Expected earnings trend
The ongoing COVID-19 pandemic and the war in Ukraine continue to pose major challenges for Germany and the world. The consequences of the war in Ukraine – rising commodity, energy and food prices leading to higher inflation and reduced purchasing power – are being felt by all businesses and citizens in all walks of life. The restrictions imposed on professional football in response to the COVID-19 pandemic are currently viewed as moderate. However, a spike in infections could adversely affect the earnings trend for Borussia Dortmund GmbH & Co. KGaA and its subsidiaries in the 2022/2023 financial year.
The projections for the new season are generally that there will be no significant restrictions on match operations, meaning that the income from match operations and public catering will likely increase as against the previous season.
Despite the economic uncertainties, Borussia Dortmund expects moderate activity on the transfer market with some very lucrative transfer deals in the offing, setting up net transfer income as a significant earnings driver.
The club traditionally pursues a more conservative approach when factoring success on the pitch and any associated earnings contributions into the forecast.
Management currently forecasts consolidated net profit of between EUR 2,000 thousand and EUR 7,000 thousand for the 2022/2023 financial year.
Due to the non-material financial and tax result in this highly uncertain planning scenario, the result from operating activities (EBIT) will correspond to the forecast consolidated net profit for the year. The operating result (EBITDA) would be around EUR 99,000 thousand higher than the result from operating activities (EBIT) due to depreciation and amortisation and would probably amount to between EUR 101,000 thousand and EUR 106,000 thousand.
Expected revenue trend and consolidated total operating proceeds
In the past financial year, Borussia Dortmund generated revenue of EUR 351,645 thousand and consolidated total operating proceeds of EUR 456,886 thousand. A revenue-related increase of roughly EUR 394,000 thousand is expected for the coming reporting period, which will likely result from increases in all income areas. Borussia Dortmund forecasts consolidated total operating proceeds of approximately EUR 489,000 thousand on the back of what are likely to be material transfer fees. However, restrictions imposed in response to the COVID-19 pandemic or a further escalation in the war in Ukraine could at any time adversely affect almost all revenue streams at Borussia Dortmund GmbH & Co. KGaA and its subsidiaries.
Expected trend for significant operating expenses
Cost management continues to be Borussia Dortmund’s highest priority. Operating cost-effectively makes a material contribution to earnings, and Borussia Dortmund is unwavering in its efforts to achieve further optimisation.
Personnel expenses account for approximately half of all operating expenditure. Portions of these personnel expenses are also dependent upon the club’s sporting success, because the professional squad is compensated on the basis of its performance, meaning that these expenditures are always commensurate with the club’s success, which itself is a source of income. The goal in the short to medium term is to make personnel expenses in the professional squad more variable with regard to sporting performance, particularly in the UEFA competitions and the qualification for these competitions.
The other operating expenses are also partly dependent on the number of matches and the club’s success on the pitch. Any efforts at cost optimisation aside, there may therefore be an increase in operating expenses that goes hand-in-hand with a material increase in income and corresponding contribution to earnings.
Due to the ongoing war in Ukraine, it can be expected that there will be further rises in commodity, energy and food prices that will cause operating expenses to grow year on year, in particular in catering and match operations.