The Fight to Save Professional Cycling From Itself

(Bloomberg) -- If you watch professional cycling at all, you probably tune in once a year to the Tour de France. During those three weeks in July, fans can watch the best riders in the world glide along the winding roads of the French countryside, vying for supremacy at the front of a long, sinuous peloton. 

But behind this carefully orchestrated European travelogue—won this week by Colombian Egan Bernal—the sport is suffering. In recent years, teams have been folding at an alarming rate, leaving riders and staff scrambling to find jobs. Its financial model has created a world of haves and have-nots.

The economics of international cycling are brutal. At the beginning of each year, most teams have a set amount of money from sponsors—an assortment of companies paying to have their brand draped across the scrawny torsos of panting riders. The big players—bike makers, telecoms and even fossil fuel companies—are usually Europe-based, given the sport’s high profile there.

Teams burn through the money, spending it largely on payroll, equipment and travel. As each season winds down, the race to secure funding for the next one begins. “At the end of the year, the money is gone and they are not sure if the sponsor will put money back on the table,” said Tim Vanderjeugd, director of sports marketing for Trek Bicycles. This dilemma, foisted on teams stuck with short-term sponsor contracts, leaves little room or resources for future planning. 

“Professional cycling should consider itself a business, but it’s parasitic,” said Jonathan Vaughters, a former professional cyclist and manager of the racing team EF Education First. “Teams and races are competing over the same sponsors...we have to get to that point, and stop clawing each other’s eyeballs.”

Now, with international cycling’s premier event complete, some stakeholders are focusing on how to do that. In the process, they hope to reverse the sport’s slow decline.

Last Sunday, the Tour de France ended as it does every year, amid crowds of cheering Parisians, fans and tourists who line the Champs-Élysées. For some, however, the race still evokes unpleasant memories of seemingly endless doping scandals, culminating in the disgrace of American rider Lance Armstrong.

While the sport has sought to put those days behind it, in some ways its structural problems are a bigger crisis.

Cycling is a difficult sport to sell to broadcasters, with hours of relative inaction interspersed with short moments of excitement when a rider tries to move up (attacks) or crashes. Televising a race requires an expensive relay system of helicopters and planes to beam signals from motorcycle-based cameras. Most cycling broadcasts—even for the Tour de France—lose money. 

With budgets that range from $15 million to as much as $40 million, keeping the teams afloat is hard in the best of circumstances. If key riders suffer injuries or a team fails to get selected for a big race, it can find itself unable to re-sign sponsors, or attract new ones. 

Team Katusha, a Swiss cycling team, competed in this year’s Tour de France, but its riders were reportedly informed that the team won’t continue next year. Irish Team Aqua Blue folded in 2018, citing a failed merger with another team and difficulty getting invited to races. And the long-running BMC Racing team almost collapsed at the end of 2018, before merging with Polish outfit CCC-Sprandi Polkowice. 

Then there are the lucky teams who benefit from the backing of a big company or billionaire. Bernal’s team, Team Ineos is backed by British petrochemical company Ineos. CEO Jim Ratcliffe, ranked No. 55 on Bloomberg's Billionaire Index with a net worth of $18.8 billion, arrived by helicopter to the team's presentation in March (the location of which was kept secret until the last possible minute to discourage anti-fracking activists from attending).

Gerry Ryan, an Australian investor, owns the Michelton Scott team. And Team Bahrain-Merida operates in part thanks to the largesse of Shaikh Nasser bin Hamad Al Khalifa, whom the team has referred to as its “number one supporter.”

The women’s side of the sport faces similar challenges, along with a persistent lack of TV coverage and the absence of a marquee event such as the Tour de France. Race organizer ASO recently told Reuters the company was setting up a group dedicated to developing women's cycling.

The difference between teams forced to scrounge for sponsors and those swimming in cash shows on the race course. Team Ineos  (formerly Team Sky when its chief sponsor was Sky UK) has dominated the biggest stage races of the past decade, winning seven of the past eight Tours de France. With a massive $40 million budget, the team simply signs the best riders, puts them to work for one or two leaders and watches the wins roll in. (Team Ineos didn’t respond to a request for comment.)

Less-wealthy stage race rivals rarely bother launching attacks, knowing their riders are usually no match for top contenders (who can rake in more than $4 million a year). As a result, races have become more predictable, causing viewership to decline. NBC attracted between 200,000 and 300,000 daily U.S. viewers of the Tour de France in 2018—approximately half the audience in 2009. And while the more exciting 2019 race attracted an average of 359,000 viewers, it’s worth noting that, by comparison, the average viewership for a National Football League game last year was 15.8 million.

This instability of professional cycling has been compounded by another structural oddity: Teams aren’t permanent franchises. Instead, they are granted short-term licenses by the Union Cycliste Internationale, the sport’s governing body. Teams also don’t compete as part of a league—each race is owned an outside company which in turn sells media and sponsorship rights. All but the best teams must compete for the favor of a race owner to obtain a berth.

If a team gets frozen out of enough races, it will lose its own sponsors, and fold. 

The UCI has said it’s planning to change how this all works. For next season, a new structure for men’s cycling is envisioned, one that will address some of the thornier issues confronting second-tier teams. A key reform will be the extension of team licensing to three years, the UCI announced in December. (The UCI did not respond to a request for comment.)

Another helpful development has been the increased number of sponsors moving into ownership roles. Trek, a huge sponsor for years, began running a team of its own in 2014. This year, it’s running seven different professional cycling teams across various disciplines, including men’s and women’s road, cyclocross and mountain bike. Each of those teams may have separate budgets, but will share resources when possible, according to Eric Bjorling, brand manager at Trek.

“We came to the conclusion that it’d be better for us in the long run to control our destiny,” said Bjorling. “You have an owner who is invested in the sport.”

Vaughters, manager of the EF Education First team, agreed with his sentiment. Originally, he was simply wooing EF Education as just another sponsor. But “as the company learned more and more, they decided they needed to own the entity as the centerpoint of their global marketing campaign,” he said. “One of their big objectives is to boost employee morale by having something to cheer for. That’s harder to do as a sponsor. It’s easier when the riders are EF employees.”

In search of new cycling fans, Vaughters has assembled a calendar of races with nontraditional formats. In addition to the spring classics and grand tours, his 2019 team is participating in select gravel races that match up riders on slightly modified road bikes, a form of racing that’s rising in popularity as interest in traditional road racing has flagged. 

As part of this shift, Vaughters signed a three-year agreement with Rapha, the cycling apparel company recently purchased by the Walmart heirs. The company had previously been a sponsor of Team Sky, but chose not to continue the partnership after 2016.

“We saw the cracks in the sports itself: The calendar is confusing. You don’t really know which races to watch,” said James Fairbank, the central marketing director at Rapha. “The Tour de France is in the middle of the year, and people don’t really pay attention otherwise. There’s a constant evolution in sponsors, so a team with a large following can collapse at any time.” 

As a result of this dynamic, cycling has started experimenting with new tactics to attract fans.

Rapha embedded two “media units” with the EF team: one to follow the traditional race calendar and one to cover riders participating in “alternative” events. The goal is to “elevate characters and races that are compelling,” said Fairbank. A recent video documenting the team’s experience at a gravel race in Kansas has already racked up nearly 180,000 views on YouTube.

Capitalizing on firsthand content is also the strategy of Velon, a company created by 11 of the top cycling teams. Part union, part data company and part incubator, Velon is working to loosen the iron grip of race organizers.

The group negotiates deals in which it grants race organizers access to rider data in exchange for a share of the revenue. Broadcasters then use the data to give fans at home a more intimate view of the race, cutting to on-board camera shots and displaying rider info—such as pedaling power, speed and heart rate—in real-time. 

Velon also operates its own experimental race series, called the Hammer, with novel formats designed to attract television audiences. Hammer series teams compete in three disciplines on short circuits, with points awarded on each lap so the lead is always changing. Starting positions in the the third and final race are determined by the results of the first two competitions. (Velon didn’t return a request for comment.)

Though adding new racing disciplines is part of the solution, Vaughters said a more powerful reform would be making cycling teams permanent franchises, like in the NFL. Figuring out an equitable revenue share between teams and race organizers will stabilize the sport, and eventually attract investors who can replace the sponsor model, he said.

“What Velon is doing is exactly right,” Vaughters said. “The race organizer, the teams and the athletes are all owners in the event. The Cleveland Browns are a valuable asset even if they lose all the time, because they are still in the NFL and they are still making money,” he said. “Cycling doesn’t have that.”

To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net

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