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Schalke 04 is under pressure from a corona crisis

Dhe financial auditors of the German Football League (DFL), who will have to deal with quite explosive documents in the coming days, will probably turn to the data from Gelsenkirchen with a particularly queasy feeling. Christian Seifert, the managing director of the league association, had ordered a first step in dealing with the provisional termination of the game on Monday: “All clubs immediately create extreme scenarios with the background of their economic capabilities.”

Anyone who listened to Peter Peters, CFO of FC Schalke 04 at his presentation of the 2019 annual report a day later, quickly realized that the Schalke “extreme scenario” should look particularly threatening. A long interruption in competition could quickly lead to a dangerous struggle for survival. “We do nothing else but play football and host events,” said Peters. “If this is not possible in the long term, it is a threat to existence – as if a furniture company was no longer allowed to build furniture.”

The district club is hit by the corona crisis at a particularly unfavorable moment. Because the team played against relegation last year and has to make do without any income from the European Cup in the current season, sales shrank from EUR 350.4 million in fiscal year 2018 to EUR 275 million the following year. Income from transfers fell from a good 45 million euros to 15 million, and the net debt is still 118.7 million euros despite the stadium being paid off. “The effects of the current situation show that it is about the existence of FC Schalke,” Marketing Director Alexander Jobst had already admitted on Monday. But at least the Schalke players are better at dealing with different major crises than most other professional clubs.

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In the 1990s, the German Football Association helped repair an impending total loss. After 2003, the legendary investment banker Stephen Lloyd Schechter kept the club in suspense with his bond over water and all of Schalke. In 2010, the city of Gelsenkirchen secured the club’s liquidity by purchasing 15 percent of the stadium’s shares, and Clemens Tönnies, the chairman of the supervisory board, has already helped out with personal loans. Peters has been in the club since 1993, so he has been through a lot, and as so often in the past few years, he has been trying to be confident. “Financial stability is guaranteed,” he said, explaining: “The core elements of the operational business are extremely robust.” However, he restricted, such assumptions require “stable economic development in Germany and Europe”. And apparently there won’t be any in the coming months.

Of course, the club’s employees, who fear for their jobs and income, also know this. According to Peters, “the mood is very thoughtful and worrying. The uncertainty is palpable and palpable. “Schalke would still have had four home games in the current season, each would generate around two million euros in revenue. From the last installment of TV revenue this season, Schalke are still entitled to 26 million euros, according to the “Westdeutscher Allgemeine Zeitung”. A loss of this total of 34 million euros could not be compensated for by giving up some of their salaries, of course, this measure is also being discussed at Schalke.

Other clubs have developed better economically in the recent past. FC Bayern and Borussia Dortmund have reserves, Borussia Mönchengladbach is in good health, Bayer Leverkusen and VfL Wolfsburg have big companies behind them. Even an association like SC Freiburg has stable equity. To make matters worse, Schalke is now faced with the fact that neglected infrastructure measures have been undertaken for a long time that devour money. The club site is currently being fundamentally renovated and modernized, “Young people in particular should benefit from the investments,” said Peters – but here too, other clubs are already at this level, which makes it easier for them to manage the crisis. A first step could be short-time working models for many of the approximately 600 permanent employees or the stopping of planned construction projects. After just a few days, the corona crisis on Schalke shows how sensitive the crisis can be to the Bundesliga.

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