Borussia Dortmund — Taking on the world

Borussia Dortmund has been one of the most successful German football clubs for decades, which has typically enabled it to compete in the financially lucrative European club competitions. The 2023/24 season was significant for the first team, as it reached the final of the Champions League.

Football clubs benefit from structural growth drivers including: increasing global interest in football, which is already the largest and most popular sport in the world; sports media is the most premium content for broadcasters; and corporate sponsors like to be associated with success and gain access to the resulting growing global audiences.

The corporate strategy has been to make Borussia Dortmund’s financial success less dependent on short-term sporting success by increasing the domestic and international marketing of the brand. Coupled with this, its financial prudence means the team’s sporting success must be sustainable (ie without taking on new debt).

The relatively consistent on-the-pitch success, achieved at a favourable cost versus rival clubs, has enabled the company to generate long-term revenue growth, a CAGR of c 11% from FY05 to FY24, from multiple revenue sources, while increasing the relative predictability of those revenues. As a result, the company has a long-established track record of generating a profit and free cash generation. This likely contrasts with the perception that football clubs are not well run from a financial perspective, albeit its free cash generation can be relatively variable depending on the level of investment in and sales of the playing squad, and the multi-year payment cycles.

We value Borussia Dortmund using an asset-backed SOTP approach, which separately values the playing squads, the club’s brand (last quoted valuation adjusted to reflect estimated market movements) and other assets (at net book value). Our valuation of €11.75 per share is at a premium of c 261% to the current share price. The undervaluation is apparent when we compare the current share price of €3.26 with our adjusted estimate of the playing squad’s valuation of €3.47 (see Exhibit 23). Using more traditional valuation methods, the prospective FY25 EV/sales multiple of 0.8x is at a significant discount to the long-run average of 1.6x, and in line with the all-time low multiple, suggesting strong upside potential.

The key near-term sensitivities are those that can affect the more variable revenue streams:

Borussia Dortmund was formed as Ballspielverein Borussia e.V. Dortmund (Borussia club for ball games) in 1909, hence the BVB 09 logo. ‘Borussia’ was taken from the brewery name BorussiaBrauerei, today known as Dortmunder Actien Brauerei. Since its formation in 1909, it has become one of Germany’s most successful and one of the most valuable global football clubs and brands. The company was listed in October 2000, becoming the first publicly traded football club on the Frankfurt Stock Exchange. It remains one of the few quoted European football clubs. The free float of the company is 61.8% and Ballspielverein Borussia 09 e.V. Dortmund owns a 5.4% stake. The company has a relatively complex corporate structure.

Domestically, the men’s team has won eight national championships (known as the Bundesliga since 1964), five DFB-Pokals (the German knockout cup competition) and six DFL-Supercups (played towards the start of a new football season between the winners of the Bundesliga and the DFB-Pokal from the prior season).

Borussia Dortmund’s finishing position in the Bundesliga has been relatively consistent, qualifying to play for the financially lucrative UEFA Champions League in the following season in 13 of the 14 last seasons. In Exhibit 2 we show Borussia Dortmund’s finishing position (quoted) in the Bundesliga in every season since FY01 (when the company was listed), compared to the 18 competing teams, as well as that of its main competitor, Bayern Munich. Typically, the top four teams in the Bundesliga qualify for the Champions League. BVB’s fifth place in the 2023/24 season was still good enough to play in the current season’s Champions League as the Bundesliga was awarded an extra place given its relative success versus other nations in the 2023/24 season. We also show the lowest finishing position required to compete in the UEFA Champions League or the UEFA Europa Cup, previously known as UEFA Cup, in the following season.

Borussia Dortmund’s relatively consistent long-term success is demonstrated below with cumulative statistics for the top 10 teams in the Bundesliga since FY01 (Exhibit 3). Of the 39 teams to have competed in the Bundesliga since 2001, Borussia Dortmund ranks as the second most successful in terms of points won, games won, games lost and goals scored. Naturally, there is a survivorship bias given the worst-performing teams are relegated every season and the long-term record omits the rise of new challengers. Borussia Dortmund is one of only six teams in the 39 that competed in Bundesliga 1 over that time to feature in every season.

Internationally, Borussia Dortmund became the first German team to win a European competition, the European Cup Winners’ Cup in 1966, and won UEFA’s most important and financially lucrative competition, the Champions League, in 1997. In the same season, it won the Intercontinental Cup, today known as the FIFA Club World Cup, played between the champions of the UEFA Champions League and the South American equivalent, Copa Libertadores.

Borussia Dortmund’s corporate objective is to defend its position in the top flight of the Bundesliga, to be achieved with a five-pronged business strategy.

Supporting the strategy is the fact that the team is one of the most successful and well-known German football clubs, with one of the highest average number of spectators in Europe.

In the following interview, Borussia Dortmund’s CFO, Thomas Treß, discusses the positioning of the team in the football landscape and the company’s attitude to debt.

Borussia Dortmund reports revenue from five sources: match operations (ticket receipts for attendance at games), advertising (sponsorship and advertising from companies), TV marketing (broadcast rights), merchandising, and conference, catering and miscellaneous.

In Exhibits 5 and 6 below we show how the revenue sources have evolved since FY05, when IFRS was adopted. We have combined merchandising and conference, catering and miscellaneous revenues into ‘Other’ as there was a minor change to revenue disclosure between FY14 and FY15.

Borussia Dortmund has generated strong revenue growth over the long term, from €75m in FY05 to €509m in FY24, a CAGR of c 11% per year, significantly ahead of German GDP growth. COVID-19-related restrictions hampered revenue growth but, by the end of FY23, revenue had recovered to more than pre-pandemic levels (ie FY19 levels), albeit this comparison is influenced by relative success in the various competitions in which the team competes.

Management’s success in better national and international exploitation of the brand is demonstrated by a revenue decline in only two years between FY05 and before the COVID-19 pandemic (FY09 and FY18), which followed seasons when the team achieved greater success than in a typical year.

Before a change in accounting standards in FY20, Borussia Dortmund included gross revenue from transfer deals in total group revenue. Revenue including transfer proceeds is now called ‘total operating proceeds’.

TV marketing is revenue earned from the broadcasting rights of the games played by the team. It has grown at a CAGR of c 15% since FY05 due to long-term inflation in media rights from increased demand for premium content by competing media platforms and the team’s improved and more consistent on-pitch success. It has become the company’s most important revenue source, overtaking advertising in FY12.

There is a high degree of visibility in the near and medium term for the domestic (ie Bundesliga) rights, which is typically the largest source of TV marketing revenue, whereas international TV and domestic cup are more dependent on the team’s success on the pitch and progression through the rounds of these competitions. In FY24, domestic TV represented just over 41% of TV marketing and 17% of total company revenue, as international TV revenue benefited from the club reaching the final of the Champions League.

Marketing of media rights is conducted centrally by the organisers of the respective competitions (the Bundesliga and UEFA) and is therefore outside Borussia Dortmund’s control. However, the system of revenue distribution to clubs is defined well in advance, providing a high level of visibility.

The current Bundesliga broadcasting rights for the four seasons 2021/22 to 2024/25 were sold for €4.4bn, a reduction of c €240m or c 5% from the prior contract. The lower proceeds for the current cycle reflected the timing of the auction, which was resolved in December 2020 during the height of economic uncertainty and COVID-19 lockdowns. The reduction included a more significant decline in revenue from international markets than German-speaking markets. The prior Bundesliga contract for the four seasons 2017/18 to 2020/21 was worth €4.64bn or €1.16bn per season, an increase of c 85% on the prior contract for the four seasons 2013/14 to 2016/17 of €2.5bn in total or €625m per season.

In November 2024, it was announced that the rights for the 2025/26 to 2028/29 seasons would total €4.484bn, a satisfying increase of 2% versus the prior contract when the value went down.

Management believes there is significant opportunity to further develop Bundesliga rights in the long term, as evidenced by the relative scale of the media rights of the major European leagues and the percentage of those rights that are generated from international markets.

Media inflation requires ongoing competitive tensions between existing and potential new broadcasters, which may be affected by the external macroeconomic environment and shifts in strategy on the allocation of spend across different forms of entertainment and sports.

To determine the relative attractiveness of the Bundesliga rights for international viewers, below we attempt to demonstrate how ‘exciting’ the main European leagues are by quantifying the dominance of the top teams in the last 11 seasons. While the dominance of Bayern Munich in Germany, winning 10 of the last 11 titles, is unhelpful in sustaining interest in the Bundesliga, we can see that competition below first place is healthy compared to other leagues based on the number of clubs that have gained UEFA Champions League positions and the average points gap between those clubs and the next bestplaced team.

UEFA is responsible for the centralised marketing of all media and commercial rights for all European club competitions, and subsequent distributions to competing clubs. The rights are typically sold in three-year cycles; the current cycle covers the seasons from 2024/25 to 2026/27. The current Champions League rights in Germany are held by Amazon, DAZN and ZDF.

There have been significant changes to the format of the European football competitions and the monetary distributions to the participating teams in the current 2024/25 season, no doubt given fresh impetus by UEFA to hinder the formation of breakaway competitions, such as the attempted launch of the European Super League.

The most significant changes to the structure of the Champions League competition can be found here. An overall summary of the difference between the new format and the old format is that there are more teams in the competition, each team plays a greater number of games in the first round of the competition, there are more games in a season (189 games versus 125 games) and the chances of proceeding beyond the initial group stage increase (ie two-thirds of teams that enter will qualify versus half of teams previously).

Distributions to Champions League participants under the new format are based on three ‘pillars’: 27.5% will be equally split between the clubs that participate in the group stage; 37.5% will be performance related, with escalating fees in the latter knockout stages of the competition (ie ‘round of 16’ onwards); and 35% will be based on a ‘value’ pillar, which takes into account a country’s relative contribution to the overall broadcasting rights and the individual club’s relative long-term performance in the competition. In March 2024, UEFA estimated the distributions to Champions League participants in the current 2024/25 season would total €2.467bn, which compares with c €2bn in 2023/24.

Exhibit 10 shows the strong growth in distributions to Champions League participants over the long term, a CAGR of 7% from 2015/16 to 2022/23, and the relative financial rewards of participating in the Champions League versus the Europa League and relatively new Europa Conference League.

Domestic cup revenue is highly variable given its dependence on the team’s success in a knockout competition, the DFB-Pokal as well as the DFL-Supercup, a one-off game played between the winners of the Bundesliga and DFB-Pokal in the prior season. The revenue is relatively low, typically €1–5m per season for the club over the last decade except in seasons where the team is successful. Winning the DFB-Pokal in FY17 and FY21 led to revenues of €9m and €10m, respectively. While it is great to win from a sporting perspective, success in the domestic cups does not have a material impact on the company’s financials, especially after player bonuses for achieving success are deducted.

In the following interview, Borussia Dortmund’s CFO, Thomas Treß, discusses the company’s TV marketing revenue.

Advertising comprises the sponsorship income from Borussia Dortmund’s key corporate partners, as well as advertising on the billboards at Signal Iduna Park and bonuses dependent on the team’s success. Advertising has grown at a CAGR of 9% from FY05 to FY24 and is the secondmost important revenue stream after TV marketing.

The resilience of the income stream is demonstrated by its continued growth through the COVID-19 pandemic, due to a combination of new sponsorship deals or extensions to existing major ones (Evonik Industries, 1&1) and more prize money (FY21), while sponsor hospitality and match day advertising have been a bit more variable.

Sponsorship revenue is typically earned from multi-year contracts (although there are annual contracts too) with leading international and regional companies that want to be associated with sporting success and want to promote their brands. Borussia Dortmund has a proven ability to renew at higher prices and attract new partners (sponsors).

The company’s principal partners, representing approximately half of total advertising revenue, include:

Before splitting the sponsorship by competition from FY21, Evonik Industries had been the sole shirt sponsor since July 2006. Opel became the team’s first ever shirt sleeve sponsor from FY18, when clubs were allowed to find their own partners, prior to which sleeve sponsorship of all Bundesliga teams was sold under a centralised deal. Principal partners tend to be shareholders of the company to strengthen the relationship with the club.

In addition to the principal partners above, there are three other levels of partner, which contribute differing amounts of income in return for various sponsorship benefits: BVB ChampionPartner (13 partners including General Logistic Systems bwin and EA Sports), BVB PremiumPartner (11 partners including Coca-Cola, Eurowings and RWE) and BVB Partner (17 partners including Makita, ARAL and H-Hotels.com).

We believe the long-term principal partnerships represent over half of Borussia Dortmund’s advertising and should be relatively predictable given the multi-year relationships. For other partners, it is likely some revenue is sensitive to the economic cycle.

The activity of seeking new sponsors is currently outsourced to Sportfive, a media group, which receives a commission on revenue generated. For Borussia Dortmund, commission and expenses are reported as advertising within other operating expenses. Over time, the effective commission rate has reduced from 31% of reported advertising revenue to 25/26%, but a new licensing agreement from FY21 reduced the agency commission to c 10% of revenue.

In the following interview, Borussia Dortmund’s CFO, Thomas Treß, discusses the advertising revenue stream.

Match operations revenue is earned from the attendance of fans at its home ground, Signal Iduna Park, as well as from friendly games played by the team including overseas tours, which typically take place before the start of the new season and during the winter break.

Management regards Signal Iduna Park, Germany’s largest football stadium with capacity for 81,365 fans, as its most valuable asset apart from the team.

Within match operations, the company separately discloses revenues from domestic (Bundesliga games), international (UEFA competitions), national cup (DFB-Pokal) and friendlies (tours).

Revenue is a function of the number of games played, the number of fans attending and price per ticket. In ‘normal’ circumstances, there is a relatively predictable element to domestic revenue, the most significant source of revenue, as there are 17 home Bundesliga games in every season, which are typically sold out. Over the long term, there has been a gradual increase in the capacity of the stadium as it has been updated and management’s policy regarding ticket prices is typically to increase them in line with inflation. The club benefits from the advance sale of 55,000 season tickets, which brings revenue visibility. The ticket price varies depending on location in the stadium, the competition, concessions and the opposing team.

Revenue from other competitions is less predictable given these include knockout competitions and revenues are shared in different ways. For example, net income (revenue less stadium costs) from DFB-Pokal games is split equally between the two competing teams and, in the latter stages of the Champions League, the home team receives all the ticket income.

In the following interview, Borussia Dortmund’s CFO, Thomas Treß, discusses the company’s match operations revenue stream.

We aggregate several revenue streams, merchandising and conference, catering and miscellaneous income (as disclosed by the company) into ‘other’, due to a change in disclosure between FY13 and FY14. As well as the more obvious revenue streams, it includes booking fees for the sale of tickets and fees received for squad players who represent their national teams, so it can be quite variable relative to other revenue streams.

Merchandising represents the award of licences and revenue from the sale of team merchandise (eg replica team kits). In addition to partners’ wholesale distribution channels, sales are made via a major FanWelt centre near the stadium, branded stores (FanShops) in Dortmund, sales kiosks at the stadium and e-commerce (www.bvbonlineshop.com). Growth should be driven by the increasing global appeal of the brand, as well as the company’s ability to increase and improve the range of merchandising. Management believes a relatively new partnership with Legends, a global premium experiences company, enhances the outlook for merchandise sales.

Conference and catering is closely linked to attendance at the stadium as well as Borussia Dortmund’s ability to monetise improved (ie higher-value) hospitality.

There is likely to be some economic sensitivity to some of the revenue streams, as fans may spend less on food and beverages or not buy new kits in a more challenging macroeconomic environment.

Borussia Dortmund’s strategy has been the development of a competitive team with a focus on identifying promising up-and-coming talent at minimal cost (even free), who can then be further developed at the ‘BVB Academy’.

Over the long term, Borussia Dortmund has a proven track record of prudent investment in players and has a good ‘eye’ for spotting new talent, who are ultimately sold for a good profit. In recent years notable successes have included:

We note that the gains on the sale of players have been an important driver of Borussia Dortmund’s profitability over the long term; however, these gains are unpredictable.

Describing why one club is better at identifying up-and-coming talent than another is as difficult as explaining why one music industry representative is better at finding promising new artists than another. Therefore, our comments are reserved to Borussia Dortmund’s development structure and highlight the company’s success with respect to player transfers.

Regarding player scouting, the club uses a worldwide network of around 30 scouts who are supported by technology, enabling them to conduct individual player analyses. Management believes its modern training centre and the ‘BVB Academy’ provide excellent training for players, and there is a clear willingness to play young players in the first team, which may be lacking at other clubs.

Borussia Dortmund’s success in the transfer market is evidenced by its net spend versus its local and international peers over the long term. Below, we show the cumulative net transfer spend for a range of competitive peers from the Bundesliga and other large European clubs over two timeframes: the last 10 seasons (including 2023/24 which, by definition, is only part of the season) and from the 2000/01 season. The data are sorted by net transfer spend since 2000/01.

Borussia Dortmund has been the only the club to generate a net surplus on transfers over the long term (from 2001 to 2023) and one of two clubs (including Schalke) to generate a net surplus over the last 10 years, which is testimony to its ability to recruit and trade talent. There is an apparent clear distinction between the level of spend between the clubs in the Bundesliga and elsewhere. Therefore, although it has been several years since Borussia Dortmund last won the Bundesliga, we would argue that its regular qualification to complete in the Bundesliga comes at a significantly lower cost than its bigger-spending peers.

Having described how the squad is developed and looked at Borussia Dortmund’s historical success in the transfer market, we move on to looking at the valuation of the current squad. At the time of writing, Borussia Dortmund has the 21st most valuable first-team squad of the 500 that are valued globally, with an estimated value of c €475m versus the purchase cost of €289m (source: Transfermarkt.com). The estimated value of the squad of c €475m compares with the valuation of c €467m in our prior Outlook note.

Below we show the estimated market values in descending order for the top 25 most valuable global football squads. We would highlight that the majority of the teams listed below appear to have unrealised gains in the valuations of their squads, except Chelsea and Manchester United.

Given the importance of the estimated squad valuation in our overall valuation of the company, and the estimated valuation is that of a third party, we have examined all of Borussia Dortmund’s transfers during the last eight seasons (ie from 2017/18) to determine whether there is any positive or negative bias to the estimate. Over this period the fees realised were c 12% below the estimated market values. Therefore, to be prudent, we apply a c 12% discount to the estimated squad valuation in our overall company valuation.

The overall result is heavily influenced by lower realised fees on two of the more significant transfers of recent years, particularly the sale of Haaland. In 2023/24 Bellingham was sold for an initial fixed fee of €103m versus an estimated market value of €120m, with variable fees to follow that are dependent on sporting success of up to 30% of the initial fixed fee; in 2022/23 Haaland was sold for €67m versus an estimated market value of €150m; and Sancho was sold for €85m versus an estimated market value of €100m in 2021/22. It is difficult to determine whether the estimated valuations were unrealistic or there were special circumstances around the transfers that enabled the purchasing clubs to get a bargain. Haaland’s purchase price by Manchester City looks relatively low given his impact on the team and when compared to the fees paid by other Premier League clubs for players that have performed less well. Transfermarkt.com currently values Haaland at €200m. Bellingham made a very promising start at Real Madrid, and Transfermarkt.com currently estimates that his value has increased to €180m. Conversely, Sancho has struggled to make a significant impact at Manchester United since he joined and has moved to Chelsea FC on loan. At the time of writing, Transfermarkt.com estimates Sancho’s market value at €30m, well below his peak valuation.

In the following interview, Borussia Dortmund’s CFO, Thomas Treß, discusses the company’s squad development activities.

We view the key sensitivities for Borussia Dortmund as follows:

In the earlier sections of this report we have focused on the key growth drivers and the revenue streams. We turn our attention to the drivers of Borussia Dortmund’s profitability, cash flow and balance sheet.

Over the long term, Borussia Dortmund has enjoyed a broad improvement in EBITDA profitability, with declines in other operating expenses (relative to revenue) offsetting growth in personnel expenses. Depreciation has been a relatively consistent 3–4% of revenue in recent years. Amortisation, predominantly of the playing squad, has been increasing relative to revenue, reflecting the increased investment in the squad (see cash flow). The company’s financial prudence is demonstrated by its positive operating profit, PBT and net income in every year since FY10, irrespective of the team’s success, except for FY20–22 due to restrictions during the COVID-19 pandemic.

We highlight the accounting and disclosure of ‘net transfer income’, which represents the net profit on the sale of players and required by IAS 8.42 from FY19. It equals the gross proceeds less the written down value of the player and associated transfer/agents’ fees. Previously, gross amounts for revenue and amortised costs, etc, were recognised in the income statement. The net effect is that profitability is not affected, but gross revenue and costs for the group, as previously disclosed, are lower. Net transfer income is an important contributor to Borussia Dortmund’s profitability.

The company introduced an annual dividend in FY12, initially at €0.06/share, which was paid every year through FY19 before a rightful focus on preserving cash during the COVID pandemic. The dividend was restored in FY24 and we assume the company will continue to pay the same level of dividend.

The first team’s success in reaching the final of the Champions League led to a significant improvement in revenue and profitability versus management’s expectations at the start of the year. Indeed, FY24 was an all-time high for most lines of the income statement, except for net income.

For FY24, the company reported revenue of c €509m (versus expectations at the start of the year of €427m); EBITDA of c €150m (€104–114m); operating profit of c €46m (€15–25m) and net income of c €44m (€15–25m). Versus FY23, revenue grew by 22%, EBITDA by 22%, operating income by 172% and net income by 364%.

All revenue streams grew year-on-year. The most significant absolute increases were:

The FY24 EBITDA margin of 29.5% was in line with that of FY23. Relative to revenue, profitability was helped by higher net transfer income (including the sale of Bellingham) and lower depreciation and amortisation and personnel expenses, offset by higher other operating expenses, which was due in part to there being more games.

Borussia Dortmund reported a solid 5% year-on-year increase in revenue in Q125 to €107m. There were no significant issues with respect to the phasing of games versus the prior year, as the season has normalised following the disruption to games due to the staging of the FIFA World Cup at the end of 2022. However, there were some significant changes for individual revenue streams:

The lower EBITDA of c €26m versus c €79m in Q124 mainly reflects significantly lower net transfer income (including the sale of Bellingham), which declined by c £63m y-o-y.

Management introduced FY25 guidance with the publication of FY24 results. Naturally, given it is still early in the season and the newly structured Champions League competition is in progress, management reiterated the guidance on the publication of the Q125 results. At the start of each season, management typically assumes that the first team will reach the round of 16 of the Champions League competition. The significant success of reaching the Champions League final in FY24 provides an obvious tough comparative for the current financial year. However, the current financial year will partially benefit from the planned FIFA Club World Cup competition, which runs from 15 June to 13 July 2025. To date, there has been limited news about the competition but management has highlighted that it expects to earn ‘tens of millions in income from TV marketing’. We assume the company will generate €30m in revenue, which is helpful in offsetting the assumed lower revenue from the Champions League.

For FY25, management has guided to revenue of €503m (down 1% y-o-y), EBITDA of €110–120m (down 23% y-o-y at the midpoint), operating income of €7–17m (down 74% y-o-y at the midpoint) and net income of €5–15m (down 77% y-o-y at the midpoint). It also guided to transfer revenue of €42m, much lower than FY24’s c €130m, to give total operating proceeds of €545m versus c €639m in the prior year.

A summary of our updated forecasts for FY25 and new forecasts for FY26 are shown below:

We have increased our FY25e revenue by c 10% as we incorporate €30m in TV marketing revenue for competing in the FIFA Club World Cup, which straddles the end of FY25 and FY26, for the first time. At the time of writing, there is a lack of clarity about the revenue available for competing in the competition, and the amount of revenue the club earns will depend on how it performs. We have significantly reduced our estimates for net transfer income given management’s guidance for gross transfer proceeds of €42m versus our prior estimate of over €100m.

The company has a long tradition of generating operating cash flow, which has been positive in every year since FY06, apart from FY20 due to the pandemic. Free cash flow has been more variable due to the phasing of payments and receipts from the sales of players, which are typically received over a number of years.

Despite management’s lower guided profitability for FY25 versus FY24, given the smaller expected contribution from the Champions League, it has guided to improved cash generation for FY25. It guides to cash from operating activities of €86m (c €47m in FY24) and free cash flow of €21m (negative €4m in FY24).

As highlighted previously, management has a preference for no or limited debt. Prior to the pandemic the company had operated with a net cash position since FY16, but the disruption to activities by the pandemic led to it taking on some debt.

The balance sheet is asset heavy, with the main items being intangible assets, predominantly the playing squad, and tangible assets, predominantly the stadium and training infrastructure. The intangible and tangible assets represented c €271m and c €198m, respectively, of the company’s total assets of c €679m and net assets of c €329m at the end of Q125. Other important assets included current and long-term trade receivables of c €127m and c €40m, respectively. From a liability perspective, besides net debt of c €33m, the most important items were short-term and long-term trade and other payables of c €111m and c €38m, respectively.

As highlighted in the cash flow section above, payments and receipts with respect to the purchase and sale of players can be made or received over a number of years. The year-on-year changes to short-term and long-term payables and receivables can have an important effect on the company’s cash generation.

We look at the company’s valuation in three ways: an asset-backed SOTP approach, together with prospective multiples versus its quoted peers and the company’s own trading history.

The asset-backed SOTP valuation is our preferred valuation method for the company as it captures the unrealised value of the football squads and the brand name. Our updated valuation is €11.75 per share versus €10.40 per share previously. The main cause of the rise in the overall valuation is an increase in the estimated brand value due to the better share price performance of the peers.

To the estimated market value for all Borussia Dortmund’s football squads we apply a discount of 22% to allow for the average transfer costs paid since FY19 (10%) and for possible overestimation of values by Transfermarkt.com (12%). To the last quoted brand valuation from May 2018 we apply a 34% premium based on the movements in market values of other quoted football clubs since that time (see Exhibit 24). The share prices of the football club peers have been quite varied over this time, and the resulting brand value is the most significant part of our valuation at €6.79 per share. We highlight that the current share price of €3.26 is lower than the current discounted estimated value of the squad, before any other assets are considered.

A comparison of Borussia Dortmund’s prospective EV/sales and EV/EBITDA multiples versus peers including other quoted football clubs and sports/entertainment companies shows it is trading at a significant discount, indicating an attractive relative valuation.

An attractive valuation is confirmed when we look at Borussia Dortmund’s prospective valuation versus long-term multiples. Below we show prospective EV/sales and EV/EBITDA multiples for FY25 and FY26 using the current EV versus its prior multiples using historical enterprise values with the high, average (figure quoted) and low multiples shown for each year. We exclude FY05 and FY06 from the EV/EBITDA charts as the company was emerging from its financial troubles and was either loss making (FY05) or generating low EBITDA (FY06), which skew the valuation.

The prospective EV/sales multiples for FY25 and FY26 of 0.8x are in line with its all-time low multiple over this period, and way below its long-term average multiple of 1.6x, suggesting good valuation support.

With respect to EV/EBITDA, the prospective multiples for FY25 and FY26 of 3.4x and 3.3x, respectively, compare with its average multiple over this timeframe of 6.5x, again suggesting an attractive relative valuation.

Moving away from income statement-based valuation measures, we look at the current market value versus our estimated net asset value or book value for FY25 and FY26, and how these compare with historical multiples. At 1.1x for FY25e, it is clearly at the low end of historical multiples, with previous lows of 1.05x and 1.01x in FY09 and FY10.

In the following video, Borussia Dortmund’s CFO, Thomas Treß, discusses the company’s ESG initiatives.