Borussia Dortmund near bankruptcy

The gap between football's rich and poor clubs is growing

German football club and former European champion Borussia Dortmund has warned it will go bankrupt if rescue talks with creditors fail.

The company's shares tumbled after it said it has "entered a life-threatening profitability and financial situation".

Borussia Dortmund has posted record losses and missed rent payments on its Westfallen stadium.

Chief executive Gerd Niebaum stepped down last week and creditors are now pushing for greater control.

Shares in Borussia Dortmund, Germany's only stock-market listed football club, dropped by almost 23% to 2.05 euros during early afternoon trading.

Outsiders needed?

Fund manager Florian Hamm - Borussia Dortmund's largest investor - said he would only invest more money in the company if he got a greater say in how it is run.

"I demand better transparency," he is quoted as saying by Germany's Manger Magazin.

The club has also faced calls to appoint executives from outside the club.

This is the bill for their mismanagement Peter-Thilo Halser

Borussia Dortmund posted a record loss of 68m euros ($89m; £47m) in the 12 months through June.

It made a loss of 27.2m euros in the first half of the current fiscal year and said that total debts will increase to 134.7m euros by the middle of 2006 unless a restructuring plan is pushed through.

"This is the bill for their mismanagement over the past years," said HVB analyst Peter-Thilo Halser.

The club appointed an auditor, who has recommended a number of steps, including deferring the rent due on the stadium and suspending debt repayments until at least the 2006-2007 fiscal year.

Stephen Schechter, a UK investment banker who has held talks with Borussia Dortmund over a possible bond sale, said the club needs a capital injection of 35m euros.

"They need strong people on the board who do not have a history with the club," he said.