’s reiterated guidance for FY22, a net loss of €17–24m, represents a robust performance given the restrictions on fan attendance for the majority of the year and a less successful season in European competitions than is typical. The company is well-placed to deliver an improved financial performance in FY22/23 if further COVID-19 related restrictions can be avoided. Our valuation of €9.8/share suggests significant upside in a normalised operating environment.
Borussia Dortmund’s Q222 results were affected by the imposition of new COVID-related restrictions towards the end of the period. Following the period end, the team was eliminated from the Europa League, having failed to qualify for the Champions League knockout stages before Christmas. Against this backdrop, the small downgrade in management guidance for FY22 profitability is testimony to the tight management of costs. The team is currently (comfortably) placed second in the Bundesliga so all will be looking forward to a more successful and profitable FY23. Our sum-of-the-parts valuation reduces to €11 per share.
Borussia Dortmund has an established track record as one of the most successful football clubs in Europe. This enables it to exploit structural tailwinds, increasing global and multi-media coverage, to drive long-term revenue growth. FY21 was a challenging year financially due to the negative effects of COVID-19 related restrictions, but the team was relatively successful including winning major silverware and guaranteed participation in the financially lucrative Champions League in FY22. The phased return of fans to the stadium through FY22 should lead to better financial results. The share price weakness has led to it trading at recent low multiples and well below our sum-of-the-parts valuation of €11.56/share.
Borussia Dortmund’s FY21 preliminary results are slightly above management’s expectations at the EBITDA level and testimony to how well the cost base has been managed given the on-off expectations through the season about the return of fans to the stadium. The challenging year has led to an increase in the company’s net debt position, unusual for a club that is conservatively run from a financial perspective, but recent transfer activity and higher match attendance should lead to an improved financial position through FY22. Our FY22 forecasts are unchanged ahead of the publication of the full financial statements on 28 September 2021.
Borussia Dortmund’s Q321 results reflected ongoing cost control, while COVID continued to affect attendance-related revenues. The team’s late surge to finish third in the Bundesliga, and more silverware by winning the DFB-Pokal ensured a pleasing end to a challenging year. We increase our FY22 EBITDA forecast by 33% to reflect a more positive outlook for attendance at matches given the roll-out of COVID vaccines. There will be much speculation about the futures of a number of key players during the summer transfer window, but the improving financial outlook means the company can remain firm on player valuations, with a number of open managerial roles at the major European teams following ‘poor’ seasons.
Borussia Dortmund’s Q221 trading update showed higher profitability year-on-year due to active cost control despite lower revenue in aggregate as a result of COVID-19, and noting that the majority of revenue sources increased. Our recent Outlook note highlighted the attractive financial characteristics of Borussia Dortmund’s business, in isolation and versus its peers, in ‘normal’ times. Therefore, the company should be a prime beneficiary of life returning to normal, with improving momentum in revenue and profitability, subject to sporting results. Our asset-based valuation indicates upside of 144% from the current share price to €12.55.
Borussia Dortmund’s Q121 results were affected, as expected, by the delayed start to the 2020/21 season, and the severe restrictions on fan attendance at games as experienced towards the end of the prior season. The recent decision by federal and state governments to further restrict attendance at games, in response to the resurgence of COVID-19 in November, highlights the uncertain operating environment for the club. We currently retain our prior forecasts but our SOTP valuation reduces by 8% to €11.96/share.
The 2019/20 season was typically successful from a sporting perspective, which reaffirmed Borussia Dortmund’s position as one of the leading football teams in Germany and Europe. The coming year is likely to be more challenging financially due to the operating restrictions necessitated by COVID-19, but the company is well placed to deliver a strong recovery in earnings if restrictions ease, albeit visibility on these is limited. The valuation reflects the uncertain outlook as it is trading at a significant discount to our sum-of the-parts valuation, broadly in line with historic sales multiples, and at a discount to its peers.
The 2019/20 season was typically successful from a sporting perspective, which reaffirmed Borussia Dortmund’s position as one of the leading football teams in Germany and Europe. The coming year is likely to be more challenging financially due to the operating restrictions necessitated by COVID-19, but the company is well-placed to deliver a strong recovery in earnings if restrictions ease, albeit visibility on these is limited. The valuation reflects the uncertain outlook as it is trading at a significant (166%) discount to our sum-of the-parts valuation, broadly in-line with historic sales multiples, and at a discount to its peers.
Borussia Dortmund’s Q320 results were positive from a profit and cash flow perspective despite the impact of COVID-19 at the end of the period. The Bundesliga has led the way in recommencing games after the season was temporarily suspended, albeit games are to be played behind closed doors, which will lead to lost ticket revenue (among other revenues). Borussia Dortmund is well placed to qualify for the Champions League in the 2020/21 season if the current season can be completed. We downgrade our EBITDA forecast for FY20 by c 49%, to reflect lost revenue due to COVID-19 and lower net transfer income. The share price looks well supported by asset valuations.
Borussia Dortmund’s Q120 results exhibited typical volatility due to the key summer transfer window. Excluding the volatile transfer revenue, there was good growth with other revenue up c 15%. We maintain our forecasts but note there is a key Champions League game in less than two weeks and results in the Bundesliga must improve to ensure qualification for the competition next season. The shares continue to look well supported by its player assets and the FY20e EV/EBITDA multiple of 5.8x.
Borussia Dortmund (BVB) enters the international break with mixed results. A decent season start, notably Supercup triumph vs Bayern and top of its strong Champions League group, could have been so much better but for difficulty closing out games, epitomised by four recent draws despite winning positions. This may cost Dortmund in a more competitive Bundesliga than of late (leading eight teams separated by just four points). We are nonetheless raising our current-year EBITDA forecast from €110m to €128m both to reflect change of accounting policy (€10.7m boost in FY18) and sustained buoyancy (€21m post-transfer revenue upgrade). Progress is subject as ever to surprise from Dortmund’s ability to generate substantial hidden reserves from transfers (we make no allowance for possible Sancho sale).
Pushing champions Bayern Munich to the wire can only have enhanced Borussia Dortmund’s (BVB) fabled ‘Echte Liebe’ brand. Three prominent player signings immediately post-season mark its resolve to improve even on a campaign that clearly exceeded expectations with a new head coach and a developing squad. That player spend (estimated at c €75m) is almost covered by the proceeds from January's bumper transfer of Pulisic, while a new independent squad valuation, highlighting Jadon Sancho (19) as the most valuable Bundesliga player (€100m), confirms BVB's substantial hidden reserves (broadly, c €300m, according to www.transfermarkt.de). We are broadly maintaining forecasts for this year and next with renewed confidence.
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.
Bundesliga leaders and unbeaten in their last 13 matches in all competitions, Borussia Dortmund could not have wished for a stronger start under new head coach, Lucien Favre. Indeed, an impressive win over Atlético Madrid already all but assures qualification for the knockout stages of the Champions League, which is in marked contrast to last season's disappointment. We are therefore confidently maintaining our current-year forecast of robust pre-transfer revenue growth (c 12%), driven by international TV marketing, even if the bumper transfers of Dembélé and Aubameyang make FY18 a hard act to follow. Progress may be more measured in FY20 but subject as ever to surprise from Dortmund’s ability to generate substantial hidden reserves from player transfers.
While uncertainty about a head coach and Champions League qualification has been satisfactorily resolved, there is no denying the challenge for Borussia Dortmund (BVB) in making a fresh start after its most difficult season since near-bankruptcy. Without pre-empting new coach Favre, who takes over in July, radical change in the squad make-up and size has already been indicated by management. Likely enhanced transfer activity should therefore support our FY19 EBITDA forecast despite lower pre-transfer income expectations (still up 11%) on greater clarity of Champions League payout. However, for the current year no such transfer offset is assumed (admittedly cautious), hence our 13% EBITDA downgrade.
While longstanding brand and financial strengths hold true, Borussia Dortmund (BVB) is currently bedevilled by uncertainties. Some, such as the absence of a permanent coach and Champions League qualification, may be temporary. Potentially more challenging is the conflict between sporting and financial aims, given an apparent increased reliance on transfer gains (investor concern at the sale of exceptional goal-scorer Aubameyang is telling). However, there is undeniable reassurance in the scale of the surplus of market value to net player assets (broadly, c €240m per www.transfermarkt.de), further lively transfer inflation and BVB’s prized development record. Moreover, finances remain resolutely robust.
While arguably riding its luck of late, Borussia Dortmund (BVB) is well-placed to exploit immediate Bundesliga and Europa League opportunities. However, there is minimal room for error in terms of prized Champions League qualification, the driver of our forecast improvement in FY19 operational profit (in Bundesliga just four points separate the second place from sixth and BVB is ranked only fourth since the winter break). To its credit, BVB’s Q2 financial performance was much more assured than on the field, with steady revenue and slightly lower EBITDA without the buttress of transfers. The rise in our current-year forecast is due wholly to January transfers (notably Aubameyang), further proof of Dortmund’s ability to generate substantial hidden reserves.
Immediate back-to-back Bundesliga wins under new coach Peter Stöger is at least a welcome change of fortune for beleaguered Dortmund. Now the winter break allows for renewed stability and the return of key players. The team remains very much in the mix for UEFA competition next season, while a deep run in the current Europa League may significantly make up for a premature Champions League exit, as evident in our newly-introduced minor downgrades. Recent Q1 results show the success of Dortmund’s transfer policy, which is generating substantial hidden reserves in player values. Quarterly EBITDA of €81.4m, driven by the remarkable sale of Dembélé to Barcelona, provides ample scope for reinvestment and alone all but guarantees a record outturn this year.
Borussia Dortmund enters the international break in good heart as wire-to-wire leaders of the Bundesliga after a record start to the season (19 points after seven games). It is early days but confirmation of a favourable reaction to new coach Peter Bosz and key player signings even if found wanting at the highest level in recent Champions League. A positive annual report and the remarkable sale of Dembélé to Barcelona further prompt us to raise substantially our current-year forecast. For FY19 we are confident that Dortmund’s conspicuously successful development record and transfer policy as well as initial benefits from Champions League reform should generate another strong outturn, even if Dembélé makes FY18 a hard act to follow.
Although in transition after high-profile player departures, Borussia Dortmund (BVB) continues to compete well on all fronts. Its financial performance is similarly spirited with a near doubling in H1 pre-transfer EBITDA, driven by the Champions League. However, costs remain an issue, so we are maintaining our full-year pre-transfer EBITDA forecast despite better than expected progress in Europe. Apart from a new deal on Bundesliga media rights, FY18 should benefit from a significantly lower player cost base, hence our €8m EBITDA upgrade and forecast bumper cash generation (over €100m net cash at June 2018), which provides ample scope for profitable investment and returns to shareholders.
A broadly positive start to the season both at home and in the Champions League confirms coach Tuchel’s successful record of squad development after high-profile departures. Renewed strength in depth and typically attractive style of play complement escalating scope for transfer gains. Despite inflationary wage pressure we still look for a doubling this year in pre-transfer EBITDA (our key metric), albeit from a reduced base (FY16 pre-transfer EBITDA was slightly below our expectations). A new lucrative deal on Bundesliga media rights drives FY18 growth prospects, assuming continued Champions League. Finances remain impressively disciplined.
While the simultaneous loss of key players Hummels, Mkhitaryan and Gündogan necessarily invites caution, coach Tuchel’s record of player development and the availability of significant funds for reinvestment make for exciting opportunity. Understandably, given squad rebuilding, financial implications are uncertain. However, assuming maintained positive sporting prospects and further c €40m player spend, we still look for a doubling in pre-transfer EBITDA (our key metric) in FY17, albeit from a reduced base in the face of inflationary wage pressure (we are lowering EBITDA forecasts by €6m for FY16 and by €13m for the year just started).
While maintained revenue in H116 was no mean feat without the Champions League, pre-transfer EBITDA (our key metric) was a casualty (-59%) of much higher than expected costs, driven by the team’s outstanding performance. With inflationary wage pressure unlikely to abate in the face of continued success, we are lowering our EBITDA forecasts by €10m and €12m for FY16 and FY17. However, we are encouraged that Dortmund’s current runaway second place in the Bundesliga, with just a quarter of the season to go, justifies confidence in a possible step change in returns in FY17, assuming Champions League qualification. We still look for a doubling in pre-transfer EBITDA, albeit from the newly reduced base, and strong cash generation for player investment. Finances remain typically disciplined.
A positive annual report and continued on-field success reinforce confidence in our current-year forecasts and a possible step-change in returns in FY17, assuming Champions League qualification. Indeed, forecasts we are now introducing for next year suggest a near-doubling in pre-transfer EBITDA (our key metric) and strong cash generation for player investment (we estimate €74m net cash at June 2017). An EV/EBITDA (pretransfer) of under 5x FY17e appears to ignore the long-term potential of such powerful brand development and valuable media rights.
As we expected, higher costs, driven by H2 on-field recovery, ensured that FY15 pre-transfer EBITDA increased only thanks to a Champions League revenue loss insurance claim (€11.8m). However, we continue to be encouraged by top-line buoyancy and the prospect of underlying profit resilience in FY16, despite no Champions League. Victory in all six competitive games this season shows a very favourable reaction to new coach Thomas Tuchel. We will fully review our forecasts on confirmation of Europa League group stage participation and release of the annual report.
Higher than expected costs, driven by H2 on-field recovery, suggest that our forecast of broadly maintained pre-transfer EBITDA in the year just ended may now be met only thanks to a Champions League revenue loss insurance claim (our estimate €10m), for which we had not previously accounted. However, we are encouraged by continuing top-line buoyancy and the prospect of underlying profit resilience in FY16 despite no Champions League. Initial reaction to new coach Thomas Tuchel seems very positive, eg key players Gündogan and Hummels deciding to stay.
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