Schalke 04 report positive financial figures for 2023 fiscal year

As previously forecasted, the Royal Blues were able to report positive figures last year for the first time since 2018, with earnings of €6.9 million (2022: -€19.4 million). Negative equity improved to €103.3 million (2022: €109.8 million). Additionally, net financial liabilities were reduced from €139.9 million to €128.5 million.

Positive development

In particular, this positive development can be attributed to an increase in spectator-based revenue due to match operations in the Bundesliga, as well as the hosting of several large-scale events at the VELTINS-Arena without any Covid-19-related restrictions. As a result, there was also an increase in revenue in the areas of catering and hospitality, as well as merchandising. In contrast, cost increases were particularly felt due to the effects of high inflation.

“We are extremely pleased that – despite operating under challenging conditions – we were able to achieve the financial aims we had set for ourselves as planned,” said Christina Rühl-Hamers, board member for finance. “The club have managed to improve in several key financial areas. It sends a clear sign of stability for our fans, members and financial partners.”

When looking to the future, the success of the club’s senior side, as well as a sustainable economic recovery, remain the club’s main goals. In consultation with the club’s supervisory board, the executive board have set the framework for the first-team player budget for the 2024/25 season already. “There is always a close and constructive exchange of information between the areas of sport and finance. In the event that we find ourselves in the 2. Bundesliga, then our budget would remain virtually the same as it was last season. We are already in a position to be active in the transfer market,” said Rühl-Hamers.

Further financial challenges remain

At the same time, the club must also continue to face several financial challenges. One of these remains the ongoing effort to reduce the financial liabilities. “In 2023, we had to pay approximately €16 million in contractual interest and amortisation payments. If you take a look at the DFL’s financial report, you’ll see that there are several clubs in the second division whose first-team budgets are less than this sum,” Rühl-Hamers explained. “These costs, as well as contractually-agreed repayments of interest-bearing liabilities, make it difficult for us to invest more money in football, our core business. That’s why we need to continue to reduce these costs.”

Another key area remains net equity. “Due to these positive figures, we have been able to report an improvement of nearly 6% in comparison to last year,” said Rühl-Hamers. “We will need to once again reduce our negative equity by at least 5% in 2024, in order to avoid a points deduction from the DFL. In order to do so, we need to also make a profit in the next calendar year.”

All financially-relevant decisions – whether they have an impact on sporting matters or not – are subject to a review of their impact on earnings and, as a result, on equity. Rühl-Hamers made clear what this means for the signing of new first-team players: “Every Euro that we spend on wages and transfer fees has an impact on our total spending and on the fulfilment of the net equity rule. Transfer fees for new players have to be written off over the course of a player’s contract, meaning their impact is spread out over several years. If we sell a player, then the revenue from that transfer only has an impact on the year in which the sale was made. This won’t hinder us from investing in our team, but it does affect the parameters under which we can operate and has to be taken into consideration.”

Staying up is the number one priority

A special case during the planning for the upcoming season is a scenario involving the 3. Liga. However, staying up is the number one priority, as Rühl-Hamers reiterated: “We submitted the necessary documentation for the 2. Bundesliga and 3. Liga licensing process on schedule on 15th March. In terms of our 3. Liga planning, we expect that we will only receive provisional approval for a licence subject to certain conditions. As part of our contingency plans, we will prepare options that we hope will allow us to fulfil those conditions. Nonetheless, we firmly believe that we will stay up.”

Due to a change in the constitution made during the 2023 AGM, the first half of 2024 will be a short fiscal year, allowing for the club to switch to a season-by-season financial year from 1st July 2024. It is important to note that the calendar year remains relevant in terms of meeting equity regulations.

Despite the various challenges, Rühl-Hamers generally feels optimistic looking to the future: “It’s important that we create a positive dynamic within the club, one that can be transferred onto the pitch. Staying up is without doubt the first step. From there, there will be noticeable changes at the club. The board began this process at the end of last year and will continue down this road in the coming months, even if not every decision is met with acclamation. We have laid out decisions that will make for a better Schalke future, and we will follow through with them.”