While longstanding brand and financial strengths hold true, Borussia Dortmund (SIX: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 http://www.transfermarkt.de), further lively transfer inflation and BVB’s prized development record. Moreover, finances remain resolutely robust.
Renowned player investment continues to pay off
The remarkable sale of Dembélé to Barcelona, followed by that of Aubameyang, all but comfortably guarantees a record EBITDA this year. This is welcome, given relative sporting disappointment, epitomised by premature exit from the Champions League and a likely near-halving in contribution to broadcasting revenue. Indeed we see creditable growth (maybe double-digit) in other pre-transfer income thanks to advertising and a new deal on domestic TV marketing, only for this to be offset by persistent high costs, notably labour. While this year is a hard act to follow owing to bumper transfers, we look for a clear rise in FY19 operational profit, assuming qualification for Champions League (BVB in the mix but minimal room for error) and more generous distribution from its new format. The markedly lower expected transfer gain for FY19 reflects the average of recent years excluding exceptionals.
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