On Tuesday, BVB visited AC Milan to play their penultimate Champions League group stage match. Thanks to a 3-1 victory, the team has already qualified for the knock-out stage before the last matchday, thus securing € 9.6m additional premium payments on top of the € 2.8m for winning the match.

As Paris St. Germain only managed to get a draw (1-1) in their final home game against Newcastle, BVB is now also in pole position finish first in their group, as they only need a draw in the last match at home against Paris. Mind you, BVB have not lost at home in the Champions League for two years and overall lost only one out of the last 29 matches at Signal Iduna Park. As the group winners play the second-placed team from another group (i.e. an “easier” opponent) in the round of sixteen, this would clearly improve BVB’s chances to advance even to the quarterfinals, which would secure another € 10.6m in premium payments (not reflected in our estimates). Keep in mind, that those premium payments have a de facto 100% margin, as no costs are incurred and that sales from ticketing, catering and merchandising are not yet included in that number.

While the club is performing above expectations in the Champions League in what we called an unlucky drawn group (Paris, Milan, Newcastle) back in October, the Bundesliga performance appears somewhat lackluster so far as BVB is only in 4th place after one third of the season. Although this would be sufficient to qualify for the Champions League at the end of the season, the team is seen to face tough competition from the surprisingly strong Stuttgart (currently 3rd) and Leipzig (5th), while Leverkusen and Bayern look set to decide the championship among themselves. Hence, BVB should be competing with Stuttgart and Leipzig for the remaining two spots to qualify for the CL. However, thanks to the depth and experience of the squad and the fact that Stuttgart will have to withdraw several key players for the Africa Cup and the Asian games in Q1, we regard BVB’s chances for a Top-4 finish as high. Notably, this will be more important than ever, as UEFA will introduce a new format starting next season which will increase overall price money by c. 33%.    

Valuation remains undemanding, in our view, as BVB shares are trading at only 1.0x EV/Sales 2023/24, which marks a notable discount to its peers Juventus (2.0x), OL (2.3x) and Manchester United (4.3x).

Reiterate BUY with an unchanged PT of € 5.50 based on DCF.