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Football in Germany - An Economic Comparison

edelhelfer report as of the season 2013/14

The edelhelfer report “Football in Germany An Economic Comparison (Season 2013/14)” has valued the 18 Bundesliga teams with respect to their economic performance. Together, the league has a value of EURbn 4.6. With an enterprise value of EURbn 1.3, Bayern München is not only the most successful football club on the pitch but also the most valuable one. Like Hamburger Sportverein (HSV) an increasing number of clubs use their economic power for the acquisition of external investors.

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The true value of HSV was extensively discussed during the past months with valuations up to EURm 350. With the commitment of Klaus-Michael Kühne and his purchase of 7.5 % of the shares in HSV Fußball AG for EURm 18.75, the club was finally valued at EURm 250. Frank Wettstein, CFO of the club, is convinced that this valuation is an adequate consideration for the shares. This results in a revenue multiple of 2.1x based on revenues of approximately EURm 120 in the season 2013/14.

“The revenue multiple of HSV is slightly above the average of the current transactions in the Bundesliga which we found in our analysis. Only Bayern München could realize a higher multiple of 2.8x in its sale of shares to Alliance in early 2014”, explains Niels Gronau managing director of edelhelfer.

In the transactions realized since January 2014, the sales multiple was 1.95x on average. That means, investors were ready to pay almost double the current revenue for their share in the company. Applying this average multiple to the revenues of the other league participants results in a first indication of how much every single club could be worth. While Bayern München achieves an enterprise value of EURbn 1.3 on the basis of its last transaction, Eintracht Braunschweig as the “the cheapest club” would only be valued at EURm 78.

Also for VfB Stuttgart (VfB), which already works on the spin-off of its professional football department as a prerequisite for a later involvement of an investor, EURm 224 could be a first benchmark for its valuation. According to current press reports, Daimler AG intends to invest EURm 20 in VfB. This would result in a shareholding of 9% with respect to this assessment. VfB is one of the last four Vereine which are still playing in the Bundesliga. In 2007, it was also the last team that could win the league as a Verein.

Altogether, the 18 clubs combine a total value of EURbn 4.6, of which Bayern München, Borussia Dortmund and Schalke 04 unite approximately EURbn 2.2, i.e. almost 50% of the whole league. These economically strongest clubs were also the most successful ones on the pitch, reaching rank one to three in the last season.

Outlier in the positive sense was FC Augsburg: Placed almost on the last rank in the revenue table, the club ranked nine places higher on the pitch and finished the season on rank eight. TSG Hoffenheim finished about six places better than expected according to its economic performance; FSV Mainz 05 became third in this “efficiency ranking”. The fact that money is not a guarantee for success on the football ground was proven again by HSV in last season. With a turnover of about EURm 120 (rank four by revenues) it could only avoid relegation in the second relegation match.

Even though there are obviously exceptions to the rule that “money scores goals”– in the negative as well as in the positive sense –, the economically stronger teams usually prevail. This situation is even reinforced further by their participation in the international competition. Therefore, it gets even more important for the “little” clubs to optimize their internal economic potentials and to acquire, if necessary, additional funds also externally.

Table: Enterprise and club values in the German national league

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