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Borussia Dortmund bite the hand that once fed them

16 April 2012 | Posted in SportsPro Blog | By Eoin Connolly | Contact the author

Borussia Dortmund bite the hand that once fed them

Polish striker Robert Lewandowski (centre) wheels away to celebrate his winner in Borussia Dortmund's 1-0 victory over Bayern Munich at Signal Iduna Park on Wednesday 11th April

It has been another good week in another good year for Borussia Dortmund. The German champions took a significant step towards retaining their title with a 1-0 win over second-placed Bayern Munich at Signal Iduna Park last Wednesday night. On Saturday, that was followed with a 2-1 victory at the home of bitter Ruhr rivals Schalke 04.
 
With Bayern dropping points a few hours later in a home draw with FSV Mainz 05, Dortmund now sit eight points clear at the top of the Bundesliga table with three games to play. It would take an unprecedented collapse to stop them winning the Bundesliga for the eighth time.
 
It was at Bayern's Allianz Arena in November that Dortmund's title defence was properly launched, a controlled 1-0 victory at the home of the then-league leaders dispelling the malaise of a sluggish start to 2011/12. Yet these consecutive title battles have brought the two clubs back together in a context that would not have seemed credible just a few years ago.
 
In late 2004, with Bayern on the march towards yet another Bundesliga title, Dortmund found themselves on the verge of bankruptcy. Huge debts had been amassed in paying for new signings; a short-sighted financial strategy executed in the hope of extending a successful period stretching back to the mid-1990s. A drop in share values – Dortmund is the only German soccer club which is partly publicly traded – was swiftly followed in the 2003/4 season with failure to qualify for the Uefa Champions League. With earnings tumbling, Dortmund could no longer pay the bills.
 
 
Ruminating in early February on the yellow and black swarm that was once again enveloping his highly paid and highly rated squad, Bayern president Uli Hoeness made a startling revelation. Such was Borussia Dortmund’s financial desperation in 2004 that Germany's biggest club reached out to their stricken opponents with a crucial loan.
"Well, first of all it’s very honourable from Bayern Munich, helping other clubs in such critical situations. It was a critical situation for Borussia Dortmund."
 
"When they [Dortmund] were aware that they could no longer pay their salaries, we gave them €2 million without collateral for a few months," Hoeness told a fans' meeting in Hamburg.
 
"This story is true!" confirmed Dortmund’s chief financial officer, Thomas Tress, in a February interview with SportsPro at the SpoBis conference in Düsseldorf. "Bayern Munich lent the former management €2 million in September 2004 until the end of October 2004. €1.5 million was paid back. And I guess, because Borussia Dortmund made a capital increase in October 2004, so from this money they paid Bayern Munich back, aside from €500,000 which was paid in June 2005."
 
Though it is not a unique gesture on Bayern's part – the Bavarians have previously offered assistance to local rivals 1860 Munich and cult favourites FC St Pauli – the irony of such a scenario is difficult to resist.
 
While five clubs have won the Bundesliga in the past decade, Bayern have never gone more than two years in the past 15 without adding to their own already sizeable tally of titles. It is a statistical quirk that encapsulates the Bavarians’ pre-eminence in an otherwise highly competitive league. It also underlines the extent to which BVB, with a huge supporter base and burgeoning commercial power, would become Bayern’s biggest domestic threat by defending the league championship this year. Still, while Tress is quick to express Dortmund’s gratitude to their rivals, he tries not to overplay the significance of Bayern’s act in the greater scheme of things.
 
“Well, first of all it’s very honourable from Bayern Munich, helping other clubs in such critical situations," he says. "It was a critical situation for Borussia Dortmund. But it was not to save Borussia Dortmund, because we are talking about €2 million. If you realise the financial debt was roughly €200 million, so €2 million does not solve the whole problem, but it helped Borussia Dortmund, it was an honourable step and what’s more to say.”
 
Tress joined Dortmund shortly after that step was taken, following a spell as a consultant on the restructuring of the club's tattered finances. Together with incoming chief executive Hans-Joachim Watzke and president Reinhard Rauball, he then led a measured recovery that saw Dortmund rationalise their spending and greatly reduce their debts.
"Borussia Dortmund and all the people in the club learned that you cannot spend money which you did not earn"
 
Together, they have created a platform on which one of Europe’s most exciting and upwardly mobile teams can prosper but there are no illusions as to what how that process began. Nor can there be any arguments that a sensible course should be maintained. The sought-after young forward Marco Reus – a product of the Dortmund academy – will join from Borussia Mönchengladbach for a reported fee of €17.5 million in the summer but the club will be keen to stress that cool-headed conservatism remains the order of the day.
 
 
"Borussia Dortmund and all the people in the club learned that you cannot spend money which you did not earn," says Tress of the lessons of the past decade. "You have to focus your economic strength and not have the idea to compete with clubs like Bayern Munich or Barcelona, because these clubs have much higher revenues and more economic strength.
 
"We learned that you have to invest in your youth, to develop your own stars, and you can add to your team with young potential players, but we are not able to compete in the European soccer market with British or Spanish clubs in respect of transfer pricing and we have to be focused on having very flexible cost structures. Those are the things we learned from the past."
 
As for the altruistic Bavarians, perennial success may be enough to soothe wounded pride, as might the prospect of a home Champions League final this season – though the not inconsiderable obstacle of Real Madrid lies in wait in the semi-final of that competition. Otherwise, something might yet be salvaged from the 12th May final of the DFB Pokal  – Germany’s knock-out cup competition – against none other than Borussia Dortmund.   
 

A full interview with Thomas Tress, the chief financial officer of Borussia Dortmund, will appear in the May edition of SportsPro magazine. Click here to subscribe.
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