The big busi­ness of cy­cling

Finweek English Edition - - INSIDE - BY GLENDA WIL­LIAMS

Not that long ago, cy­cling was a Cin­derella sport in South africa, and spon­sor­ship and me­dia cov­er­age were hard to come by.

In Europe, cy­cling has al­ways been big busi­ness, driven by the re­gion’s pas­sion for the sport and its mas­sive fol­low­ing. The busi­ness of cy­cling here has been helped in no small part by the leg­endary Tour de France, the other two Grand Tours, the Giro d’Italia, and Vuelta a Es­pana, as well as the popular spring clas­sics, the most fa­mous of which is Paris-Roubaix, aptly named the “Hell of the North” be­cause of its tor­tu­ous pavé (cob­ble) sec­tors.

Fol­low­ing the trend of their road­rac­ing Euro­pean coun­ter­parts, it was road cy­cling, par­tic­u­larly through large events like the Cape Town Cy­cle Tour and the Mo­men­tum 947 Cy­cle Chal­lenge, that the lo­cal pop­u­la­tion mostly par­tic­i­pated in. That is un­til moun­tain bik­ing fever took hold. Now, with more than 50

three- to four-day moun­tain bike stage races i n South Africa, height­ened moun­tain bik­ing ac­tiv­ity is ev­i­dent. Not sur­pris­ingly, this growth in the pop­u­lar­ity of cy­cling has made cy­cling brands, mar­keters and spon­sors sit up and take no­tice.

Cy­cling is no longer a poor man’s sport. The re­al­ity is that to­day many cy­clists are com­fort­ably well off, so it’s no won­der that brands are now eye­ing the cy­cling in­dus­try with its grow­ing me­dia ex­po­sure to in­crease aware­ness for their brands. But the brand is not the only ben­e­fi­ciary of growth.

Build­ing t he brand also means build­ing the sport - some­thing MTN knows quite a bit about. Its in­vest­ment in cy­cling , which be­gan in 2007, con­trib­uted to the growth of the sport at both recre­ational and com­pet­i­tive lev­els. The visibility and not un­sub­stan­tial suc­cesses of MTN-Qhubeka, the con­ti­nent’s first Pro Con­ti­nen­tal African team, helped drive in­ter­est and in­vest­ment into cy­cling. Per­haps more im­por­tantly, th­ese in­vest­ments, spon­sor­ships, events and re­lated ex­po­sure con­trib­ute to growth in the cy­cling in­dus­try and the econ­omy as well as cre­ate jobs and drive tourism to the coun­try.

SA’s sig­na­ture events like Absa Cape Epic, which is ac­cred­ited by the UCI (Union Cy­cliste In­ter­na­tionale), and the world’s largest timed event, the Cape Town Cy­cle Tour with its 35 000-odd par­tic­i­pants, gen­er­ated over R600m for the West­ern Cape econ­omy last year. And they con­tinue to pro­mote cy­cling both lo­cally and glob­ally. As will Team MTN-Qhubeka, who will be f ly­ing the na­tion’s f lag at the Tour de France later this year.

The bi­cy­cle may not be king here as it is in many Euro­pean coun­tries, but the cy­cling in­dus­try is grow­ing lo­cally. Even the City of Joburg is push­ing for a more cy­cling-friendly city by pro­mot­ing cy­cling and build­ing cy­cling lanes. But more to the point, the in­creas­ing num­ber of events, par­tic­i­pants, cy­cling-re­lated sales as well as a grow­ing and en­gaged au­di­ence ev­i­dences this growth. And it is un­likely that big name cy­cling brands like

Spe­cial­ized would be plough­ing money into lo­cal ded­i­cated set-ups if this were not the case.

A SUS­TAIN­ABLE BUSI­NESS: THE ABSA CAPE EPIC

SA’s unique events like the Cape Town Cy­cle Tour and the 947 have set the bar as sus­tain­able busi­ness mod­els and pre­mier cy­cling events. One race in par­tic­u­lar has also man­aged to do this with­out re­ly­ing on mas­sive par­tic­i­pant num­bers, and it has el­e­vated the sta­tus of moun­tain bik­ing in the coun­try. The West­ern Cape’s Absa Cape Epic is the world’s only hors cat­e­gorie (HC) moun­tain bike team race – on a par only with the Tour de France, Giro d’Italia, Vuelta a Es­paña, the three road cy­cling Grand Tours, and the Cyprus Sun­shine Cup.

It is not called the Epic for noth­ing. It is an epic eight-day test of en­durance and skill. What awaits rid­ers each year is a chal­leng­ing 800km ter­rain that in­cludes 15 000m of climb­ing travers­ing im­pos­ing moun­tains and rocky climbs, tax­ing gravel roads and grip­ping, tech­ni­cal de­scents. It is not for the ner­vous or un­fit. Yet ev­ery­one who is any­one wants to be a part of it. Last year, the 100 Early Bird en­tries were sold out within sec­onds and po­ten­tial par­tic­i­pants, both men and women, had to scram­ble to get an en­try through the Epic’s in­no­va­tive lot­tery sys­tem.

At R59 600 per two-per­son team, the en­try fee is not cheap. But this amount also cov­ers ac­com­mo­da­tion, food and sup­port over eight days. The rid­ers’ en­try fees only cover 55% of the cost of the event, says Absa Cape Epic founder Kevin Ver­maak. The re­main­ing 45% is cov­ered by spon­sor­ship in­come.

Why, you may ask, would so many t wo-team hope­fuls, many of them am­a­teurs, be will­ing to pay a size­able amount to put them­selves through the or­di­nary per­son’s equiv­a­lent of tor­ture over eight days? The an­swer is sim­ple. It is one of the most, if not the most, pres­ti­gious moun­tain bike race in the world. Its HC sta­tus means it is one that the pro­fes­sional moun­tain biker is not go­ing to miss, es­pe­cially when cru­cial UCI points can also be earned. A prize purse of R1.7m is an added in­cen­tive. Not sur­pris­ingly, the Absa Cape Epic at­tracts top pro­fes­sion­als and am­a­teurs from around the globe. But many don’t make the cut as only a to­tal of 1 200 rid­ers – in 600 two-per­son teams – can take part each year.

Founded by l ocal en­tre­pre­neur Kevin Ver­maak in 2004, en­tries for lo­cal par­tic­i­pants in t he i nau­gu­ral r ace sold out i n t hree days. The in­ter­na­tional block had sold out as well. By 2005, it had sur­passed 2 500 global TV hours to be­come the most tele­vised moun­tain bike race of all time and, in 2006, it landed ti­tle spon­sor Absa, re­ports t he Gor­don In­sti­tute of Busi­ness Science (GIBS). TV cov­er­age i n 2014 amounted to 3 500 hours, a va l ue of R260m, Ver­maak told Finweek.

This year Ver­maak an­tic­i­pates R300m to be gen­er­ated by the Absa Cape Epic for the lo­cal econ­omy. The av­er­age rider, he says, will spend an av­er­age to­tal of 14 days in the West­ern Cape, usu­ally i nclud­ing four days be­fore the race in Cape Town.

“In 2014, it was t he fi r st t r ip t o South Africa f or 38% of t he in­ter­na­tional rid­ers and 89% said they would re­turn again for a hol­i­day with their fam­ily. The im­pact extends to towns in which the race passes through and there­fore is not lo­calised to the City of Cape Town,” says Ver­maak.

Kevin Ver­maak

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