16 Mar 17
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.
05 Oct 16
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.
15 Jul 16
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).
The price of success
11 Mar 16
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.
Coming into range
22 Oct 15
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.
27 Aug 15
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.
15 Jul 15
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.