Cycling’s Sponsor-Branded Teams p/b Financial Instability

May 11 2015

I like a lot of what Vaughters says here, but the problem is that cycling can’t have a franchise system until it has actual franchises. I mean, Vaughters’ own squad—officially Slipstream Sports LLC—hasn’t ever been called by that name. Manchester United, in contrast, has remained Manchester United, whether Sharp, AIG, or Chevy is emblazoned across the chest.

This enduring team brand is a major reason why the franchise system is successful. That “I gotta see about a girl” scene in Good Will Hunting is effective because Will and Sean—a generation apart—each understand the experience of Red Sox fandom. It just wouldn’t work with US Postal Service p/b Berry Floor.

Even in Belgium, the one part of the world where teams might conceivably have inter-generational fan bases, the country’s biggest “franchise” has changed names three times since its inception—six, if you count co-sponsors. And even then, it was a spin-off of a pre-existing Italian organization (Mapei).

It’s a multi-dimensional contrast; in the US, the events and venues themselves are the here-today, gone-tomorrow advertising vector. Yes, there’s the World Series and the Super Bowl, but there are far more TaxSlayer Bowls[your name here] Gardens and branding rights for pretty much every ancillary anything in the broadcast. Makes Amstel Gold seem almost anti-capitalist, and in many ways, reflects the current power imbalance between cycling’s teams and race organizers.

Most commentary on the business of cycling versus the business of ball sports centers around the existence of a stadium. And don’t get me wrong, it can be an incredible revenue stream. But I don’t believe it’s the stadium itself that makes the difference—I think it’s the fans’ relationship to the brand of the local squad.

After all, stadiums are profitable for teams (and often a raw deal for cities) because fans are willing to build them with public funds, shell out $85 for a seat, and dull those expenditures with nine-dollar Bud Lights. The idea that a massive physical structure should be expected to turn a profit for a franchise on as few as eight events a year is absurd—it’s the fans’ willingness to pay that makes it happen.

Cycling doesn’t need stadiums—it just needs those franchise brands to make fanbases coalesce. From the Cowboys’ star to the Yankees “NY”, licensed apparel is a massive revenue driver. While I’ll be the first to advocate rolling up to the group ride in a Mapei kit, I’d get the same feeling walking into Fenway in a $193 replica Bill Lee jersey—and in the latter case, the Red Sox would still get revenue.

Of course, a lot of this branding is tied up in regional affiliations—there’s something undeniable about the appeal of The Home Team. And cycling used to understand this, as the Tour de France was contested by national and regional squads well into the 1960s.

You could argue that teams today are too international to recreate this system, but it’s not like the guys playing for the Bears are actually from Chicago. The “homeness” of a team is largely a function of branding, to the point that gear from certain teams frequently becomes de facto gang insignia.

By setting up a permanent, open-to-the-public, service course-esq structure in a specific population center, teams could both begin to create that sense of local ownership, and (in place of a stadium) diversify their revenue through direct sales of team-branded goods, coffee, beer, service from pro mechanics, and early access to the newest gear from team sponsors.

There's no such team as the Spungos

…of course, there could be in cycling, so long as Spungo™ Brand ponied up enough money (via).

All this isn’t to say the franchise system is a magic bullet—leagues frequently fail, and the early days of every successful pro sport were fraught with competing leagues, mergers, moving teams, and folding organizations. But once established, there’s no denying the marketability of the team brands they create, from Crystal Palace—whose namesake was destroyed some 80 years ago—to the Cleveland Browns—who were revived even after the original franchise changed names and moved to Baltimore.

But of course, all this earning potential is completely hamstrung by the existing brand name sponsorship model. It might be an easier sell in the short-term, but it makes a lasting franchise structure effectively impossible, to the point that sponsor-branded teams might be the most serious threat to the long-term financial viability of the sport—more so even than doping.

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12 Responses to “Cycling’s Sponsor-Branded Teams p/b Financial Instability”

  1. mendip5000 11 May 2015 at 9:43 am #

    I find it interesting to note that Euskaltel Euskadi, the one top level cycling team that was undeniably linked to a location, no longer exists…

    • cosmo 11 May 2015 at 6:10 pm #

      Sure—but Euskaltel had some serious issues. They focused almost exclusively on the development of Basque riders, and were backed almost (if not entirely) by Basque businesses—not the broadest-based strategy in a region of just 2.5 million people or so. It also didn’t help that they rose to prominence during a massive economic bubble whose implosion the larger Spanish economy is still trying to dig out of.

      The Green Bay Packers are a nice counter-example. They’re a similarly small market (~6 million in all of Wisconsin) and the Packers are extremely close to the Green Bay community—the team is actually run as a non-profit corporation in which private citizens can buy shares. Yet in spite (or perhaps because of) this, they’re one of the most favorably-viewed franchises in the NFL, and are able to effectively market themselves as a productive business partner to massive corporations like MillerCoors and Verizon.

      As I say in the piece, it’s the branding that’s important. Having a local affiliation can certainly help with that, but they’re definitely not one in the same.

  2. Touriste-Routier 12 May 2015 at 6:06 am #

    Another issue is that cycling isn’t a league; the teams, race organizers, and governing body are all distinct entities. And the competitors aren’t necessarily represented by their teams (not that they are in ball sports either).

    Until the teams start organizing or owning races (much like what the US amateur scene is supposedly modeled on), they will have no ownership of anything remotely tangible or relevant. What many of the team managers seem to want is a cut of profits from something owned by someone else (the races); they are not creating anything, adding value, or taking any risk. Mounting cameras on bikes and sharing data isn’t going to bring teams stability or prosperity. At best it will be a minor revenue stream.

    There is a big push for a season long competition from the UCI and now maybe from Velon, but the real question is does anyone (fans) care?

    While it might be nice to have a season long narrative, the increased specialization of the riders and the changing natures of the event-courses change (sometimes to suit a particular type of rider), sponsors change, race start/finish locations change work against a bigger consistent story. Neve rmind that rider’s contracts or careers are often made via 1 big result. Is anyone going to really care who finished 15th consistently throughout the season?

    Maybe road cycling needs to look at cyclocross for some ideas on how to succeed. There are several profitable season long competitions that people (riders, fans, sponsors) care about, 2 of which are privately owned and operated. There are gate revenues, large concession sales, TV revenue, sponsorships, etc. And the riders are contracted to appear, and share in the spoils via appearance fees and prize money.

    And here, the teams don’t really matter, it is the household name riders that help drive the draw. This is something that the road teams need to recognize (which JV mentions in the video); if the majority of stars don’t appear during the entire season (or at least most of it), what exactly are you banking on?

    • sps12321 13 May 2015 at 5:54 am #

      looking to cyclocross is an idea but I would argue that fans don’t care about the teams all that much but are fans of riders.

  3. ZiaBoulder 12 May 2015 at 7:49 pm #

    ASO seems to want to gobble up any struggling race (Paris-Nice, Vuelta, etc — is Paris Roubaix on this list too?) UCI wants only to control the product. And, teams are struggling to find a place in the heart and mind of the audience. It seems NASCAesque for the teams b/c people really attach themselves to a racer (eg. Jens Voigt, Ted King etc.) Jens had/has fans despite the teams he was on.

    It seems that it should be easy to get Race Owners and teams to align their interests (more money for everyone) and UCI can just sit in the background (like FIBA, FIFA, FIVA, etc.) and get the money they need from International events (adverts etc.). So, what is the stumbling block? You all provide great insights and should run for positions on a Board of Directors (USAC, UCI) to help solve these problems, and still I would like a simple and clear explanation of why there is constant tension among all the parties involved.

    thanks,

  4. Rhys 12 May 2015 at 11:37 pm #

    I agree also a lot with what Vaughters has to say. I think the Velon thing is ultimately in very early stages but one of the competitive advantages of cycling is the amazing ever-changing scenery and if you can combine that with on the rivet cycling – it’s a compelling combination. The technology is already there.

    The whole league thing is great for mainstream but I think you would lose a lot if you lost the New World-Spring Classics-Week tour-three week tour-worlds traditions….

  5. sps12321 13 May 2015 at 5:32 am #

    I agree with most of what you said. I think there is in cycling often a lack of team identity. Fans will support individual riders not teams. When your favourite rider switches teams you often shift your fandedness with them. There are a few exceptions, I think OGE, for example, does a great job of creating that identity and has a great following because of that and also relies on the Australian fan base.

    One solution, is to shift the attention from riders to teams. The winner of the race is the team whose rider crosses the line first. That guy is the guy who “scored” for his team. Cavendish doesn’t win the race without the team setting him up. Putting the focus on the team could create that identity and following as the riders move around.

    • sps12321 14 May 2015 at 7:17 am #

      It is why I love having the team time trials at the start of the race. Makes the pink Jersey win at the end so dependant on the whole team contributing to the win and makes it obvious that they did contribute (even if they get dropped).

    • Kyle V. 18 May 2015 at 3:03 pm #

      They should bring the entire team up with the winner for big races, kinda like John D. did in Paris Roubaix this year. That would really reinforce the idea that it takes a team to pull off the big wins even though you may not immediately see their contributions.

  6. Larry T. 18 May 2015 at 7:51 am #

    Please, please, please don’t make pro cycling like the NFL, MLB, NHL, etc. JV’s little clip contained a lot of blather about franchises, money and entertainment but said little about SPORT. Dumbing down the “product” so any mouth-breather can understand it won’t do much, plenty of other TV products already do a great job of that. The sport’s money now comes from the bike biz, rich chamois sniffers, corrupt political regimes and some gambling interests controlled by various countries. If you want more varied sponsors with bigger wallets, try cleaning up the doping mess in a real way rather than emulating North American “sports” models. Quite a few of us are interested in this sport BECAUSE it’s not one of those.

  7. Quentin 19 May 2015 at 12:48 pm #

    I’ve been a Slipstream (or whatever they’re called this year) fan for a long time for a variety of reasons, but one of them in the early days was that I thought the use of argyle as a marker of team identity was a cool idea. The problem is, while I hear they still have argyle somewhere on their kit, I sure can’t see it, and it seems to have been disappearing for a few years now. If you want to build a franchise identity, bring back the argyle! If we’re going to use European soccer as a point of comparison, they keep more or less the same look in their kit from one year to the next, they don’t change colors every time they change jersey sponsors, and they definitely don’t all wear the same color.

  8. Breezy 21 May 2015 at 5:59 am #

    I don’t think this anything to do with stadiums or brands – sure that set up the pro ball leagues to get where they are – but it’s not where their power lies.

    The real power of the NBA/NFL is the collective bargaining and revenue sharing of owners – want the Dallas Cowboy games? Cool, but you have to pay for the Jacksonville Jaguars games too. In a grotesquely distorted way the haves watch out for the have nots.

    The players get their cut by collectively bargaining with the league – they always get a set percent of total league revenue guaranteed in the form of a salary cap/floor.

    In cycling the one or two organizations bid for their own rights, and have slowly gobbled up all the worthwhile media events within their domain. There is nothing collective, only piecemeal bargaining to keep a single entity generating revenue. In a similar fashion, each team has to sort out it’s own sponsors/revenue so there is massive fluctuation between team budgets.

    Unless I hear cycling come to terms with some sort of collective bargaining from both levels of the sport (race owners and riders), all of this talk about altering the landscape of cycling financial stability and installing a “franchise” system is pure fantasy.

    p.s. Vaughters is wrong about about the structure of the NFL. The NFL is technically a non-profit setup by the owners of 32 businesses to conduct the administrative aspects of competitive sport (although this will change in 2015). The 32 owners collectively bargain with TV networks, not the league. The owners specifically operate with a federal anti-trust exemption. So from the level of collusion/competition he’s correct. But being organized by an institution that does not directly generate revenue or profit makes it much easier to work together.

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