Expected general economic environment

The summary of the expected general economic environment is dominated by the effects of the COVID-19 pandemic. The strict lockdown measures enacted in recent weeks are currently being steadily eased.
Essentially, the basis for all pending decisions is the fight against the COVID-19 pandemic. Thus, as far as professional football is concerned, it is important that the associations remain in regular contact with the health authorities. A coordination group with representatives from DFL, DFB and the state associations was formed for this purpose.

DFL Deutsche Fußball Liga GmbH took the postponed final of the UEFA Champions League and Bundesliga relegation matches into account when it drew up the fixture schedule for the 2020/2021 season. The season is scheduled to kick off on 18 September 2020.

Income from match operations are directly tied to allowing spectators to visit SIGNAL IDUNA PARK.

As things currently stand, the ban on major events only runs until 31 August 2020, making it conceivable that the new Bundesliga season could kick off with limited numbers of spectators. DFL Deutsche Fußball Liga GmbH has issued guidelines with which the conditions can be met to allow spectators in SIGNAL IDUNA PARK. Thus, Borussia Dortmund is in regular contact with DFL Deutsche Fußball Liga GmbH to discuss how sections of the stadium can once again be opened to spectators.

Since selling out stadiums is currently not feasible and any easing of restrictions will always be conditional on static or falling rates of infection, earnings forecasts in this regard are dominated by severe losses and uncertainty.

Commercially successful professional football operations are no longer limited to just regional or national levels. The team's success in these competitions is very much a focus in all plans. Qualifying for the group stage of the UEFA Champions League continues to place Borussia Dortmund in a better financial position. Playing and delivering positive performances in the competition not only generates income, it can also widen the club's media and brand coverage, which promotes the club's interaction with existing fans and encourages others to begin following Borussia Dortmund. The club intends to promote these effects with a progressive internationalisation strategy that is regularly tailored to current trends. In light of this, Borussia Dortmund aims to further expand and professionalise its digital presence. Borussia Dortmund thereby responds to social trends and to a large degree leverages the attractiveness of the Borussia Dortmund brand. The growing international awareness of the brand that this gives rise to allows the club to tap foreign markets.

In the 2020/2021 season, Borussia Dortmund once again marketed its virtual advertising boards. SIGNAL IDUNA PARK's advertising boards can be digitally overlaid in the broadcast signal to target the respective TV audiences when broadcasting matches abroad. In times when matches are held behind closed doors or only in front of a very small number of spectators, this technology allows sponsors abroad to be targeted on an individual basis. For Borussia Dortmund's international partners in particular, this is an attractive and increasingly popular way to reach their customers worldwide.

Despite the economic setbacks in the first half of the 2020 calendar year and the forecast exacerbation of the global economic slump, professional football, particularly in Germany, has not lost any of its appeal. As such, Borussia Dortmund will also operate in a demanding market and competitive environment in the coming season.

Particular focus will be placed on income from TV marketing in connection with the expected general economic environment.

DFL Deutsche Fußball Liga GmbH has informed the clubs of the first and second Bundesliga divisions about the expected distribution volume for the 2020/2021 season. Since any further developments cannot be reliably assessed at present due to the COVID-19 pandemic, the DFL Executive Committee decided to withhold a portion of the distribution as security for the time being. Despite the reductions, the announced disbursements of the TV funds will allow for a good degree of planning.

Despite the significant influence of the COVID-19 pandemic, DFL Deutsche Fußball Liga GmbH once again sold the media rights for the DACH region for the 2021/2022 season onwards for approximately EUR 1.1 billion. Sky Germany secured the rights to all live broadcasts on Saturdays, while DAZN will broadcast matches on Fridays and Sundays. Football will also return to free-to-air TV after a 17-year hiatus, with ProSieben/Sat1 acquiring the rights to a total of nine live matches. Even though the agreement fell short of expectations with a decline in volume of around 5%, in these uncertain times it represents an excellent economic foundation for the coming seasons.

After marketing activities at the stadium temporarily came to a complete halt, stadium tours were resumed on 1 July 2020. Visitors can take these self-guided tours using their own smartphones and headphones. Hospitality events have also resumed; however the number of participants has been reduced significantly and visitors must comply the hygiene guidelines.

Since policy-makers will continue to set the precedents in this regard, this revenue item is also expected to decrease until further notice.

Transfer deals are an important part of Borussia Dortmund's business and, as in previous years, represent a significant source of income. However, in view of the developments in the economic environment, Borussia Dortmund on principle only takes transfer income into limited account in its planning. The transfer policy nevertheless presents significant opportunities to generate substantial income. Consequently, transfer deals are always assessed against the background of the current season. High transfer sums often go hand in hand with a drop in quality within the team, but it cannot be ruled out that value-driven transfers will be concluded contrary to the Company's sporting interests. Given Borussia Dortmund's sustained success, its players are increasingly piquing the interest of other top clubs.

The COVID-19 crisis is also influencing the transfer market. Transfer sums for players are expected to decrease temporarily on account of the economic uncertainties. According to the International Centre for Sports Studies, it is possible that transfer sums for players in Europe's leagues will decline by several million euros.

Since football seasons were postponed throughout the world, there are two summer transfer windows this year. The DFB announced that the first transfer window would open for one day on 1 July 2020 to allow for the registration of previously signed contracts. In line with the fact that leagues in Europe are delaying the end of their seasons, the DFB is following UEFA's recommendation that the current transfer window be extended until 5 October 2020.

Despite the expected potential losses and the uncertainty as the situation continues to unfold, the European leagues remain attractive for talented young players. Current expectations are that there will be quite a bit of activity on the transfer market in the summer of 2020 but that the record transfer fees seen in previous seasons will not be paid.

Overall assessment of expected performance

The COVID-19 crisis is currently overshadowing the economic activities of German companies, forcing them to confront the major challenge of having to operate in a highly uncertain environment. After concluding the season under unprecedented circumstances, Borussia Dortmund also expects to face significant economic restrictions in the coming season. The risk of a second wave of the pandemic and another lockdown as a result will shape economic planning for some time to come. Borussia Dortmund will persevere through these difficult times thanks to the economically sound foundation it has built up and the specific countermeasures it has taken. There is a high forecasting risk stemming from the strong dependence on political decisions and the further course of the COVID-19 pandemic. Thus, any statements regarding the future performance of the Company are subject to a high degree of uncertainty.

6th match day / 28.09.2019

BVB - Werder Bremen 2:2

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