Catastrophic figures of the consolidated financial statements for the half-year from July 1, 2022 to December 31, 2022
Hertha BSC is in a financial predicament this is shown by the recently published consolidated report for the half-year from July 1, 2022 to December 31, 2022. The situation is alarming and the figures are worrying. The association's debts are immense and the last reserves have been used up. The future outlook is bleak and the club is in danger of falling into an even greater financial crisis.
However, the trend of the financial report is not surprising. It was already apparent in the club's past reports that Hertha BSC was heading for financial disaster. Nevertheless, the speed at which the club's economic decline is progressing is worrying.
Negative equity of -15.10 million euros and liabilities of 90.80 million euros
Hertha's financial report shows that the club continues to have high debts and does not have enough money to service them. The figures make it clear that Hertha is in a precarious situation. Negative equity is -15.1 million euros and liabilities (debts) amount to 90.8 million euros, which is even a slight increase from the previous report. Hertha now has current assets of only 26.4 million euros and fixed assets of 59.5 million euros.
In the past six months, the club has once again generated an immense loss: -44.6 million euros are on the books. This means that the club is planning on a minus of 64 million euros this season. However, the liabilities that Hertha is pushing ahead of itself are due soon. Over 88 million euros are due to be paid off within the next twelve months. This represents an immense feat of strength for the club.
So the situation is very serious and there are still many unresolved issues and problems that need to be addressed. If Hertha BSC cannot overcome the financial challenges, the club faces a difficult future that could be marked by even bigger problems.
Hertha BSC's financial problems are rooted in a structural problem: the club's revenues are not sufficient to cover its expenses. The financial report for the first half of the current season lists salary costs of €51.3 million, while revenue stands at €66.5 million. This means that more than three quarters of revenue goes directly to the club's salaries. That is clearly too much. By comparison, solid Bundesliga clubs like SC Freiburg or Mainz 05 spend about half of their revenue on salaries.
Economic irrationality after Lars Windhorst joined the club
The megalomania of the first season after the entry of investor Lars Windhorst in 2019/20 has raised the salary level in the long term. However, this is not the only cause of Hertha BSC's financial woes. For a year and a half now, the club's officials have been affirming that they want to lower salaries. Nevertheless, salaries continue to rise. In the first half of the current season, salaries are almost five million euros higher than at the winter break of the previous season. These figures include not only the players, but also all employees as well as the management. The workforce was also only increased enormously under former managing director Fredi Bobic.
Hertha BSC has made expensive transfers in the past, for which high transfer fees and long contract terms were agreed. This resulted in high obligations for the club, which must be serviced even in worse times. Players such as Krzysztof Piatek, Dodi Lukebakio and Lucas Tousart, for example, still have several years left on their contracts and receive their high salaries accordingly. The high transfer fees paid for the transfers must also be amortized pro rata over several years. For example, Hertha has to write off €4.12 million each year for the purchase of Lukebakio, resulting in significant losses in the income statement. This is just one example of the burden caused by expensive transfers from previous years, which is still affecting Hertha BSC now.
Bundesliga license at risk
It is currently unclear whether Hertha BSC will receive its Bundesliga license. Hertha must prove that they are economically viable and present a concrete plan by the end of the 2023/24 season, aiming to be in the black by June 2024. It is not clear from the public financial report exactly what Hertha's plan is. However, the documents that the DFL will receive are more extensive and Hertha still has a lot of work to do. Vague plans as possible
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