Champions League key to Dortmund’s business model

From a financial perspective, 2023/24 was “an exceptionally successful year” for Borussia Dortmund, as pre-tax profit more than quadrupled from €11m to €49m (€44m after tax).

Revenue shot up €95m (22%) from €425m to €520m, a new club record and the first time that Dortmund have broken through the €500m barrier. This was further boosted by profit from player sales also increasing by €25m (35%) from €73m to €98m.

This was partially offset by significant growth in operating expenses, which rose €92m (19%) to €572m. However, interest swung from €6m payable to €3m receivable.

Broadcasting was the star of the show, rising €49m (31%) from €157m to €206m, though commercial also significantly increased by €33m (15%) from €217m to €250m. Match operations was up €9m (21%) from €44m to €53m.

Unlike many other leading leagues, German clubs very largely operate sustainably with no fewer than 13 of the 18 Bundesliga clubs posting a profit. The losses at four of the other five clubs were less than €10m with the outlier being Hertha BSC with a massive €99m deficit.

Dortmund have now posted profits two years in a row, so they are back to “business as usual”, having been profitable for nine consecutive years before COVID struck, generating an impressive €227m between 2011 and 2019.

Dortmund’s profit from player sales rose €25m (35%) from €73m to €98m, mainly due to the big money sale of Jude Bellingham to Real Madrid. This was the club’s second highest ever, only surpassed by the €126m gain in 2017/18.

Dortmund’s recurring revenue has increased by €142m (38%) from the pre-pandemic €378m in 2018/19 to €520m (including other operating income), mainly driven by growth in commercial income, which has shot up by nearly 60% (€92m) in this period. Bayern Munich are yet to publish their 2023/24 accounts, but in 2022/23 their €654m revenue was a massive €324m more than Dortmund’s €420m.

Looked at another way, Bayern’s revenue was around 80% more than Dortmund, which is a massive difference between the first and second ranked clubs in a country. This is far more than the gap in the other leading countries – with the exception of France, where PSG are in a class of their own financially.

Given the relatively low TV money domestically, the Champions League is a very important part of Dortmund’s business model. In 2023/23 they earned €120m for reaching the final, where they were defeated 2-0 by Real Madrid. Dortmund’s €120m from the Champions League last season was comfortably the highest they have earned in Europe, easily overtaking the previous €79m peak in 2020/21, when they reached the quarter-finals.

Their European exploits have delivered a healthy €400m from European competition in the last five years, so it is no surprise that the club has described the income here as “extremely lucrative”. This was still much less than Bayern Munich’s €555m, but a fair way above RB Leipzig €299m, Bayer Leverkusen €178m and Eintracht Frankfurt €113m.

Dortmund have the highest crowds in Germany, averaging over 81,000, which represents a near sell-out of Signal Iduna Park. The closest challengers in 2022/23 were Bayern Munich 75,000, followed by Eintracht Frankfurt 56,900, Stuttgart 55,118 and Borussia Mönchengladbach 51,371. In fact, in 2022/23 Dortmund’s attendance was actually the second highest in Europe, only behind Barcelona’s 83,500, but ahead of other great clubs like Manchester United, Inter and Milan.

Dortmund’s wage bill increased by €33m (14%) from €236m to €269m, a new club record. This was largely due to higher performance-related bonuses, as the base salaries of the professional squad slightly decreased. In addition, retail and administration was up from €36m to €44m. Despite this growth, the wages gap to Bayern Munich remains very high. In fact, the €179m difference in 2022/23, when Bayern had €416m wages, was the highest ever between the two clubs. Dortmund’s wages are also a fair bit less than their European peers, e.g. in 2022/23 PSG’s €621m, Barcelona €571m and Manchester City €486m were all more than twice as much, while four other clubs paid more than €400m.

Largely thanks to reaching the Champions League, they broke through the €500m revenue barrier for the first time, setting new records in every revenue stream. This led to a healthy €49m profit, the club’s best result for 11 years.

Dortmund suffered more than most from COVID, which the club had described as “the most difficult economic period in more than 15 years”, but it has well and truly recovered since those dark days.

The business model does depend on good performance in the Champions League and decent profits from player trading, so they cannot afford to be complacent, though Dortmund’s pragmatic approach has usually proved up to the task of delivering solid finances.