Cycling: problems of cycling: caught in a vicious circle

Sensible bike sponsoring costs as much as the breast of FC Bayern every year.Bicycle teams are increasingly becoming balls of patrons, which is why the World Association is considering the introduction of a Financial Fair Plays.Without reform, perhaps only half of the teams will survive.

“At Christmas, the Cannondale-Drapac cycling team will no longer exist,” said John Vaughters, CEO of Cannondale-Drapac after the eighth stage of Vuelta a Espana:”Unless a company decides to support the team quickly.

It was a shocking news story that shook the cycling circus in the middle of Vuelta’s second week.The jump of a new partner for the 2018 season created a funding gap of seven million dollars for the American racing team.

Team Cannondale is now known for playing with a comparatively small budget in the upper league of cycling. The Americans have an annual budget of 15 million euros, a sum that was one of the highest in the scene five years ago when Ryder Hesjedal was awarded a Giro winner.

For comparison: Krösus Team Sky, according to L’ Equipe, can fall back on three times as much and among other things can afford a specially designed race hub that reminds of the motor homes of the Formula 1 teams.Cannondale is also known as the Moneyball Team of cycling, because they often tie young, inexperienced talents to the team in the long run.With success: Rigoberto Uranium took second place in the Tour de France this year and won the mountain classification at the Vuelta.

The immediate consequence of Cannondale’s budget shortfall was that all contracts for the team’s drivers, but also those of the entire staff, from bus driver to mechanic, were cancelled for the time being.

It was the fans of Green Argyle, as the team called themselves because of the check pattern on their jerseys, who suggested a first attempt to save the 2018 season:”The most common reaction of our fans was:’ Try Crowdfunding'”, the team told us a few days later on their homepage.Cannondale found a strategic partner in Fairly Group, a risk consulting firm from the USA.Each euro collected in a crowdfunding campaign is doubled by Fairly.

But that’s not all: two weeks after the announcement of the problems with Education First, the positive response of the campaign enabled a new main sponsor to be found for the next few years.

The team is now called EF Education First-Drapac p/b Cannondale.It’s the 14th.Name since the founding of the team in 2003 – a symbol for the fluctuation of sponsors in cycling.

But why is sponsoring in cycling so difficult?The boom of the era of Lance Armstrong and Jan Ulrich is over, and the scene is still experiencing reputational difficulties as a result of systematic doping.This limits marketing reach, and high costs for running races leave little room for increasing prize money.

In spite of all this, salaries, especially those of top stars, have risen significantly in recent years.Some private sponsors have become involved in cycling and have contributed to the significant increase in budgets – at least in the short term.Astana, Katusha, Bahrain Merida and Team United Arab Emirates are all supported by “national governments”, while BMC Cycling is backed by the Swiss entrepreneur Andy Rihs.

Approximately 80 percent of the budgets are used for the salaries of drivers and supervisors, only 20 percent is needed by a team for vehicles, travel expenses and other expenses.

While increasing investments are good signs for cycling, only a few of them are successful.The teams provide high-profile riders with high-end contracts to attract the greatest attention to the team and its sponsors.

Superstars such as Chris Froome and Peter Sagan are now receiving five million euros a year.A “water carrier” earns just 36,300 euros, which the UCI World Union prescribes as the minimum wage limit.If you want the stars, you have to pay their salaries.If a team lacks the money for a superstar, fewer companies will be willing to sponsor the team – a vicious circle.

In football or basketball, astronomical salaries and transfer sums are the order of the day.But at the same time, however, revenues from TV money, merchandising and tickets also increased.These sources of income are limited in cycling.Road races are freely accessible to all fans, so it is not possible to earn money by selling tickets.

The production costs of a cycle race far exceed those of stationary sporting events.The ASO, the organiser of Tour de France, Vuelta, Paris-Roubaix and eleven other cycling races, spent around 130 million euros on the organisation of the races in 2012, according to its annual balance sheet.

At the same time, patrons are turning bicycle sponsoring for companies into an immoral business concept.Team Cannondale has been the loudest to raise this issue in recent years.

CEO Vaughters told Cyclingtips:”For a publicly listed company that is not driven by cycling enthusiasm in its decisions, it makes no sense to invest as much money in cycling as teams with private supporters”.

A further comparison with basketball shows that investments in cycling are hardly justifiable: while a cycling team needs an annual budget of 15 million euros, the bank JP Morgan Chase, for example, prefers to secure the name rights of the new arena of the Golden State Warriors for this amount.

In return, Chase is associated with the currently most successful franchise of the NBA, which would be enough for a midfield team in cycling at best.

From 1991 to 2007, Deutsche Telekom was the sponsor of a top cycling team.To return to the World Tour at the same level, Telekom would have to invest 30 million euros per year.For the same amount, players of FC Bayern Munich now wear the Telekom logo on their chest.

My marketing people told me that within the last five years we have reached all the investors we can reach through bike sponsoring,”said Russian entrepreneur Oleg Tinkoff at the end of last year.Tinkoff owned a team including Alberto Contador and Sagan for five years.”We’re going to switch to direct TV advertising.”

Current developments could force the UCI to introduce rules similar to UEFA Financial Fair Play.David Lappartient, President of the French Cycling Federation, is the strongest advocate of budget regulation:”I think that football has given us a good example of budget limits,” said Lapartient of the Associated Press.”This is something we have to work on in our sport.”.

There should be an upper limit of about 15 million euros for contracts with the cyclists,”said Contador at Vuelta:” When salaries go through the roof, it becomes increasingly difficult to attract sponsors.

One possible reform would be to introduce a soft ceiling on salaries: all teams that exceed it would be exempted from distributions of prize money.These would be distributed evenly to all other teams that meet the ceiling.

Such a system could deter private patrons from setting up contracts that are too high for the superstars of the scene.If they do, smaller teams would benefit directly and be given the opportunity to engage the superstars themselves.

nearby

Interestingly, Froome, the current Tour and Vuelta winner, is critical of such plans:”My team mates have shown that they are the strongest team in the cycling circus.Is all this to be explained by our budget?I’m not so sure,” says Froome, captain of the Sky team, which enjoys the highest peloton budget.

“I think that’s how professional sports work.If a team successfully reinvested its money to drive the sport forward, a financial ceiling would impede such developments.”

Another proposal is to reduce the number of drivers per team in order to reduce costs.Team Sky currently has 28 drivers under contract, with Cannondale it is one less.

Recently, the UCI confirmed that teams can use eight drivers instead of nine in large circuits.The association has justified this measure in order to increase the safety in the peloton on the one hand and to make the dominance of individual teams more difficult on the other hand.However, the reform could also make sense from a financial point of view.

Froome reacted sarcastically to all these plans:”We should all be riding the same wheels, the same outfitters, we should eat the same rice and porridge from a big pot every morning,” said Froome and asked:”Where do we draw a line?

The fact is that companies prefer to invest in other sports.It takes board members with a strong connection to cycling to make a company decide to sponsor a team in the peloton.If the UCI does not introduce reforms, the number of riders in the world’s major cycling races could soon be significantly reduced.