German federal bank KfW approve VfB Stuttgart loan application
The Baden-Württemberg club has seen huge amount of losses in the past year and continue to do so, mainly due to the lack of match day revenue and ticket sales.
The coronavirus pandemic has seen several German clubs face adverse financial situations. Situations clubs have never experienced before, that have prompted few to fall back and slash their spending, reduce wages, lay off employees or apply for loan – just like VfB Stuttgart 1893 have.
Although the 50+1 model secures clubs from being financially hand strapped, it does not prevent them from facing difficult circumstances such as in the current scenario,
VfB Stuttgart applied for a loan in spring 2020 to cut short their pandemic related income-loss which amounted to more than €30m in 2020.
Now, they have seen their loan application approved by federally-owned German development bank, Kreditanstalt für Wiederaufbau (KfW).
According to Stuttgart’s official statement, the loan with a term of five years is tied to other conditions in addition to full repayment. For example, VfB undertakes to reduce its salary volume in the professional football squad, as well as in management and administration, in the amount of the funds called over the term of the loan, if it is used. Furthermore, continuous and transparent financial reporting to KfW over the entire term is mandatory.
After the approval of the five year loan term, Stuttgart’s CEO Thomas Hitzlsperger said the club is committed to adhering to financially and economically sustainable and transparent way to proceed ahead.
“We would like to express our thanks to those responsible at KfW, the political decision-makers and the representatives of our house banks who have accompanied us on this journey. The additional conditions correspond to the solidarity principle of our association and are at the same time an important signal that we send to politics and society with full conviction: VfB Stuttgart was committed to a more sustainable, solid economy in professional football even before the pandemic and is now and will continue to do consistently in the future,” he said.
Chief Financial Officer, Stefan Heim has given his word on using the loan cautiously: “We will use this loan cautiously and with the greatest care to ensure the continued economic survival of VfB Stuttgart. The possibility of making use of it alone creates additional security and the ability to act for us in such uncertain economic times.
Over the past few seasons, Bundesliga clubs such as 1. FC Kaiserslautern, Schalke 04, FSV Mainz 05 etc. have already made their struggles known, on and off the pitch.