, 40 tweets, 25 min read
Borussia Dortmund 2018/19 accounts cover their first season with Lucien Favre as manager when they finished second behind Bayern Munich in the Bundesliga and reached the Champions League last 16. Some thoughts in the following thread #BVB
#BVB profit before tax decreased €13m from €35m to €22m (profit after tax €17m), despite revenue rising €60m (19%) from €317m to €377m, as profit on player sales fell €49m from €126m to €77m and total expenses were up €26m, but net interest payable was €3m lower.
All #BVB revenue streams increased, though the largest growth by far was in broadcasting, up €45m (37%) to €167m. In addition, commercial rose €9m (6%) to €157m, match operations €2m (6%) to €45m and other operating income €4m to €8m.
As a technical aside, using #BVB definition, which includes €120m player sales, but excludes €8m other operating income, revenue dropped €46m (9%) from the previous year’s record €536m to €490m.
#BVB wages increased €18m (10%) from €187m to €205m, while other expenses rose €14m (11%) to €133m. On the other hand, player amortisation (including impairment) was down €8m (9%) to €80m, though depreciation was up €2m to €13m.
Although #BVB have reported solid profits, they are a long way below the leading English clubs: in 2017/18 the Premier League led the way with #THFC €157m, #LFC €141m, #AFC €79m and #CFC €76m. Dortmund were much lower with €35m, while #FCBayern were similar with €46m.
#BVB’s bottom line benefited from €77m profit on player sales (revenue €120m less expenses €43m), mainly Christian Pulisic to #CFC, Sokratis to #AFC and Yarmolenko to #WHUFC. This was €49m lower than 2017/18, which included Dembelé to Barcelona & Aubameyang to #AFC.
Although #BVB have been increasing profits from player sales, especially in 2017/18 when they generated €126m, they were still outpaced by other leading European clubs, most notably Barcelona, who earned a colossal €208m, largely from the sale of Neymar to #PSG.
#BVB have been consistently profitable with 2010 being the last time the club reported a (small) loss. In the 9 years since then, they have accumulated €227m profits, averaging €25m a season. The board expects to post another profit in 2019/20.
#BVB have become increasingly reliant on player sales with average annual profits rising from just €11m in 2010-15 to a hefty €78m in the last 4 years. Without these profits, Dortmund would have been loss-making, but their strategy of developing young players has paid off.
That said, #BVB EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as cash operating profit, increased from €12m to €39m, though it has fallen from €54m in 2015. Including player sales, this was €116m, down from prior season’s record €137m.
#BVB ongoing revenue has grown by €92m (around a third ) in the last 3 years from €285m to €377m, largely driven by broadcasting, which has more than doubled, growing by €84m from €83m to €167m. Commercial, for so long Dortmund’s strength, is only up €5m in this period.
In fact, for the first time, broadcasting is the most important revenue stream at #BVB with 44%, having overtaken commercial 42%. TV has more than doubled since 20% share in 2010, while commercial has fallen from 57%. Match operations has also declined from 22% to 12%.
The revenue gap between #BVB €317m and #FCBayern €629m of €312m was the highest it has ever been in 2017/18. Last season, Dormund’s revenue grew to €377m, but we are still waiting for Bayern’s detailed accounts (have announced €750m turnover, but this includes player sales).
#BVB were 12th in the Deloitte Money League, based on £317m 2017/18 revenue. Sporting Director Michael Zorc noted, “If you look at the big boys we’re up against, they each start the season roughly a quarter of a billion Euros ahead of us”, which, if anything, understates the gap.
#BVB commercial income increased by €9m (6%) to €157m. Conferencing/catering rose €5m (21%) to €31m, while advertising grew €3m (3%) to €97m and merchandising was slightly up to €30m. In 2018 Dortmund had 11th highest revenue in Europe, but more than €200m below Bayern.
#BVB have €20m Evonik shirt sponsorship to 2025 (4th highest in Germany), €15m Puma kit supplier to 2020 (in negotiations for €20-30m deal), €9m Opel sleeve sponsor to 2022 & €5.8m Signal Iduna stadium naming rights partner to 2026. That’s pretty good, but far below Bayern.
#BVB broadcasting income increased €45m (37%) to €167m, mainly due to Europe, up €36m (114%) to €68m, though Bundesliga TV money was also up €10m (12%) to €98m. This growth was very welcome, as Dortmund’s €122m the previous season was only 17th highest in the Money League.
The Bundesliga TV revenue is distributed using four criteria: the five-year league performance ranking (70%); the five-year ranking for both divisions (23%); the 20-year ranking for both divisions (5%); and the playing time of Germany U23s (2%).
As a result, Bayern Munich and #BVB received the most from the Bundesliga TV deal in 2017/18 with €98m and €88m respectively, followed by Schalke 04 €80m and Bayer Leverkusen €80m. RB Leipzig only earned €30m due to their relatively recent promotion to Bundesliga 1.
Bundesliga clubs including #BVB have benefited from the new 4-year TV deal from 2017/18, which shot up 85% over previous period. However, other leagues will see large growth this season, so Premier League and La Liga will extend the difference, while Ligue 1 will narrow the gap.
Assuming that TV pool was unchanged in 2017/18, #BVB earned around €64m for reaching Champions League last 16, which was €33m more than prior season (eliminated in CL group stage, then Europa League last 16). Other German clubs: Bayern €79m, Schalke €62m and Hoffenheim €26m.
Total Champions League revenue was up 54% in 2018/19 (higher TV rights). Also a new UEFA coefficient payment (based on performances over 10 years), where #BVB had the 13th highest ranking of clubs competing that season, guaranteeing them €22m. Bayern ranked 3rd (worth €33m).
#BVB have earned a healthy €195m from European competition in the last 5 years, only surpassed in Germany by Bayern €319m, but with a chunky €124m shortfall. However, a fair way above Schalke €118m, Leverkusen €109m, Mönchengladbach €64m, Wolfsburg €61m & RB Leipzig €50m.
#BVB match operations revenue rose €2m (6%) to €45m, even though they staged the same number of games, largely down to more income from US tours. In 2017/18 Dortmund had the 11th highest revenue in the Money League, which was pretty good, but still €47m lower than #FCBayern.
However, #BVB had the highest attendance in Germany of 80,841 (including 55,000 season tickets – capped to ensure adequate supply of tickets on match day), around 6,000 more than #FCBayern & 20,000 higher than Schalke. Strategy is to keep ticket prices low to maintain atmosphere.
#BVB wage bill rose €18m (10%) from €187m to €205m, as base salaries and performance-related bonuses both increased. Wages have grown by €87m (74%) since 2015 with wages to turnover ratio worsening from 42% to 54% (still very respectable).
Despite the growth over this period, the #BVB wage bill is still significantly lower than #FCBayern: in 2017/18 the difference was €116m (€187m vs. €303m). This represents a sizeable competitive disadvantage against their main domestic rivals.
This point is even more relevant in Europe, where #BVB had the 12th highest wage bill of the Money League clubs in 2017/18. Their €187m was €300m lower than Barcelona’s incredible €487m and €200m below Real Madrid’s €395m.
However, that season’s 59% wages to turnover ratio for #BVB was one of the highest of the Money League clubs, significantly worse than #FCBayern’s 48%, though much better than Barcelona and Atletico Madrid 70%. Worth noting the improvement to 54% in 2018/19.
The other #BVB staff cost, player amortisation, has shot up from only €8m in 2012 to €66m in 2019, reflecting investment in the playing squad. The 2019 results also included €14m player impairment (write-downs of certain player values). For context Bayern was €69m in 2018.
Over the last 4 years, #BVB have had average annual net transfer sales of €28m, compared to net spend of €6m in 2010-16. However, gross spend has actually increased in this period from €30m to €112m, so the decrease is entirely due to sales surging from €24m to €140m.
As a result, #BVB have the highest net sales (€111m) in the Bundesliga over the last 4 seasons. In the same period, RB Leipzig and Bayern Munich have both had net spend over €100m with €146m & €117m respectively. 2019/20 sales include Diallo to PSG & Philipp to Dynamo Moscow.
However, it’s a very different story in gross spend for the last 4 seasons with #BVB €449m being over €100m more than Bayern Munich €340m, followed by RB Leipzig €263m, Wolfsburg €224m & Leverkusen €206m. 2018/19 purchases included Hummels, Schulz, Hazard, Brandt & Alcacer.
#BVB have done incredibly well to eliminate all financial debt with the exception of €12m finance leases, while increasing cash balances to €56m. In 2006 gross debt was as high as €196m, but Dortmund now have net funds of €44m.
#BVB had to commit as much as 9.1% (€10.5m) of its revenue to interest payable in 2008, but this has now been slashed to just 0.4% (€1.7m) in 2019, mainly for expenses from finance leases.
The low amount of interest payable has really helped #BVB in the turnaround from their former financial problems. To place this into perspective, five leading clubs had net interest above €20m in 2017/18: Inter €35m, Atleti €25m, Roma €25m, #THFC €21m and #MUFC £20m.
In 2019 #BVB generated €149m from operations (including player sales, now considered to be core business), spending €129m on players and €10m on capex. Also spent €3m on lease repayments, €1m interest, €6m dividends & €3m tax, leading to €4m decrease in cash balance.
In last 5years #BVB have had €666m available cash: €525m operations plus €141m share issue. Most spent on players €465m with €45m on capex and €11m tax. Around €108m went on financing: €63m debt repayments, €29m dividends & €16m interest payments. Cash balance up €38m.
#BVB expects “financial performance to remain strong in the future”. However, as Michael Zorc noted, they need a different approach to the elite clubs. This means that investment into young talent like Jaden Sancho will continue, leading to benefits on and (later) off the pitch.
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