
Sounds like Balinitis, and can be considered pretty normal.
http://www.houseandhome.org/dog-health-problems"Balanitis
Balanitis is an inflammatory condition of the foreskin (the prepuce). It is a normal condition in most dogs, is commonly seen as a pus-filled discharge from the eye of the penis, and is very difficult to clear up. The prepucial cavity (the fleshy housing of the penis) is warm and moist, an ideal environment for bacteria. Sexual frustration is a contributing factor; the dog continually licks himself as a form of masturbation, so reinfecting the area.
Treatment can be instituted by syringing out the cavity and squirting an antibiotic cream into it two or three times a day for a five-day period. However, once medication ceases, reinfection is likely. As balanitis causes the dog so little trouble, it is regarded as an almost-normal condition and should only lead to a visit to the vet if the discharge becomes bloody, signifying an injury or inflammation of the sexual glands."
Other articles do link it to reduced fertility, so if he is to be a stud dog it might be worth getting it treated, (seems that you need to drain the liquid from the prepuce and squirt in antibiotic cream or lotion into the prepuce) but it can be recurring due to a dog constantly licking the area.