The expected general economic environment is dominated by the ongoing COVID-19 pandemic. The strains of the coronavirus already rampant, in particular the delta variant, are hindering efforts to overcome the pandemic. Despite low infection rates, progress in vaccinating the population and decisions to roll back restrictions, the pandemic remains ever-present in Germany and around the world. Professional football has been heavily impacted too, and must continue to play its part to overcome the crisis.
DFL Deutsche Fußball Liga GmbH has published its fixture calendar for the 2021/2022 season. The new Bundesliga season will begin in mid-August 2021, and Borussia Dortmund will make its début at home to Eintracht Frankfurt.
Income from match operations are directly tied to allowing spectators to visit SIGNAL IDUNA PARK.
At the beginning of July 2021, Germany’s federal states decided to permit a partial return of fans to stadiums in time for the new season. The resolution, which is initially in force until 11 September 2021, permits stadiums to operate at maximum 50% capacity, with the total number of spectators initially capped at 25,000. Approval from the competent authorities is required as a basic prerequisite for spectators to return. This will take into account infection rates, which must not exceed 35 cases per 100,000 residents. At anything above this, a maximum of 5,000 spectators will be permitted. Those who have not been vaccinated or have not recovered from COVID-19 must show a negative test result. In addition, the health and safety protocols and social distancing will remain in place.
Even if these new rules are an improvement on the previous season, the partial return of fans to the terraces is closely linked to low infection rates. Thus, although higher income is expected than in the previous year, it will still be a lot lower and plagued by far more uncertainties than before the pandemic.
Commercially successful professional football operations are no longer limited to just regional or national levels. The team’s success in these competitions is very much a focus in all plans. Qualifying for the group stage of the UEFA Champions League continues to place Borussia Dortmund in a better financial position. Playing and delivering positive performances in the competition not only generates income, it can also widen the club’s media and brand coverage, which promotes the club’s interaction with existing fans and encourages others to begin following Borussia Dortmund. The club intends to promote these effects with a progressive internationalisation strategy that is regularly tailored to current trends. In light of this, Borussia Dortmund aims to further expand and professionalise its digital presence. Borussia Dortmund thereby responds to social trends and to a large degree leverages the attractiveness of the Borussia Dortmund brand. The growing international awareness of the brand that this gives rise to allows the club to tap foreign markets. This includes the 2021 Virtual Summer Tour, with Borussia Dortmund making virtual stops in nine countries across three continents between 10 and 18 July 2021 to bring the club even closer to and connect with its international fan communities and partners and give all fans (not just) from the nine participating countries the chance to immerse themselves in the world of Borussia Dortmund.
Since the 2020/2021 season, Borussia Dortmund has had two different kit sponsors. The team wears kits bearing the logo of Evonik Industries AG in all international club competitions, friendlies staged abroad and DFB Cup matches, while 1&1 Telecommunication SE is the kit sponsor for Bundesliga matches. This one-of-a-kind sponsorship model was developed as part of the internationalisation strategy and promises further revenue potential going forward, since it allows the club and its respective partners to target specific markets.
In the 2021/2022 season, Borussia Dortmund once again marketed its virtual advertising boards. SIGNAL IDUNA PARK’s advertising boards can be digitally overlaid in the broadcast signal to target the respective TV audiences when broadcasting matches abroad. For Borussia Dortmund’s international partners in particular, this is an attractive and increasingly popular way to reach their customers worldwide.
Despite the ongoing COVID-19 pandemic and the ensuing economic declines, professional football, particularly in Germany, has not lost any of its allure. Borussia Dortmund also maintains close and longstanding partnerships with its sponsors. Borussia Dortmund remains just as appealing as ever. As such, Borussia Dortmund will also operate in a demanding market and competitive environment in the coming season.
Particular focus will be placed on income from TV marketing in connection with the expected general economic environment.
DFL Deutsche Fußball Liga GmbH has informed the clubs of the first and second Bundesliga divisions about the expected distribution volume for the 2021/2022 season. The announced disbursements of the TV funds will allow for a good degree of planning. However, these plans may change at any time due to the ongoing COVID-19 pandemic. The amount and timing of the disbursements depends in particular on partners making due contractual payments and the 2021/2022 season being seen through to a trouble-free conclusion.
Despite the massive impact of the COVID-19 pandemic, DFL Deutsche Fußball Liga GmbH sold the German media rights for the 2021/2022 to 2024/2025 seasons for an average of approximately EUR 1.1 billion per year, with the individual disbursements increasing from season to season. This corresponds to total income of EUR 4.4 billion, exceeding the billion-euro mark once more and continuing the high revenue level seen in previous years. Sky Germany secured the rights to all live broadcasts on Saturdays, while DAZN will broadcast matches on Fridays and Sundays. Football will also return to free-to-air TV after a 17-year hiatus, with ProSieben/Sat1 acquiring the broadcasting rights to a total of nine live matches. Even though the agreement fell somewhat short of expectations with a decline in volume of around 5%, in these uncertain times it represents the best possible degree of stability and an excellent economic foundation for the coming seasons.
The COVID-19 pandemic is also affecting international TV marketing from UEFA competitions. To alleviate the financial impact of the pandemic on the clubs, the income shortfall will be spread over five seasons (from the 2019/2020 to the 2023/2024 season), which will stretch the adverse effects out over a longer period. In specific terms, UEFA will make the deductions before distributing funds to the clubs. The planned distributions nevertheless remain highly attractive.
Stadium marketing is subject to compliance with social distancing and health and safety protocols, but this does enable stadium tours to be offered. External events can likewise be held in the hospitality areas, albeit with restricted guest numbers. Under the appropriate conditions, football training courses can also be offered. The likely restrictions on selling alcoholic beverages and the limited stadium capacities at home matches will weigh on the profitability of public catering.
This revenue stream therefore also remains affected, since it is dictated by political decisions and official stipulations.
Transfer deals are an important part of Borussia Dortmund’s business and, as in previous years, represent a significant source of income. However, in view of the developments in the economic environment, Borussia Dortmund on principle only takes transfer income into limited account in its planning. The transfer policy nevertheless presents significant opportunities to generate substantial income. Consequently, transfer deals are always assessed against the background of the current season. High transfer sums often go hand in hand with a drop in quality within the team, but it cannot be ruled out that value-driven transfers will be concluded contrary to the Company’s sporting interests. Given Borussia Dortmund’s sustained success, its players are increasingly piquing the interest of other top clubs.
The COVID-19 pandemic continues to affect transfers. Based on last year’s summer transfer window, it can be assumed that the economic uncertainty and decline in income experienced by clubs around the world will continue to temporarily reduce the transfer fees received for players. The summer transfer window is now back to normal and will last from 1 July to 31 August 2021.
Despite the expected potential losses and the uncertainty as the situation continues to unfold, the European leagues remain attractive for talented young players. Besides that, Borussia Dortmund has an excellent team. An active transfer market can be expected all the same in the summer of 2021, with some very lucrative deals in the pipeline. A notable example is the transfer of Jadon Sancho to Manchester United in July 2021.
Overall assessment of expected performance
The COVID-19 crisis continues to overshadow the economic activities of German companies, forcing them to confront the major challenge of having to operate in a highly uncertain environment. Borussia Dortmund also expects to face significant economic restrictions in the coming period. Even if infection rates in Germany are currently at a stable low level and progress is being made in the vaccination campaign, there remains an ever-present risk that infections will flare up and tougher restrictions will be imposed to control them. This will shape economic planning for some time to come. Borussia Dortmund will persevere through these still difficult times thanks to the economically sound foundation it has built up and the specific countermeasures it has taken. There is a high forecasting risk stemming from the strong dependence on political decisions and the further course of the COVID-19 pandemic. Thus, any statements regarding the future performance of the Company remain subject to a high degree of uncertainty.