Borussia Dortmund is one of the top football clubs for investors looking to buy into the industry, analysts at Berenberg believe.
Number crunchers at the privately owned bank have rated the German football team a ‘buy’ placing it ahead of Ajax, Juventus and Lyon owner Eagle Football.
“Dortmund has the best-quality management, in our view, and is the only club that we expect to generate sustainably positive profitability from this year onwards,” Berenberg said.
“We believe that revenues should be correlated with the growing popularity of football, yet the valuation only broadly correlates with the current transfer value of the squad.”
Analysts also praised the team’s exposure to both the Champions League (it’s in this year’s final) and the FIFA Club World Cup.
Prior to Covid, the football club was able to achieve a little under a decade of consistent profitability while maintaining a “reasonable balance sheet”.
After the pandemic “a capital increase in 2021 covered the limited debt built up and the balance sheet has returned to its historic strength,” the investment bank explained.
Dortmund was also able to swing back to a profit last year and is expected to do the same again in 2023/24.
Following a strong performance in the Champions League, analysts expect the return of a dividend and further revenue growth next season.
Die Schwarzgelben (the black and yellows) achieved this despite German footballing rules preventing external backers from taking control of operations at clubs, thus limiting interest from private investors.
In terms of the transfer market, which Berenberg sees as vital to the success of football clubs, it says Dortmund has “mastered the balance between monetising… and maintaining sporting performance.”
Analysts pointed to the €103 million sale of Jude Bellingham to Real Madrid and the €75 million sale of Erling Haaland to Manchester City as strong deals in which they were acquired as young talents and sold for material profits.
Much of this success is generated through the club using its high profile as a “shop window” to showcase the talents of its younger and developing players.
Berenberg explained that despite outgoings, sporting performance has been strong, with second or third-place finishes in every season since 2018/19.
“This season, the team is currently in fifth place, but this is compensated by the team having just qualified for the Champions League final,” analysts explained.
Berenberg targets a €6 share price for Dortmund, representing a near 50% premium to its current market value.
