Friday Feature: Is cycling feeling the recession?

Cycling is first and foremost a sport, but it is increasingly also a business. And while 2011 was a thrilling year from a competitive standpoint, there were also worrying signs from a commercial perspective that the sport’s current business model may be unsustainable.

The UCI would certainly have you believe otherwise, as it trumpets the sport’s commercially successful expansion into new territories such as Oman, Qatar and most recently China in recent years. As would ASO, for whom the Tour de France – as characterised by the garish excesses of the publicity caravan – remains a lucrative rain-maker for ASO, sponsors, teams and riders (or at least some of them) alike.

The Tour de France publicity caravan keeps ASO's commercial wheels turning healthily (image courtesy of Josh Hallett/Flickr)

However, beyond the ambitious plans for global domination and the mountains of cheese which are scattered among the fans in the month of July lies a more worrying trend. Outwardly the sport is in rude health, however beneath the surface many of the smaller players are finding it difficult to survive in a world in which money (or the lack thereof) talks.

Cycling tightens its belt

To a degree the sport is already being fiscally responsible. Teams are instructed not to bring specialist time trial bikes to the long-distance races to keep travel costs down. And even at the Grand Tours, the riders hardly live in five-star comfort, frequently dossing down two to a room in the continental equivalent of a Travelodge. This seems sensible, although equally it is hard to conceive of this level of parsimony ever extending to football, say, or Formula 1.

The Tour of Ireland was a victim of the economic downturn

However, the last 24 months have shown clear indications of more worrying financial stresses. Many small races are struggling to survive with some, such as the Tour of Ireland and the Tour of the Med folding (although the latter has been reinstated). The Tour de Picardie was cut to three stages in 2009 and is reportedly in danger of going out of existence altogether. The GP Miguel Indurain (which, contrary to what it sname might suggest, has been running since 1951) is under threat thanks to the ailing Spanish economy. Similarly, the Mallorca Challenge is scaling back from five to four races for this year at least.

Teams have been feeling the pinch too. HTC-Highroad, the most successful team in the sport and one owned by astute businessman Bob Stapleton, ceased operations after it could not secure a title sponsor for 2012. RadioShack and Leopard Trek merged, as did Omega Pharma-Lotto and Quick Step, and before them Garmin and Cervelo (now Garmin-Barracuda) – all for purely financial reasons.

Simply put, cycling is not awash with cash. Look beyond the sport’s big names and take a step back from some of the big numbers bandied around by sponsors, and you enter a murky world of shady commercial deals, poorly paid domestiques and squalid conditions. The minimum annual wage for a rider in one of the 18 ProTeams (cycling’s top division) was €38,500 in 2011 (around £32,000) – not much more than the average Premier League footballer earns in a week. (And even then, as inrng reveals, riders do not necessarily receive their full salary from teams or are made to pay some of it back.)

Consequently times are tough for all but the biggest and most successful teams. Even with ProTeam status, the Basque Euskaltel-Euskadi squad are known to be in difficulties. While a place in the sport’s top division is a desirable thing, it is also a double-edged sword as it means a team must commit to participating in all its events. Pro Continental teams (the second tier of cycling) have to rely on winning one of a limited number of wildcard invites to the biggest races, which further limits their attractiveness to sponsors.

What next?

In the worst case scenario, we could not only see several smaller teams at both ProTeam and Pro Continental level disappear in the next year or two, but a number of races too.

Would this be a bad thing? Not necessarily. The cycling calendar is already pretty full, and the removal of some dead wood could help pave the way for new races in new territories which would be attractive to the UCI, teams and sponsors. How about a new WorldTour race in South Africa, perhaps? Or the promotion of the Tour of California to WorldTour status, with a view to one day creating a Tour of America?

A relaxation of the rule which state that all ProTeams must have at least 23 riders on their roster could alleviate the wage burden on smaller teams who, with a smaller squad to rotate, would then be able to be more selective about where they race. Conversely, the introduction of a maximum squad size (a similar rule has been recently implemented in football) would prevent teams with deep pockets from hoarding the best talent, allowing smaller outfits to compete more easily for good riders.

Despite its current difficulties, the business model for cycling is not broken – it is merely in need of some minor tweaks to see the sport through the current economic downturn. For sponsors, cycling still represents good value for money as an investment. For a relatively modest fee compared to top-tier sports such as football or F1, a sponsor can gain access to a significant global audience. And, such is the nature of races, with its different competitions and the constant presence of breakaways, there are always plentiful opportunities to get the team sponsor’s name and logo in print or on TV. Airtime in cycling is not dominated by a handful of teams – everyone has a chance.

Indeed, the level of competitiveness is much greater in cycling than it is in football, where there is a clearer correlation between success and money, and a much greater polarisation between the ‘haves’ and ‘have-nots’. Small teams such as Euskaltel-Euskadi and Europcar can still take on and beat the big-money teams like BMC and Sky. It is one of the key features of the sport that makes it so unpredictable and exciting for fans, and it is something that the powers-that-be would do well to remember.

So, yes, cycling is feeling the recession, and tough economic times do tend to promote an every-man-or-himself mentality. But if the sport can take a more holistic view of itself – perhaps even pruning back temporarily to put itself in shape for stronger future growth – it will come out of this period stronger than ever.

About these ads

2 thoughts on “Friday Feature: Is cycling feeling the recession?

  1. Nicely written but you left out a BIG reason for pro cycling’s problems – constant, dragged-out doping scandals. When we still don’t know who actually won the TdF of 2010 in January of 2012 who but cycling-mad money-men would sponsor a team in this corrupt sport? And with the economic problems you so well outlined, even those guys are feeling the pinch.

    • You make a fair point that the sport has been hurt greatly by doping scandals. These are, of course, not directly related to economic conditions. But the additional impact they have had on top of the declining economy certainly reduces the pool of potential sponsors and can only hurt teams commercially as a result. That damage is more obvious in bad times than in good, which hastened Highroad’s exit from the sport and has impacted the ability of GreenEDGE, Leopard Trek and others to secure title sponsors. GreenEDGE’s line about taking the opportunity to build their brand was just a positive way of spinning their failure to secure a title sponsor.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s