This article analyses Borussia Dortmund finances in respect of the 2020/21 season.
Season review
Borussia Dortmund won the DFB-Pokal for the first time in four years in 2020/21. The club also performed well in the UEFA Champions League (UCL), exiting in the quarter finals. Dortmund was unable to wrestle back the Bundesliga, with Bayern victorious for the ninth consecutive season.
Borussia Dortmund finances were hit hard by the lack of fans in stadia. This and lower player sales saw the club record a loss of €73m, its highest ever.
Borussia Dortmund Finances – Revenue
Revenue fell from €370m to €334m (10%) as matchday revenue was virtually non-existent in 2020/21. Other income rose from €9.2m to €10.4m (13%), taking total income from €379m to €345m (9%). Other income includes income such as insurance pay-outs and provision reversals.
Matchday
Matchday revenue was almost non-existent, falling from €32.5m to €0.6m (98%). The return of fans (still with restrictions) should enable Borussia Dortmund to recover a significant chunk of revenue.
Broadcast
Broadcast revenue rose from €170m to €187m (10%). This was driven by its UCL exploits having exited at the round of 16 in 2020. A new broadcast cycle begins in 2021/22 but promises little uplift in Bundesliga distributions. However, what will have a material impact on broadcast revenue in 2022 is the club’s failure to progress past the UCL group stages. This will see a reduction in its broadcast revenue, and a significant one if the club does not reach the latter stages of the UEFA Europa League (UEL).
Commercial
Commercial revenue fell from €168m to €147m (12%) as conferencing, catering and events were out of action. Sponsorship revenue rose from €98m to €107m as the club agreed a lucrative new deal with 1&1 as its shirt sponsor. Commercial revenue is likely to rise given the ability to increase events and catering, but sponsorship growth is likely to be modest.
Borussia Dortmund Finances – Revenue summary
It was a tricky year for all clubs navigating a full season with limited fan attendance. A rise in broadcast revenue helped take a sting. While the club will be grateful to have a portion of its matchday revenue back in 2022, failure to reach the UCL knockouts will likely see overall revenue decline or flatline.
Borussia Dortmund Finances – Operating costs
Operating costs fell from €371m to €335m (10%) as Borussia Dortmund managed to cut costs in light of falling revenue. This meant that underlying operating profitability remained much the same.
Wages
Dortmund’s wage bill was pretty much flat at €216m. However due to falling revenue, the wages to revenue ratio increased to 65%. This is still comfortably below UEFA’s recommended maximum ratio of 70%. Wages may remain low as any increase in wages may be offset by smaller bonuses for UEFA performance given struggles in 2021/22.
Other costs
Other operating costs fell from €155m to €119m. This was driven by savings across matchday and advertising costs, both which will increase in 2022.
Borussia Dortmund Finances – Operating costs summary
Dortmund is renowned for being a well-run sustainable club. Its cost management remains strong despite recent challenges, and this will need to remain the case due to the loss of UCL income in 2022.
Borussia Dortmund Finances – Transfers
It was a quieter season than usual for Borussia Dortmund in the transfer market. In came Can (25m) and Bellingham (€23m) for a combined €48m. Departing the club were Toprak (€4m), Balerdi (Loan – €1m) and Burnic (€0.5m) for a combined €5.5m. This led to a net spend of €43m.
Amortisation
Player amortisation charges rose from €92m to €97m (6%) following the investment made by the club. A similar level of spending in 2021/22 will likely see this number remain stable.
Profit on player sales
Borussia Dortmund generated a profit on player sales of €15m. This compares to a €40m profit in 2020 and is one of its lowest in recent memory. The club relies on player sales as part of its business model and is a big reason for its losses in 2021.
However, the significant sale of Sancho to Manchester United will see Dortmund record a huge profit on player sales in 2022.
Transfer debtors / creditors
Dortmund is a net transfer creditor currently, owing more in transfer fees than it owes by other clubs. The club owes €88m in transfer fees while only being owed €22m, a net creditor position of €66m. This may change in 2022 depending on the payment terms of the Sancho transfer.
Borussia Dortmund Finances – Transfers summary
Player trading is a core part of Borussia Dortmund’s business model, contributing hugely to its finances. The club is a talent hub, and the club are excellent at developing and spotting talent. Reduced sales were hence a major cause of its record losses; however, the sale of Sancho should help reverse this.
Borussia Dortmund Finances – Profitability
The club recorded record losses in 2021 as it felt the pinch from lost matchday revenue and low player sales.
Operating profit / loss before player trading
Before player trading, operating profits rose from €8.9m to €9.9m (10%). This was due to Dortmund cutting costs by a larger amount than its reduction in revenue. The loss of UCL income will be at least partly absorbed by increased matchday and events revenue. UEL performance may therefore play a significant part in profitability in 2022.
Operating profit / loss after player trading
After player trading, operating losses grew from €43m to €72m (67%). This was driven by the lower transfer activity, highlighting the importance of player trading to its busines model. As mentioned, the Sancho sale should go a long way to helping Dortmund get closer to break even.
Profit / loss before tax
Due to net finance costs of €1.1m, Borussia Dortmund record a loss before tax of €73m. This compares to a €47m loss in 2020, taking losses in the past two years to €120m. Borussia Dortmund estimated its losses would be around €15m in 2022, however failure to qualify for the UCL knockouts will likely see this number increase.
Borussia Dortmund Finances – Profitability summary
Record losses were incurred as the timing of a poor transfer window and lost matchday revenue unfortunately led to its poorest ever financial result. The sale of Sancho and return of fans should steady the ship, but the club will have been rocked by its UCL failings.
Borussia Dortmund Finances – Assets / Liabilities
A record loss for Borussia Dortmund required external funding to see the club through its financial challenge.
Cash flow
Borussia Dortmund’s cash reserves fell from €3.3m to €1.7m. This was driven by cash outflows from player transfers (€59m) and capital expenditure (€3.4m). These outflows were offset by cash inflows from operations (€16m) and financing (€53m). All of the financing relates to an overdraft facility utilised by the club.
Debt
The club’s debt levels hence increased from €32m to €78m. The majority (€57m) relates to its overdraft facility. The remainder (€21m) relates to finances leases. The club will be hoping to reduce this facility in the next few years; however, the sale of Sancho may largely be used to pay down existing transfer debts.
Net debt
The club’s net debt hence was hence €76m, up from €29m.
Borussia Dortmund Finances – Final Remarks
Borussia Dortmund has struggled through the last two years financially like most clubs. The sale of Sancho and the value of its current talent means that the club will not have too many financial worries, although European performance will remain important if it doesn’t wish to sale these players, either due to financial pressures or for sporting reasons.
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