UNSURPRISINGLY, the coronavirus pandemic has hit some of Europe’s top clubs where it really hurts. Borussia Dortmund, one of the first to reveal their 2019-20 financials, made a € 44 million loss, largely due to reduced matchday income, lower levels of profitability around transfers and higher wages.
BVB, whose share price has fallen by more than 40% in 2020, generated revenues of € 370.2 million, only marginally down on 2018-19, largely due to higher levels of merchandising. However, it has to be remembered that up until September 30, BVB’s third quarter, income had totalled over € 315 million. In the final quarter, BVB saw sales drop by 25% and the true cost of the pandemic will be revealed in more detailed figures for the full year. BVB’s early year revenue generation and their robust business model, a decade of profitability, has softened the blow to some extent.
BVB has a new kit deal with Puma that runs until 2028 but their principal sponsor, chemicals company Evonik, has reduced its stake in the club to below 10%. At the same time, the club has split shirt sponsorship between Evonik and the telecoms sector’s 1&1.
The preliminary data shows matchday revenues dropped from € 44.7 million to € 32.5 million, a reflection of games being played behind closed doors since Europe went into lockdown. In two seasons, BVB’s matchday earnings have fallen by some € 25 million. Before the virus struck, the club continued to have the highest match attendances in world football (81,171 average pre-lockdown) and were admired for their realistic ticketing policy. But with such high attendances, playing just 12 games in front of full houses at the Signal Iduna Park was undoubtedly detrimental.
Broadcasting monies for the entire year were slightly up to € 169.8 million and commercial activity rose to € 167.9 million. Again, more granularity will show how the last quarter (April-June) affected performance.
The big loss doesn’t bode well for the rest of the Bundesliga, but was attributable to a number of influences. As well as the lower matchday revenues, BVB’s profit on transfers was only € 40.2 million versus € 82.9 million in 2018-19 and depreciation and amortisation increased by € 13.6 million to € 106.1 million. Wages also increased by more than € 10 million to € 215.2 million. The wage-to-income ratio was 58%, four percentage points higher than the previous season. BVB’s players are on reduced wages until, the earlier of, the end of the year or when crowds are allowed to return. Although Dortmund finished runners-up in the Bundesliga, their wage bill was around 60% of the total paid by Bayern Munich, the treble champions.
BVB were very active in the transfer market in 2019-20, making five major signings at a cost of € 126.5 million, but recouping € 117 million in sales. The 2019-20 results suggest Dortmund might be pressured into selling their main assets, such as England international Jadon Sancho, but the club’s Chief Executive Officer, Hans-Joachim Watzke, insists that is not the case and that the past 10 years have been good, “both athletically and economically” thanks to the club’s conservative approach. “We have succeeded in generating such a high level of assets that we can withstand this pandemic for a very long time,” said Watzke.
Dortmund have already entered the market to enhance their existing squad for 2020-21, signing promising 17 year-old midfielder Jude Bellingham from Birmingham. Manchester United have been keen to sign Sancho but terms have not been agreed for both the transfer fee (€ 100 million) and player’s wages.
Another player that made headlines in 2019-20 was Erling Braut Håland, signed from Red Bull Salzburg for € 20 million in January 2020 and now valued at around € 90 million after scoring 13 goals in 15 Bundesliga games.
Dortmund will have fared better than many of their Bundesliga stable-mates, but it is likely the pandemic will merely strengthen Bayern Munich’s stranglehold on German football, leaving BVB at the forefront of the chasing pack.
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