File picture shows Borussia Dortmund's Mario Goetze (2nd L) as he challenges VfB Stuttgart's Christian Gentner (L) and VfB Stuttgart's Arthur Boka (3rd L) during their German first division Bundesliga soccer match in Stuttgart March 30, 2013. Borussia Dortmund confirmed April 23, 2013 that Goetze, one of the jewels of their youth academy, was set to join arch-rivals Bayern Munich in the summer, adding they were "disappointed" at the news of the midfielder's departure. Picture taken March 30, 2013
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What is the purpose of a publicly listed football club: to win trophies or turn a profit? Teaching faculty from the European School of Management and Technology in Berlin have examined this question in their recently published research.

Urs Müller and Ulrich Linnhoff, with Bernhard Pellens of Ruhr-Universität Bochum, take the example of Borussia Dortmund, Germany’s only football club to be listed on the stock exchange.

The club was taken public in 2000 – at the height of its on-pitch success – having won European club football’s most prestigious tournament, the Uefa Champions League, in 1997. Its transformation to a for-profit company coincided with the sport’s rapid commercialisation fuelled by rising broadcasting revenues.

Increased revenues were, however, offset by “rocketing expenses, in particular players’ salaries”, the authors observe. Pursuing success in lucrative tournaments, the Ruhr club assembled a star-studded squad of players with an accompanying wage bill that reached €60m a season at its peak, they write. Although topping the Bundesliga, the German league, in 2002, Borussia struggled to sustain its success and by the end of 2004 was on the brink of financial collapse.

A rescue package – launched in 2005 – dramatically cut labour costs and allowed the club to repurchase its stadium, which had been sold in 2002. On a more sustainable financial footing, Borussia has since returned to success, winning the Bundesliga in both 2011 and 2012. However, from its flotation on the stock market in 2000, to 2009, the club amassed a cumulative loss of more than €145m, Mr Müller notes.

In their research – available online at ecch – the writers ask what goals should Borussia set itself? Does the club have a higher obligation to its fans and traditions through the pursuit of sporting success, or to its shareholders, who suffered the collapse in its share price from €11 at flotation to less than €1 in 2009?

For Mr Müller, these “very essential” questions relating to Borussia’s identity are relevant to every organisation.

“What is the higher purpose?” he asks. “The definition of the main purpose of an organisation – whether business, association or any other institution – is a permanent management challenge.”

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