Borussia Dortmund and the effects in the share price


As we all know the share price of the football club is related with how the team plays on the pitch. Through Dortmund’s example I analyse the evolution of the share price of a football club trying to find which are the factors that may affect the share price.

To begin with, through 2017 there was not major changes corresponding to the first half of the fiscal year 2017-2018. As it is listed on the Frankfurt Stock Exchange, 60% of the share capital of the club is floating as the last trading day the price was €6,104. Meaning an increase in the variation of 0.9%. However, this quick analysis hides the large fluctuations recorded these six months as BvB share had a spike at €8,2 early October while on early December below €6. So what are the factors explaining those fluctuations?

Transfer rumors affecting the value?

It is widely known that activity of football clubs is constantly watched by various media. A trend tha is true during the summer period, during which many rumors comes around about transfers. At the same time, we know that the weight that may represent the trading activities of players, the rumors circulating on this subject are not without consequences on the movements made by investors betting on the clubs traded. Watching BvB share, it is not insignificant to note a strong growth of title starts early August. When the rumors of Dembele trading to Barcelona for more than 100M€ began we realised something. From the “proposed” price of the transfer, the stock share was €5,9 (02/08) grew to €7,5(25/08) date when he was officially announced by FC Barcelona. As a result it put an end to a speculative boom.

Does the results on the pitch influence?

Despite the transfer of Dembele at Barcelona, it was interesting to see the share continued to rise until early October  reaching almost €8,3 which means more a 26% increase compare to July. In addition, it was also one of the best early starts of BvB in the championship as they recorded 6 wins and a draw, standing first place before the Bavarian rival. After that game, the bad results in national dn European level led to a slow decline of the stock reaching €6.

What about financial reports?

For traditional companies publicity traded reports is an expected moment for investors. In case BvB it showed more than 3%. However, in the sport industry it is difficult to make a direct link between share pride and the results. WHY? Simply because in BvB case took place with the transfer of Dembele. Although for the first quarter of this fiscal year announced an increase of turnover bt 77% and profit higher than €50M, that didn’t stop the decrease of the share price.

Board Decisions

The last element of this opinion analysis is the dismissal of Peter Bosz formalized on the December 10 although it was announced in press since the beginning of December. A dismissal which comes at a time where the title began its recovery and a remedy which can also return for good results.

Concluding and in my opinion, the image of any company and developments can affect the share price of a football club. Financial factors must also be integrated in the analysis. However, unlike the classic companies, football clubs are scrutinized by press. It is an element that can have negligible consequences on the evolution of the share prices.

You can read more at our author’s blog here.