The Money Game: Bundesliga 2008/2009 Financial ResultsBy: Jan | January 28th, 2010
The DFL released a detailed report on the economic state of professional football in Germany on Wednesday. The financial results had previously been part of the DFL’s Bundesliga Report, due in August, but have now been released separately, earlier and in more detail. There is less text, more numbers and the glossy photos have been replaced by grittier bleached counterparts. The Bundesliga means business. What else is new? Increased revenue, increased equity, increased debt and Borussia Mönchengladbach bears the brunt of the blame.
Revenue rose by 9.5% to a record €1.715 billion. The combined revenue of the two Bundesligas (first + second division) broke the €2 billion barrier for the first time. Advertising has become the biggest contributor to the league’s revenue pie. The economic crisis could have a negative impact on this revenue stream this season, although a lot of major deals like kit sponsorships are long term and experts suggest that football’s popularity shields it from the problems other sports face in finding/retaining sponsors. Sponsorship still centers around typically male products like beer, cars and DiY stores, but the DFL expects that the advertising industry will eventually recognize the growing popularity of the league among women and families. The current TV deal runs until 2013 and will slightly increase by €50m over that timespan, while international TV deals will also contribute an extra €20m. Overall no massive improvements can be expected here. Matchday revenue has been maxed out and without any increase in ticket prices will remain at the current level as well.
One thing you can do is adjust the revenue by subtracting one-off fees from transfers. This is what Deloitte like to do for their Football Money League and Annual Review of Football Finance. In this case revenues would have risen by €58,7m to €1.438bn in 2008, and by €136,9m to €1.575bn in 2009. The market leaders Bayern Munich more or less repeated their financial results from the previous season, so they didn’t contribute much to this increase. The deep cup runs by Bremen and Hamburg have contributed to record revenues for both clubs. Apart from that, a lot of the growth is probably also down to the newly promoted clubs. Cologne and Mönchengladbach alone have probably generated around €50m more than the likes of Rostock and Duisburg, and the Hoffenheim “fairy tale” has also helped this team to quickly attract a healthy mix of sponsors, while their new stadium will have also helped to drive up revenues. The potential relegation of clubs like Hertha can thus also have a negative impact on the league’s total revenue next season.
The league recorded a profit of €31m, or an average of €1.72m per club, 14.2% less than in the previous season. Though, the average EBITDA of the clubs rose by 15% to €14.6m. EBITDA as the report explains stands for “earnings before interest, taxes, depreciation and amortization, and is the performance indicator commonly used in financial analyses”. The number of clubs that broke even sank from 15 to 11. Hertha, Schalke and Hoffenheim have been three new entries to the clubs in the red. Not sure about the fourth one.
Equity and Debt
Equity capital increased by 21% to €521m resulting in an equity ratio of 35.5%. As the report explains: “This ratio, which describes the contribution of equity capital to total assets and enables an evaluation of financial stability, is high compared to many other sectors.” Cough banks cough. Debts rose by 30% to €610m. Both increases can mostly be blamed on the return of Borussia Mönchengladbach, who added their whole Borussia Park stadium, training and youth centre financing package to the books of the league. Three years ago equity was as low as €294m and debts as high as €569m, so the league has build some muscle during this time. It’s worth noting that debt obviously isn’t a good and/or sole indicator for the financial burden of clubs. E.g. part of Hamburg’s stadium financing deal is a rather unfortunate liaison with sports marketer Sportfive, who receive a percentage of Hamburg’s TV money. Such a deal doesn’t show up as debt, but can be a bigger burden for a club than an interest free loan by an “evil” club owner like Roman Abramovich.
If that wasn’t yet fun enough for you, then you can download the report as PDF here.