A broadly positive start to the season both at home and in the Champions League confirms Borussia Dortmund GmbH & Co KGaA (F:BVB) 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.
Q4: Success at a price
Dortmund ended the year well with Q4 pre-transfer revenue up 13% on the back of Europa League involvement, Champions League qualification and a return to the German Cup Final. However, also as expected, costs were again an issue, hence pre-transfer EBITDA reduced to €1m from €4m in Q415, as adjusted for a ‘negative outcome’ insurance claim. This is attributed to pressures associated with key player retention and variable expenses, eg player bonuses, advertising agency commissions and match operations. For the full year, advertising was especially buoyant (+12%) thanks to on-field success and a growing presence in Asia.
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