The news broke this morning that mining services company Orica is to cease its sponsorship of the Australian GreenEdge team at the end of the 2017 season. It’s the latest piece of bad news for professional cycling after the recent headlines that IAM Cycling and Tinkoff are both set to disband at the end of 2016 due to lack of financial backing.
Tinkoff owner Oleg Tinkov is reported to have said that he thinks the BMC Racing and Katusha teams will also “close their doors soon” – something denied by BMC general manager Jim Ochowicz this week.
The reasons given by withdrawing sponsors are invariably the same: the company cannot continue contributing millions of Euros to cycling teams in a tough international economic climate. Either the money simply isn’t there to spend on sports sponsorship, or they feel that the marketing benefit of supporting a cycling team has reached its conclusion. Some have left because of cycling’s association with doping.
While IAM and Tinkoff will be drawing to a close at the end of 2016 – leaving a significant gap in the roster of WorldTour teams and many riders struggling to find a top-level contract – at least the Orica-GreenEdge team has 18 months in which to secure a new backer.
A new team that looked set to emerge – Bahrain Cycling Team – is now embroiled in a furore over the Human Rights record of its owner Prince Nasser bin Hamad Al Khalifa. Aside from the obvious moral issue, questions are being asked as to whether the ethics of the team’s management adhere to the sport’s rules. Even those that appear willing to contribute to cycling aren’t a good fit.
Teams losing sponsors is nothing new, of course. It’s very rare in any sport for a title sponsor to stick with a team for more than five years or so. There are a number of factors currently not helping in pro cycling’s search for cash.
One is that the budget of WorldTour teams seems to be on the rise. Rider wages take a significant portion of any team budget, then you have to factor in support staff, equipment, logistics, travel, etc. It is thought that Team Sky’s overall budget is £24 million – although this is at the top end of the scale. The average WorldTour team budget is estimated to be around £11million.
Big name riders such as Chris Froome and Peter Sagan can command wages of up to £3million a year, putting them out of the league of many teams. That sets up an arms race: the more money, the better riders, the more wins, and the more exposure. That’s great for those with big budgets and bad news for those with more limited coffers.
Some big sponsors only arrive in the sport because a key member of the company’s board is a fan of cycling, and therefore the association with cycling only continues for as long as that interest persists. This isn’t the most sound business proposition, as the investment is not balanced by exposure is what is still perceived as a minority sport.
Exposure is good for three weeks in July when the Tour de France is on, but there are few sponsors who got on board because they wanted to see their name on riders’ kit during the Eneco Tour.
It was business, or lack of it, that led to Oleg Tinkov’s withdrawal from cycling. The Russian has for several years bemoaned the lack of progress in improving the business model of bike racing. Sponsors pour money into teams and get little in return – no huge chunk of money from TV rights, for example, like premiership football teams receive.
Over the years, there have been several attempts to rectify this situation with team/rider groups variously attempting to put the case forward for revenue.
The most recent is Velon, which represents 11 WorldTour teams and uses the tagline ‘make cycling better’. Since its launch at the end of 2014, Velon’s efforts are only now beginning to bear fruit.
Former Liverpool football club director Graham Bartlett is CEO of Velon and is aiming to apply his experience of lucrative deals from football to cycling.
“There are still lots of things you can do to excite and interest the fans in the way that you show the information and how you deliver it – there are far smarter people than me who are addressing all of those issues to make sure that we still deliver a very exciting product to the fans,” Bartlett told Cycling Weekly in March.
A deal has been struck for Velon to provide live on-bike video footage to enhance broadcast coverage – in return for a fee, which is distributed among member teams.
Sadly, the money available will not be enough to support all of the WorldTour teams, and can’t be viewed as a replacement for title sponsorship. But at least it shows that the teams are willing to push the commercial aspect of the sport forward, which will catch the eye of potential sponsors looking for a good-value marketing opportunity.
Some of the blame for lack of support for teams and their financial backers has been placed at the door of the Union Cycliste Internationale (UCI), the sport’s governing body. Like any bureaucratic organisation where decisions have to be made and passed by committee(s), change can be slow to take effect.
The UCI’s relationships with the biggest race organisers is still shaky, with Tour organiser ASO saying at the end of 2015 that it would withdraw its races from the WorldTour after 2016 as its disagrees with the UCI’s planned reforms.
With no clear guarantee that the top-level WorldTour teams will automatically get a ride in the sport’s biggest event – the one that provides the most coverage for sponsors – teams are going to have a tough time finding new money.