Show Me The Money

Pro cycling teams have relied on sponsors ever since sponsorship was invented, but with the money drying up they need to find another way

With no ticket sales or revenue from TV rights, pro cycling teams have always been reliant on sponsorship to pay the bills. But this model may no longer be viable, and calls are growing for a change to the way the sport is financed. Cyclist investigates the options

‘Ibelieve that the business model of cycling is failing,’ says Luca Guercilena, manager of the TrekSegafredo team. Guercilena is speaking in Salamanca at the start of Stage 10 of the Vuelta a España as his riders emerge from their bus, climb on their bikes and pedal to a signing-on stage set up amid the splendour of the Plaza Mayor.

The scene is bathed in warm sunshine. The crowd is big, maybe several thousand. On the surface, the race, and the sport, is a picture of good health. The atmosphere is aspirational and glamorous, which makes Guercilena’s words all the more jarring.

But it doesn’t take much effort to scratch away that glossy veneer and see a less attractive picture underneath. A year ago, for example, one of the teams competing at the Vuelta alongside Trek-segafredo was Aqua Blue Sport, an ambitious squad in its first season.

As well as being Ireland’s first Procontilevel cycling team, Aqua Blue had an innovative business model, with an online shop selling equipment and clothing, the

‘T here’s no greater feeling than sitting in a team car behind your team. But everything else that goes with it is rotten to the core’

profits from which would go into running the team. The goal was for the online shop to be providing the team’s funding in full within four years, which would represent something of a revolution: a cycling team not wholly reliant on a main sponsor.

It seemed ambitious, yet few imagined that the project would hit the buffers as quickly or abruptly as it did. It was a cruel irony that the man behind the team, Rick Delaney, announced Aqua Blue’s immediate closure just as this year’s Vuelta got underway, when 12 months earlier they had announced their arrival so emphatically when Stefan Denifl won a stage.

Teams come and go all the time in cycling, but it’s extremely rare for one to stop midseason. The news came just six days before the Tour of Britain, which should have been one of Aqua Blue’s biggest races of the season. What’s more, the company behind the team – the online retail store – was one of the sponsors of the race, a commitment that Delaney says cost him €50,000.

Bizarrely, this meant the Aqua Blue Sport name was prominent throughout the eightday race yet their riders were not actually in the race. To underline the cut-throat nature of the sport – or business – the organisers managed to find a replacement team even at such short notice. Team Wiggins, bitterly disappointed not to be have been selected in the first place, were only too happy to step into Aqua Blue’s shoes.

The sinking of Aqua Blue

There was no single reason for the team’s failure. It was the result of a perfect storm of problems, including issues with equipment and the collapse of a proposed merger with another team. But perhaps the single biggest challenge was the system – or lack of a system – for entry to the biggest races.

Looking back, it seems remarkable that Aqua Blue, then a new and unproven team in the Professional Continental category, were given a wild card to a Grand Tour, the Vuelta, in their first year. There were 27 Professional Continental teams registered by the UCI this season, and competition between them is intense. This is the division beneath the Worldtour, where the 18 bestfunded teams in the world are guaranteed entry to all the major races.

There are no such guarantees at Proconti level. So while the top French squads can be reasonably confident of a wild card for the Tour de France, the top Italian ones of an invite to the Giro d’italia, and the best Spanish Proconti squads of a spot in the Vuelta, a team from Ireland can only keep their fingers crossed and hope for the best.

In these circumstances, sponsoring such a team is, as Delaney has now discovered, not so much an investment as a gamble.

Once he’d decided to close Aqua Blue, Delaney felt able to speak about how the system works. He complained about the lack of advice from the UCI, cycling’s world governing body, despite, he said, all their encouraging words when he met them in 2016 to discuss his proposed team. More recently, he says, ‘I told them of my frustration with the race selection process. We should have to qualify in a system where teams go up and teams go down, but it’s never going to happen.

‘In our first year we rode the Tour de Suisse and it cost me €20,000,’ Delaney adds. ‘We won a stage, but when we rode it again this year I had to pay another €20,000 for the privilege of investing €2.73m a year in the team. Then I have to pay another 10 grand to ride the Amstel Gold Race.

‘It’s a disgusting sport,’ he says. ‘Forgive me, it’s not a disgusting sport. The way it’s run is disgusting. There’s no greater feeling than sitting in a team car behind your team – it’s goose pimples from head to toe. But everything else that goes with it is just rotten to the core.’

Delaney claims that he doesn’t object in principle to having to pay to enter races. What he does object to is the lack of transparency and clarity. The system, such as it is, is opaque. If it costs a sum of money to ride the Giro, he would like to know what that sum is, and then make a business decision on whether it’s worth it.

For Delaney, the catalyst for his decision to call it quits was when months of negotiations about a proposed merger with the Vérandas Willems team came to nothing.

‘I thought about it all weekend and woke up on Monday morning at 6am and decided to pull the pin,’ he says. ‘This has been my passion and dream for the past two years, so I didn’t do it on a whim. I spent millions, I gave 42 people jobs for two years, and I haven’t broken a contract with anybody.’

Five riders had been signed for 2019 and Delaney has promised to honour those contracts if the riders don’t find alternative employment.

The online shop, he adds, will remain, and he’s hopeful it will succeed. ‘It’s a very ambitious project, we’ve had many changes, we’ve hit many walls, but we’re still going, and we’ll make progress,’ he insists. ‘It’s working, we just haven’t had the volume.’

His dream, he says, is for the online shop to succeed to the point where Aqua Blue can one day return to the sport ‘unshackled’. Few will be holding their breath.

Advertising makes a break

Back in Salamanca a few days after Delaney’s decision to close his team, Luca Guercilena is reflecting on some of the same issues. The problem is that the pro cycling model that existed and worked for more than 100 years may no longer be fit for purpose in the 21st century.

Professional cycling faces the same problem as a media industry that relied for so long on advertising. Another parallel is that consumers of media now expect most content to be free, just as cycling fans have always expected their sport to be free. However, the biggest question concerns the sponsorship model.

When advertising migrates elsewhere – when brands don’t need cycling teams to spread their message, just like they now don’t need newspapers – what is there to replace it?

‘It’s not enough any more for any kind of sponsor to have just a logo on a jersey,’ says Guercilena. ‘For years we have been told that the UCI will create a system through which teams can survive long term, because the reality is we are too closely linked to sponsors, so when the sponsor decides to move away from a project you are left empty-handed.

‘Twenty years ago we had sponsors coming in with a clear direction and a clear project in mind. Now we read about more money coming in, and better money, but that’s simply wrong. If we make an analysis of the money companies are putting in, and the return they get, it has changed. There is no comparison.

‘We can’t be blind and say there’s a team disappearing but another one is coming,’ he adds. ‘It’s a problem. Teams should not disappear. With the growth of cycling, I believe we should have had 40 Worldtour teams right now, but we are struggling for 16 or 18.’

One reason for the teams’ struggle to survive on sponsorship money alone is clearly the way that the advertising industry has changed and continues to change, but another is that the costs of running a pro team have escalated in recent years. In 2005 the biggest budget teams had about £10 million. Now Team Sky have around £34.5 million and the others are scrabbling

‘W e can’t be blind and say there’s a team disappearing but another one is coming. Teams should not disappear’

to keep up. It’s no wonder teams are looking to establish their own revenue streams, but the question is how.

‘The teams for sure need to find a way to have a revenue stream, through the data of riders, videos or whatever impact we can have on social media,’ says Guercilena. ‘Then image rights and TV rights, streaming rights. Teams are not part of any of this. And so we are going to continuously fail.’

What isn’t clear is what TV and image rights, or self-generated content, might be worth. Guercilena also mentions sharing in the profits from races, but the reality is few races appear to make a profit.

‘We need to help races avoid losses,’ says Guercilena, ‘but we need to be part of the sharing too. When you compare cycling to other sports it’s insane, because in other sports they all share the revenue.’

The search for a new plan

As he stands by his team bus, surrounded by the Trek-segafredo cars, bikes, riders and personnel, Guercilena seems struck by costs that are borne entirely by the teams.

‘I’m wondering why the protagonists have no rights to decide anything,’ he says. ‘They should at least be equals. Who is paying the riders? The teams. Who is coming to the races with buses and things? The teams. We do not have the right to be race organisers, that’s clear and understandable. But at the moment we do not have the right to share in anything. We just need to accept whatever rules are imposed. That’s the problem, and that’s the model that needs to be changed.

‘Give the opportunity to the teams to live forever, because when you see a team like BMC folding, or at least changing completely [BMC will be taken over by Polish company CCC in 2019], when you see Quick-step struggling, and a good project, Aqua Blue, pushed to close because they can’t find revenue, then we have a big problem.’

But Guercilena’s proposed solution to the problem is completely different to Delaney’s. Whereas Delaney favours a system of promotion and relegation, Guercilena finds this suggestion ‘ridiculous’ and ‘simply insane’. He may be swimming against the tide given that David Lappartient, the new UCI president, is apparently keen on reforms that will see a reduced Worldtour of 15 teams and a promotion and relegation system.

Guercelina, and most other Worldtour team bosses, favours something quite different: in effect, a closed league that will guarantee the top teams entry to the major races over many years, giving them the chance to sell a long-term plan to sponsors and investors. It will also perhaps establish revenue streams that they believe can flow from TV rights, image rights and other media content – which is thus far untapped but also unproven and therefore entirely speculative.

‘To me the answer is simple,’ Guercilena says. ‘We need a dedicated league. That’s it. There’s no other discussion. Take the NBA, the NFL, Major League Baseball: they make a lot of money and the minute they see the revenue going down they sit down at the table and decide all together on a solution.

‘If you analyse the other professional sports in the world, starting with American sports, it’s a closed system in which there’s clear investment and clear revenue for the team, and the leagues and the organisers and the teams are all rowing in the same direction. In cycling this is not happening.’ Richard Moore is a cycling journalist and author, former racer and co-founder of The Cycling Podcast

M ost Worldtour team bosses favour a closed league that will guarantee the top teams entry to the major races over many years