Original-Research: Borussia Dortmund GmbH & Co KGaA - from NuWays AG

Classification of NuWays AG to Borussia Dortmund GmbH & Co KGaA

Company Name: Borussia Dortmund GmbH & Co KGaA ISIN: DE0005493092

Reason for the research: Update
Recommendation: BUY
from: 11.03.2024
Target price: 5.50
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Philipp Sennewald

Qualification for FIFA CWC 25 provides earnings upside for BVB

Following RB Leipzig´s UEFA Champions League (UCL) exit against Real Madrid last week Borussia Dortmund is now officially qualified for FIFA Club World Cup 2025.

The recently founded FIFA Club World Cup (CWC), which will be held in a four-year rhythm, will take place from June to July 2025 in the USA. 32 teams will take part in the competition – selected among the winners of continental club competitions. FIFA has recently announced the details for qualification criteria – ensuring UEFA the participation of 12 teams from the European confederation. Moreover, FIFA has allowed European participants according to UEFA Champions League coefficient ranking, whereas participants from other continental confederations will be selected according to a FIFA ranking. UEFA has guaranteed automatic qualification to the tournament for the last three UCL Winners plus the upcoming 2024 UCL champion. The remaining eight teams are selected according to a coefficient based on the 4- year performance in the UCL. Currently, Borussia is granted the 6th place in the UEFA ranking (excluding UCL winners automatically qualified).

While FIFA did not yet release official details on the prize money and corresponding distribution, several media outlets like Italian “Gazzetta dello Sport” indicated that total price money will be around € 2.5bn, which would imply an average payment of € 78m per participant. However, since we have no official figures yet, we do not include a possible financial impact of the CWC qualification in our model.

Yet, in addition to the direct revenue boost, the format looks set to increase the club’s general visibility outside of Germany and especially in the important US market, where BVB recently opened its first permanent office in North America. Hence, this should provide upside potential for the club’s merchandise and sponsoring revenues. Moreover, BVB and Bayern Munich participating in the CWC should also improve the negotiation power of the German Football League (DFL) regarding the foreign Media distribution rights of the Bundesliga, which would ultimately benefit BVB’s TV Marketing revenues.

Against this backdrop as well as the strong operating performance in H1, we reiterate BUY with an unchanged PT of € 5.50 based on DCF.

You can download the research here:
http://www.more-ir.de/d/29103.pdf
For additional information visit our website www.nuways-ag.com/research.

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