“There is not much left of the rain of money.” Sport manager Fredi Bobic said that at the beginning of his tenure at Hertha BSC last summer. Many thought this sentence from an 11Freunde interview was clumsy understatement. Maybe Bobic just had in mind to let the public know that the “Big City Club” times were over – also to be able to reduce transfer fees and salary expectations. After Lars Windhorst’s investments, Hertha could not really be burned out. His Tennor Holding pumped 375 million euros into the capital club in several tranches.
However, a closer look at Hertha’s finances reveals that this investment will at best have kept Hertha at zero financially as it was a deferral aid into new spheres. Because: The economic situation of the “old lady” is once again dramatic.
With quick action to Europe
The story of Hertha’s finances since investor Lars Windhorst got on board in the summer of 2019, it’s that of a bet. A bet that the club – above all the management at the time, consisting of Michael Preetz for sports and Ingo Schiller for finances – greedily accepted. The Windhorst millions should aim high. In addition to actively reducing past liabilities, the large amount of new money should be used to catch up with the top positions in the Bundesliga. Put an end to the countless seasons in the gray midfield, into the phalanx of the league’s top established clubs.
Although the association spoke of cautious investing at the time, the reality was different. Already in the first season after Windhorst joined, Hertha spent 110 million euros on new players. While it was “only” 33.7 million euros for newcomers in the summer, personnel costs literally exploded in the winter. Driven by the gold rush mood under interim coach Jürgen Klinsmann, the club in the capital invested 77 million euros in new players at the halfway point in the season – more than any other club in the world.
It is the aforementioned bet that Hertha makes. Instead of agreeing on a longer-term and sustainable plan to lead the club organically to Europe, it should succeed immediately with a snap action. What is left of it is known. Klinsmann left spectacularly, the expensive squad stayed with a salary structure that had gotten out of joint. The reality was not Europe, but relegation battle. Then the corona pandemic made things worse. In 2019/20 Hertha recorded the highest losses of all Bundesliga clubs with 53.5 million euros.
“Corona is not the cause, but only the fire accelerator”
In the 2020/21 financial year, the “old lady” suffered the biggest losses in the league at 77 million euros. “A lot of money went into the legs, about 100 million euros of the investment was invested in players. About 130 million euros were invested to compensate for the losses from the last two seasons,” explains sports economist Christoph Breuer to rbb. “Overall, the debt was also reduced somewhat, which increased significantly at the beginning of the 19/20 season, but as of today Hertha BSC has a mountain of debt that is about the same as before the Windhorst investment.” Liabilities amounted to EUR 91.6 million in 2019 and EUR 99.6 million at the end of the 2021 financial year. Debt and equity (107.5 million euros) are on the same level. “This is a critical size,” said Breuer. “Especially since the shares cannot be sold again. A financial safety net was not created, this opportunity was missed.”
Breuer continues to point to personnel expenses as the biggest problem: “In my opinion, an adjustment to salary structures is essential.” Before Windhorst joined, Hertha was 13th in the Bundesliga in terms of personnel expenses, today it is eighth – but the sporting development points in the opposite direction. According to its own figures, Hertha spent 59 million euros on staff in the summer of 2019. In 2021 it was 92 million euros. For comparison: SC Freiburg achieved almost the same gross profit as Hertha in the 2021 financial year – at 104.2 million euros, around 1.5 million euros more than Berlin – but at 53.5 million euros it recorded almost half as much personnel expenses. “If no further tranches are received, a dramatic economic situation will emerge – if there are no significant cuts,” Breuer clarifies. According to the expert, the economic connection to the upper midfield of the league – which includes clubs like Eintracht Frankfurt, Freiburg or Mainz 05 – was missed.
For the 2022 financial year, Hertha’s finance boss Schiller predicts a loss of 47 million euros. Overall losses from the last three financial years amount to 177.5 million euros. Breuer does not accept Corona as a central argument here. The pandemic should not be mentioned as a primary problem, but rather that Hertha is chronically inefficient in terms of sport and economy. “The reduced income caused by Corona only meant that these weak points became visible more quickly. Corona is not the cause, but only the fire accelerator.”
By the end of 2023, 88 million euros in liabilities will be due
There are therefore good reasons why Fredi Bobic has declared for the second year in a row that he has a surplus of transfer income and that he urgently needs to adjust the salary structure. The squad that the 50-year-old took over was simply not financially viable, it was overwhelming the club. Last summer, Bobic generated a pure transfer plus of an estimated 20 million euros. There are also a total of ten loans, some of which are top earners. The personnel expenses specified by Schiller have fallen by almost seven million euros and now amount to 85.3 million euros. Hertha will also have to sell parts of its silverware in the summer of 2022 in order to be able to let the club breathe financially. “No one is not for sale,” assured Bobic at the end of May.
“Hertha BSC is only slightly better financially today than it was before Windhorst,” was Breuer’s sober verdict. “The fact that Hertha is currently better able to cope with certain financial losses than many other traditional clubs in the Bundesliga is not permanent – it can be compensated for in another one or two seasons. Then these millions will also be used up.” This thesis is supported by the fact that Hertha will have a total of 88 million euros in liabilities by the end of 2023. This emerges from the most recent annual report. A large part of this is the repayment of the “Nordic Bonds” bond, which amounts to 40 million euros and was raised in order to be able to pay off financial investor KKR in 2018.
Hertha has to bake smaller Schrippen
In summary, Hertha’s financial situation paints a bleak picture. The club lived blatantly beyond its means for years, but the sporting success has not come. Now the receipt has to be paid in the form of massive savings and much smaller bread rolls have to be baked in the future. Probably the best scenario would be that Hertha emerges as a healthy club, without debts, but also with little or no equity.
A first step in the right direction would be to develop a coherent sporting concept with new coach Sandro Schwarz. Schwarz has proven both in Mainz and at Dynamo Moscow that he can work very well with young players and thus create market value. Hertha may have seen things moving forward, but there is no way around reverting to a training club. Otherwise Bobic will have to say in a few years: “There is not much left of the club.”
Broadcast: rbbUM6, 04.06.22, 6 p.m
Source: rbb