SBD/July 21, 2014/Marketing and Sponsorship

Cycling Teams May Become Fixed Franchises In Response To Sponsorship Decline

A decline in non-cycling sponsors has forced a return to bicycle manufacturers
While a group of team owners "are seeking a cut" of TV rights from the Tour de France, another "proposed remedy for cycling’s general instability is to adopt a league structure like other sports, in which the teams are fixed franchises that can be bought and sold," according to Ian Austen of the N.Y. TIMES. Most teams are using the "spectacle of the Tour to amaze and lure new sponsors," but cycling team budgets are, by American standards, more like a "couple of star athletes’ salaries." At the top, British-based Team Sky "spends an estimated" $40.6M a year (all figures U.S.) and about six major teams are in the $23M range. Most of that money "comes from sponsors" because cycling spectators "do not pay to watch" the Tour. Although sponsors’ names and logos "decorate the riders’ clothing, cars, buses and anywhere else they will fit, the teams are usually owned by small, little-known companies." Even at the "best of times, it has been a precarious arrangement, forcing some teams to change names and shift colors almost as frequently as a chameleon." Australia-based Orica-GreenEDGE pro cycling team Owner Gerry Ryan said that he believes the "financial uncertainty surrounding teams was a major factor behind the sport’s doping problems." Sponsors "rarely commit for the long term, putting pressure on teams for race results that may persuade them to renew -- or to lure a replacement sponsor." The Tour’s title sponsors are a "mixed bunch." The recent decline in non-cycling sponsors has "forced a return to the past with bicycle manufacturers, who had generally been secondary sponsors, filling the main sponsor void for some teams." They include U.S.-based brands Trek and Cannondale, BMC of Switzerland, and Taiwan-based Giant and Merida. However, few believe that bike makers can "afford to be the primary source of financing for teams over the long term" (N.Y. TIMES, 7/20).
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