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Business

Dortmund Faces Cash Crunch

Borussia Dortmund, long one of Germany’s premier soccer clubs, has had a lousy season so far. But is the only Bundesliga team listed on the stock exchange also sliding towards financial oblivion?

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Can Borussia's players count on getting their paychecks?

Borussia’s misery this season has been both on an off the pitch. Plagued by numerous injuries, the 2002 league champion has been unable to keep up with the Bundesliga’s best this year. And the team’s mediocre performance has meant Dortmund failed to qualify for the prestigious and lucrative Champions League, where Europe’s top-flight teams compete.

It has been widely known for months that losing the estimated €12 million ($15.3 million) in revenue from the Champions League matches has put Dortmund’s managers under particular pressure. But few could have guessed the extent of Borussia’s financial woes until recently.

“We’re in the most difficult situation since I’ve been in Dortmund – and that’s January 1993,” Borussia coach Matthias Sammers said last month.

Borrowing €100 million?

Over the Bundesliga’s Christmas break, numerous reports surfaced that Borussia was looking into borrowing around €100 million by issuing debt simply to keep the club afloat. The securities would reportedly be backed by the future revenue generated by viewing rights over the next 12 years. Team managers have since repeatedly denied that there is a liquidity crunch in Dortmund, but speculation caused by the massive borrowing plans has refused to subside.

The debt issue would not be the first time Borussia has creatively tried to ease its financial problems. There was an uproar in Germany last autumn when it became known that Dortmund wanted to take advantage of tax breaks for employees who work at nighttime and on weekend work to trim its tax bill.

Several reports in the media expect the club to chalk up around €25 million in losses this season. According to the Munich-based Süddeutsche Zeitung daily, a source from Dortmund’s upper circle has said the team has already “sold the family silverware” and now the borrowing against as yet unseen revenue would spell the “sale of the club’s future.”

General manager Michael Meier recently admitted Borussia had been talking with an Anglo-American investment group Schechter & Co. for the past year about possibly pursuing the debt issue, but both Meier and Dortmund’s president Gerd Niebaum continue to dispute that the team’s coffers are already empty. “We’re liquid enough to finance this season through the end,” Niebaum told the daily newspaper the Frankfurter Allgemeine Zeitung last week.

Stocks down about 70 percent

However, such words offer little solace to the club’s fans and console even less the holders of its stock, which has taken a proper beating amid all the financial gloom and doom. Since the Borussia listing on the stock market in October 2000, buyers of its shares have lost around 70 percent of their investment. From the initial price of €11, the Borussia stock has slumped to €3.31 on Friday.

With a number of key players still injured or failing entirely to turn up for training, Dortmund unfortunately can’t count on the sporting success that would help bring in more cash this year. “Unless there’s a miracle, Borussia Dortmund will run up gigantic losses this season,” HypoVereinsbank analyst Peter Thilo recently told the magazine Focus Money.

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