S04 expect to be profitable in 2023, regardless of which division the club is in

FC Gelsenkirchen-Schalke 04 e.V ended the financial year 2022 with a low double-digit million loss, just as predicted. The main reasons for this were spending last season in the 2. Bundesliga and the final phase of the squad rebuild following relegation in 2021. This should hopefully be the final statement in the coming years with a negative result.

“We are forecasting a profit for the financial year 2023, regardless of which division we are in,” revealed Christina Rühl-Hamers, member of the board and responsible for the club’s finances. The sale of players, which the DFL don’t accept as part of their licensing process anyway, will not be necessary for this aim. “We have managed to lay a stable financial foundation again after almost three years of hard work, which will allow us to now take the next steps. This is a fantastic achievement by the whole club.”

We have managed to lay a stable financial foundation again after almost three years of hard work, which will allow us to now take the next steps.

Christina Rühl-Hamers

The forecasted profit for the financial year 2023 will be in the single-digit to double-digit million range. If the Royal Blues can stay in the Bundesliga, they can plan for a slightly bigger turnover than in the same period of last year. “The decisions we made at the end of 2020 are now starting to pay off. We will be able to carry on reducing our liabilities in both scenarios. This doesn’t mean that we will be able to suddenly make big moves, but we’re still optimistic about the future. A financial turnaround is clear to see,” said Rühl-Hamers.

A challenging and eventful year

2022 was an extremely challenging and eventful year for FC Schalke 04. The club parted company with their long-term main sponsor, carried out a successful bond issue, dealt with the effects of the Coronavirus pandemic, won promotion back to the Bundesliga by winning the second division and saw a number of changes to the first-team squad. Despite all of this, the Royal Blues managed to further consolidate their financial capabilities.

During the financial year 2022, the club’s total revenue was €157 million, slightly below the figure from the previous year (€167.1 million). The loss in revenue was lower than originally planned in last year’s report because another year in the second division had been accounted for. The club’s total liabilities have been reduced from around €183.5 million to €180 million. The financial liabilities (€141.5 million) are only slightly higher than last year’s (€140.6 million). This is down to the successful placement of the 2021/2026 and 2022/2027 bonds, which represent the completion of the refinancing of the bond liabilities. At the same time, the first instalments of a working capital loan, which S04 took out during the pandemic, have been paid back. Both these things were important for the club’s future financial planning. There was a total loss of €19.4 million across the company, slightly higher than in the previous year (€17.8 million). However, the club was able to make a small profit in the second half of the financial year, and therefore met the expectations for 2022.

The gradual return to a full VELTINS-Arena helped provide lots more income on matchdays and during events. The turnover also greatly increased for sponsoring and merchandising during this period. As well as the end of last season and the immediate promotion back to the Bundesliga, the decision to market the training kits and match kits separately led to higher revenues. Expenses were also reduced, mainly thanks to the reduction of the first-team budget and fewer losses on player values. Due to the relegation from the Bundesliga in 2020/21, the income from TV rights and transfer fees (following the squad rebuild) also massively decreased.

The return to the Bundesliga is noticeable in all business fields.

Christina Rühl-Hamers

“The return to the Bundesliga is noticeable in all business fields,” explained Christina Rühl-Hamers. “Sporting success remains the most important factor in our financial plans.” Avoiding relegation this season is therefore an important step in order to help improve the club’s long-term financial stability, and to help the Knappen be more resilient. Nevertheless, the club is planning for both possible scenarios: “We have found really good solutions and made some effective long-term decisions over the last three financial years, ones shaped by the pandemic and our relegation, and we will continue to do so. We have prepared for the second division as best we can and feel like we are well equipped.” The board member is also confident regarding the upcoming licensing process. “We are extremely confident that, subject to examination by the DFL, we will receive a license for both leagues without any conditions regarding liquidity.” It is expected that the club will have to submit documentation regarding negative equity.

The positive projection shows how well FC Schalke 04 have dealt with the various challenges in recent times. The aim, according to Rühl-Hamers, is to still improve the club’s financial capabilities, in particular so that investments can be made into the club’s future. “Sport at the highest level is only possible if we have planning security. Long-term squad planning over several seasons increases the chances of sporting success, and our financial planning over a period of a few years is designed for this. We will be able to provide a budget that gives us room for manoeuvre and allows us to be competitive in both scenarios,” summarised the board member.