Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...
Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...
Annual Report 2006/2007 KGaA/Group - BVB Aktie - Borussia ...
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GROUP MANAGEMENT REPORT<br />
organisation is based on a clear separation of the<br />
individual corporate divisions, which thus enables<br />
business decisions to be analysed and prepared in<br />
individual departments with the relevant expertise<br />
before a decision is made for the Company as a<br />
whole. The constant exchange between the corporate<br />
divisions through the medium of well established<br />
meetings contributes beforehand to optimising<br />
the quality of the decisions made and avoiding<br />
conflicts of objectives.<br />
From the point of view of risk management, it is<br />
equally indispensable for a company to be able to rely<br />
on qualified executives and their staff. Management<br />
and all the Company's employees have a permanent<br />
responsibility to identify risks at an early stage, to<br />
monitor and therefore limit them, and at the same<br />
time to pursue business opportunities rigorously.<br />
COMPETITIVE RISKS<br />
Competition between football clubs, for example in<br />
obtaining sponsors, has intensified, and not just as<br />
result of the stadiums built for the <strong>2006</strong> FIFA World<br />
Cup. Differing decisions made under the influence<br />
of regional politics can also affect the ability to attract<br />
and retain interested companies. In the most recent<br />
season, in particular, sponsors have been rated differently<br />
by regional politicians, and in some cases<br />
have therefore been approved for certain competitors<br />
while being simultaneously banned for others.<br />
An additional difficulty is that there is an unusually<br />
high concentration of competitors in North Rhine-<br />
Westphalia in particular, with six clubs currently in<br />
the Bundesliga and several in the Second Bun -<br />
desliga. This can have negative consequences for<br />
attracting sponsors based in the region because, in<br />
contrast to other regions, there is the risk for sponsors<br />
that they will be in conflict with each other for<br />
potential customers.<br />
SALES RISKS<br />
The future performance of <strong>Borussia</strong> Dortmund's<br />
individual lines of business depends on its sporting<br />
success. A lack of sporting success over a long period<br />
could have a major impact on demand for the products<br />
offered and therefore on the achievement of<br />
financial and sporting objectives. It is also not possible<br />
to be fully certain in advance of the consequences<br />
for the Company of statutory provisions.<br />
Equally, the development of pay TV will have a longterm<br />
effect on TV income achievable in future.<br />
FINANCIAL RISKS<br />
<strong>Borussia</strong> Dortmund finances itself primarily from longterm<br />
bank loans, trade payables, season tickets paid for<br />
in advance and payments from sponsors. The related<br />
risks arising comprise interest-rate-related cash flow<br />
risks, market risks, liquidity risks and credit risks. On<br />
the other hand, the Company is not exposed to any significant<br />
currency risks. The methods of managing the<br />
individual types of risk are described in the following.<br />
Under the terms of the loan agreements entered into<br />
by <strong>Borussia</strong> Dortmund and its subsidiaries with<br />
Morgan Stanley & Co. International Ltd., London,<br />
England, the lender has an early right of termination<br />
in the event of failure to maintain certain contractually<br />
defined financial ratios (covenants).<br />
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