Borussia Dortmund, Germany's only publicly listed soccer club, said Thursday it was teetering on the edge of financial collapse. The state of North Rhine-Westphalia rejected suggestions it bail out the Bundesliga team.
Financial trouble has deflated Borussia's once mighty image
Borussia Dortmund, which runs its business year from July to June, said it had run up a preliminary operating loss of €27.2 million ($35 million) in the six months to December. And that figure was expected to widen to €68.8 million for the full year ending June 30, 2005.
"The earnings and financial situation of Borussia Dortmund has become existence-threatening," the ailing club said in a statement.
Together with cumulative losses of €73.3 million from previous years, that meant that Bundesliga champion of 2002 had a total shortfall of €142.1 million, equivalent to 79 percent of its paid-up capital. In view of its "very tight finances," Borussia Dortmund's management was in "constant and constructive dialogue with creditors about how to overcome the current bottleneck on a sustainable basis," the statement said.
It had therefore asked auditors Rölfs Partner to draw up a restructuring concept. As part of the package, Borussia Dortmund intended to defer rental payments to the Westfalenstadion stadium where it plays its matches, as well as a series of other measures.
While the majority of creditors had already agreed to the restructuring, three creditors had not yet given their approval and the soccer club was continuing to negotiate with them, Borussia Dortmund said. The financial troubles come only a week after Gerd Niebaum resigned as club president. His replacement, Hans-Joachim Watzke, was named two days ago.
Borussia Dortmund shares fell heavily on the stock exchange in the wake of the news and were showing a loss of €0.49 or 18.49 percent at €2.16 in late morning trade.
The German state North Rhine-Westphalia said it would not step in to bail out the once-mighty Ruhr Valley club. State sport minister Michael Vesper said it would be a huge blow if the team disappeared from the Bundesliga, but there was no way to justify helping Borussia pay for its expensive players. "We cannot use public funds to secure the millions in salaries for pros," state sport minister Michael Vesper told the DPA news agency.
In an effort to solve its financial woes, it seems the 2002 Bundesliga champion may be forced to cash in its best assets. There are plenty of European clubs that might be interested in snapping up Dortmund's Czech stars Tomas Rosicky and Jan Koller.