The Group finances itself primarily from long-term finance leases, trade payables, season tickets paid for in advance and payments from sponsors. The related risks arising comprise fair value risks (interest-rate-related cash flow risks), liquidity risks and credit risks. On the other hand, the Group is not exposed to any significant currency risks. The methods of managing the individual types of risk are described in the following.
Interest rate risks
Until September 2017, the Group was exposed to interest rate risks based on variable-rate loans; appropriate interest rate hedges were entered into to hedge these risks. Risk Control uses appropriate tools and methods to constantly monitor interest rate risk, and reports regularly to the management on current events. The objective of the risk strategy is to limit or eliminate interest rate risks. The strategy explicitly calls for the use of appropriate derivative financial instruments to hedge risks.
Sensitivity analysis (interest rate risk)
All interest rate swaps and variable-interest loans are included in the sensitivity analysis. On 30 September 2017, however, Borussia Dortmund decided that it would not make use of the planned bank financing for the purchase. Due to the elimination of the hedged item, the hedge was terminated as at the reporting date and it is no longer necessary to prepare sensitivity analysis.
The Group constantly monitors the risk of possible liquidity bottlenecks, taking into account the probable maturities of its financial liabilities and the timing of the expected cash flows from operating activities. The Group counters potential liquidity risk by taking up largely long-term financing. Appropriate corporate planning is used to constantly monitor short-term financing components. Please refer to Note 27 for disclosures on the maturities of contractual cash flows.
The Group conducts business exclusively with third parties of high credit standing. Concentrations of credit risk can arise in the context of a player transfer and from long-term sponsorship agreements. Such concentrations of risk are monitored in the course of the Group's operating activities.
The maximum credit risk in the event of counterparty default is equal to the carrying amount of these instruments. Please refer to Note 24.