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In Bayern's Shadow, Borussia Dortmund to Raise €110 Million

Keeping up with the Lahms: Dortmund needs more cash to catch Bayern Munich. Source: AP
Keeping up with the Lahms: Dortmund needs more cash to compete with Bayern Munich.
  • Why it matters

    Why it matters

    Germany’s only publicly listed professional soccer club wants to narrow the financial gap with the world’s top clubs.

  • Facts

    Facts

    • Borussia Dortmund will issue up to 24.6 million new shares.
    • Puma and Signal Iduna have indicated interest in taking larger stakes in the team.
    • The move would allow the club to keep key players such as Mats Hummels and Marco Reus for the long term.
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    Audio

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As Borussia Dortmund and Bayern Munich battle for dominance in German soccer, the power struggle isn’t restricted to what happens on the pitch.

On Thursday, a day before the start of the Bundesliga, Germany’s top division, Dortmund announced it was planning an extensive capital increase. The only German soccer club listed on the stock market will sell up to 24.6 million new shares. At €4.93 per share, about €110 million ($146 million) could be raised.

Existing shareholders have first refusal rights.

Sporting goods manufacturer Puma and insurer Signal Iduna are ready to take bigger equity stakes of up to 5 percent each, Handelsblatt has learned. The club declined to comment. In July, chemical group Evonik, Borussia’s longtime main sponsor, bought a stake worth about €27 million at a price of €4.37 per share.

Hans-Joachim Watzke, Borussia Dortmund’s managing director, wants to reduce the financial gap between his club and Bavarian powerhouse FC Bayern Munich. Through the stock offering, Dortmund’s market capitalization would grow from €330 million to €440 million. Bayern is worth an estimated €1.3 billion after financial services company Allianz purchased about 8 percent of the club in February.

By bringing in Puma and Signal Iduna as investors, Dortmund is copying the Bavarians.

About a third of the additional money would enable Dortmund to hold key players such as defender Mats Hummels and striker Marco Reus for the long term instead of possibly losing them to its deep-pocketed archrival in Munich, as happened most recently with Robert Lewandowski and Mario Götze. Whereas Borussia Dortmund’s payroll was €75 million a season, Bayern Munich’s was almost double at €144 million.

By bringing in Puma and Signal Iduna as investors, Dortmund is copying the Bavarians. Major shareholders of the unlisted Munich club are Adidas, Audi and Allianz. A new study by management consulting company Ernst & Young concluded the victory of Germany’s national team at the World Cup in July had increased interest in partnerships with domestic professional leagues. The Bundesliga is one of the most profitable European football leagues with annuals earnings of €96 million.

Deutsche Bank might question whether it had made the right decision in June. After long discussions, the board decided against getting on board with Borussia Dortmund with a 10 percent stake.

On Oct. 31, 2000, Dortmund made soccer history. Then-club president Gerd Niebaum and his manager, Michael Meier, travelled proudly to Frankfurt and decorated the bulls in front of the stock exchange in the club’s black and yellow scarves. “If we show in 2001 that going public is not only fun for the companies but for investors, other teams will follow,” Mr. Niebaum said.

But almost 14 years later, Borussia Dortmund remains the only publicly listed German soccer team. In all of Europe, less than 20 football clubs are listed on the stock exchange.

Bayern Munich remains the measure of all things sports-related in Germany. The team has 23 Bundesliga titles and 5 European championships, compared to Borussia Dortmund’s five domestic titles and one Champions League victory.

But Borussia Dortmund’s success on the capital markets might just make the rivalry on the pitch a bit more even.

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