Yesterday, BVB published an ad-hoc stating that CEO Hans-Joachim Watzke will not extend his contract and will step down from management in the fall of 2025, when his contract expires.

Watzke was appointed as CEO in February 2005 when the club was in a financially precarious situation. After the turn of the millennium, an inflated cost base paired with a lack of sporting success brought the club to the brink of bankruptcy. Watzke is regarded as the man who turned matters around for the BVB at a creditors' meeting in March 2005. From then on, the club continuously reduced its debt while at the same time developing into a European top club under Watzke’s leadership, winning two Bundesliga titles, three DFB Cups and reaching the final of the Champions League in 2013. Watzke's departure is therefore certainly a bitter blow for the club as he is likely not replaceable on a one-to-one basis. However, as there are almost two years left until his departure, we are convinced that a suitable successor will be found in cooperation with the current CEO.

That said, it is also worthwhile looking at the current sporting performance of BVB, which is kind of a mixed bag. Although reaching the knock-out stage of the Champions League (CL), the club is only sitting in 5^th place in the Bundesliga, six points behind Leipzig in 4^th after failing to win a match in Decembre. However, thanks to the depth and experience of the squad and the fact that Stuttgart (3^rd, +7 points) will have to withdraw several key players for the Africa Cup and the Asian games in Q1, BVB should still have a valid opportunity to secure 4^th place, which is crucial to qualify for the newly formatted 2024/25 CL under which participants overall price money will increase by a third. Moreover, 5^th place might also be sufficient should Germany remain 2^nd in the UEFA clubs coefficient which however appears unlikely given the strength of the clubs from Spain and England as well as the slim advantage of only 0.017 points (see p. 2 for more detail). Hence, while there is upside to this years estimate given a feasible opponent in the CL round of sixteen (Eindhoven), our 24/25e could serve as too bullish should the club not participate in the CL at all (eNuW: round of sixteen).

Despite the recent performance dip, 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 (2.1x), OL (2.5x) and Manchester United (4.6x). We reiterate BUY with an unchanged PT of € 5.50 based on DCF.