Borussia Dortmund - Passing the financial fitness test
Borussia Dortmund’s Q221 trading update showed higher profitability year-on-year due to active cost control despite lower revenue in aggregate as a result of COVID-19, and noting that the majority of revenue sources increased. Our recent Outlook note highlighted the attractive financial characteristics of Borussia Dortmund’s business, in isolation and versus its peers, in ‘normal’ times. Therefore, the company should be a prime beneficiary of life returning to normal, with improving momentum in revenue and profitability, subject to sporting results. Our asset-based valuation indicates upside of 144% from the current share price to €12.55.Borussia Dortmund has two reportable segments, which are responsible for the main activites of the overall Group. The first segment consists of Borussia Dortmund GmbH & Co. KGaA, which operates a professional football club including professional football squad and leverages the associated revenue potential arising from the the transfer of players, catering, TV marketing, sponsorship and ticketing. The second segment consists of the separate merchandising business, which is carried out by BVB Merchandising GmbH. In addition, Co. assumes all the marketing activities for the stadium, including the event areas, on non-match days and includes activities such as stadium tours.
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