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34. Bull, Bear & Beyond – Borussia Dortmund: executive interview: Corporate and general
7 Plays1 year ago
In the first interview, we focus on the position of the company and the team in the football landscape. We discuss the attractive growth dynamics of football, why Borussia Dortmund should be thought of in a different way versus the perception that football clubs are not well run from a financial perspective, Borussia Dortmund’s positioning among the European football elite clubs and the company’s attitude to debt.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Original interview published on 16/12/2024 and reposted as a podcast
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Transcript
Introduction of Thomas Tress, CFO of Borussia Dortmund
00:00:07
Speaker
I'm Russell Poynton from Edison Group. I'm delighted today to have with me Thomas Tress, the CFO of Borussia Dortmund. Hello Thomas. Hi. Thank you for joining me today.
The Growth Potential of Football
00:00:19
Speaker
So Thomas, before we talk about Borussia Dortmund specifically, could you just talk about what you think makes football attractive from a growth perspective, please?
00:00:29
Speaker
Well, it's ah on the one side it's a popularity of the sports. There are so many people in the world interested in football, which makes it attractive also for the advertising industry, for the broadcasters.
00:00:42
Speaker
And what is important is to have a premium content. to offer to the audience. This is important. And we see that the advertising business is growing over time and also the football is following those routes, is growing and growing.
00:00:58
Speaker
And when we started 2005, we had a revenue a revenue level on about million. nowadays we we reaching million. Well, this is all over.
00:01:12
Speaker
And it's well and for us important is being in Germany. and This helps many companies to be aligned with us and develops very well.
Unique Investment Aspects of Borussia Dortmund
00:01:25
Speaker
So Thomas, ah for many investors, the idea of investing in a football club is a bit of a challenge because they there's a general perception that football clubs are not well run from a financial perspective and the players are the main beneficiaries. So what why should investors think about Borussia Dortmunds in a slightly different way? Well, that's the first thing, at the first point, often when I talk to investors or with potential investors, I have to convince them that we are normal the economics.
00:01:57
Speaker
ah that we are a normal economic company with normal revenue streams and normal cost structures and liquidity structures, plannings, ah that it's not just a football club.
00:02:11
Speaker
We have 500 million turnover. We are growing every year ah substantially. We are profitable as one of the few football clubs in the world.
00:02:25
Speaker
And we are not ah gambling industry, but many people may think about it. But it's not. it's it's a football business. It's entertainment business. It's broadcasting business. create we have We produce content to our audience.
00:02:43
Speaker
and We have a very brilliant brand as Borussia Dortmund, where a lot of companies sponsors like to be linked to, to do their own advertising for their product, to emotionalize their brands with Borussia Dortmund.
00:03:00
Speaker
This is what it's about. Football business is capitalization of the brand value and the brand development. And it's not just ah gambling or who ah something like this.
00:03:14
Speaker
And for an investor, it's important to see that there's a growth and there's profitability and that we produce value which has contributed to the finance to an investor in their They get some dividends on the one side which is low because in the football you are in a very competitive market. You have to invest, invest in your sport of competitiveness. But on the other side you produce value and this value is reflected in our balance sheets.
00:03:45
Speaker
And this is part of that what the investor earns in and in his terms. It is more about the value of the development of a share price over time.
Borussia Dortmund's Position Among Football Clubs
00:03:56
Speaker
So for the non-football fans who are watching, could you give some indication of where Borussia Dortmund is positioned relative to other German teams and the other European bigger football clubs?
00:04:08
Speaker
Well, you can categorize football clubs in three different layers. The one would be the the global brands, the sweet spots and regional or local brands.
00:04:20
Speaker
And we are surely one of the sweet spots. We are not on the same value as, say, Real Madrid or Manchester City, but we are more on the level of Atletico Madrid.
00:04:35
Speaker
and maybe Arsenal London for British investors. And then there below this, you have those regional brands like Eindracht, Frankfurt, Haufbeest, Stuttgart, which is not an international reflection. Thomas, it's probably worth talking about your attitude to financial debt at the corporate level.
Financial Philosophy of Minimal Debt in Football Clubs
00:04:56
Speaker
Yeah, well it' quite simple. I believe in my deep heart that football business should not be leveraged substantially, at least not the operation of the business, because it's not that predictable as normal industry. but is we do not produce a product with where you produce it and you have a market to sell it on.
00:05:20
Speaker
We produce entertainment, football and football has sometimes unexpected developments. And for that reason, for me it's important to to balance economic and sportive success.
00:05:35
Speaker
And that means for me also to not overdead football company. And the the best would be to not ah have any financial liabilities on the ballot balance sheet, if not for infrastructure.
00:05:51
Speaker
Because then you are very healthy. And that's the reason we have very low financial liabilities on the balance sheet and just financial balance sheet for inras infrastructure investments.