The Economics of Pro Cycling

Unlike the NBA, the NFL or the MLB, the structure of the sport cycling is built basically of clay. And it is for this reason that cycling teams come and go and leave people, who has families to feed, out of a job.

For instance, team BMC, one of the better Pro Tour Teams, bellied up this year. BMC was founded in 2007 and used to be owned by a Swiss guy named Andy Rihs. BMC was actually formed on 2000, when it was named Phonak. Phonak and BMC were companies owned by Rihs, who had an incredible passion for bicycle racing.

Phonak was a team that was troubled, because it was the time when doping was brought into the fore and the team had signed two of Lance Armstrong’s associates, Tyler Hamilton and Floyd Landis, both who would end up suspended for doping issues. The biggest scandal of all would occur in 2006, when just days after winning the Tour de France, Landis would be strip of his Maillot Jaune for a positive drug test.

But Rihs persisted, and BMC was formed the following year. Sowly but surely, it signed “clean” riders like Cadel Evans, who had a reputation as an under achiever but under BMC, would blossom into a Tour de France champion in 2011. In 2011, he lured Greg van Avermaet from a rival team and it paid dividends in 2016 when GVA won the Olympics road race, Paris-Roubaix in 2017 and a host of other one day races in Europe. If Peter Sagan has a rival, then its GVA.

What is Phonak and BMC? Well, Phonak is a hearing aid company while BMC is a company that makes high-end carbon bicycle frames, and are both one by Rihs.

Unfortunately for BMC, Rihs, its billionaire/team owner, passed away this year and the new management didn’t share Rih’s passion for the sport.

And so this leads many people who follow the sport to ask why has this set-up been allowed to go on? Well, its about the money. Unlike the NBA, where the teams play for one league, cycling teams race for may leagues, and the biggest is the Tour de France. In the NBA, about 50 percent of the league’s income goes to player salary, which in turn comes from TV deals, gates, etc. For cyclists racing in the Tour, they get exactly nothing. All the revenues goes to ASO, the owners of the Tour de France. The same thing is true with Paris-Roubaix, Giro d’Italia and al races in the world. Cyclist’s salaries comes from the sponsors, for example, from passionate and rich cycling afficionados like Rihs or from companies who want exposure of their products to cycling fans. But when these companies think that their products are already known, they would withdraw their money and spend it somewhere else.

In other words, that’s how (un)stable the sport is. The salary cap in the NBA is USD101 million. In pro cycling, there is no salary cap and team SKY has the biggest budget- rumored to be USD45 million. BMC has USD29 to play around with.

Now, to put it in perspective, Stephen Curry earns USD34 million a year and 27 NBA players earn at least USD23 million/year.

(To be continued)