So the news came through today that all is well and good in men’s professional cycling, financially speaking. A report from auditors Ernst & Young shows that the total budgets of the 40 men’s professional cycling teams has risen by 36.5% since 2009. Three years ago the total budget came in at €235 million, whereas today teams have €321 million.
Esteemed leader of world cycling/professional idiot Pat McQuaid had this to say in the UCI’s statement, “It is very pleasing to see that the men`s professional cycling is prospering in these difficult times. Most of the cyclists within the professional peloton can live very well, or at least comfortably, on their salaries thanks to the support of sponsors who invest in this sport. These sponsors are attracted by the extremely good visibility cycling provides them throughout the year.”
The press release also notes, somewhat inadvertently given the positive tone of the statement, the massive reliance on finding sponsors the teams have. 95% of team’s budgets are generated through sponsors. This puts teams under a huge amount of pressure to find sponsors, something that doesn’t always happen, as we all know. The most successful team in terms of wins in recent years, HTC-Highroad, couldn’t find a sponsor last year and no longer exists. Vuelta winners Geox-TMC saw their sponsors pull out last year, and despite team boss Mauro Gianetti’s desperate search for replacements, the team folded for good.
Euskaltel-Euskadi’s financial troubles have been well documented (story on this blog), with their budget staying the same for the past five years at €7 million, miniscule by WorldTour standards. The future doesn’t look especially rosy for the team with the prospect of a different structure after this season – one not supported by the Fundación Euskadi and local government. A sponsor will have to be found.
There has been some positive sponsor-finding news this season though. After fretting over a secondary sponsor and the controversy with BigMat, Garmin team boss Jonathan Vaughters eventually managed to bring in tech firm Barracuda Networks as co-sponsor earlier this year. However, even with this new income, the team said that they are still on the lookout for additional sponsorship.
Going back to the UCI’s report, there is no doubt that the increase in money available to teams has been significantly influenced by the increase in teams run by very rich men who provide the team budget, rather than the traditional structure of sponsors doing so. In 2009, Astana was the only team like this that existed (run by the oil-rich Kazakh government).
However, this season we have hearing aid billionaire Andy Rihs at BMC (they did, of course, exist in 2009, but the investment has been majorly increased over the past two years), Gerry Ryan – reportedly worth $180 million – at GreenEdge, Igor Makarov at Katusha (the team backed by oil and gas companies Itera and Gazprom, and Makarov himself a probable billionaire being the chairman of the board at Itera), and Flavio Becca, who laid the base for the team we now know as Radioshack-Nissan-Trek. In addition to this, Team Sky is a part of the Murdoch News Corporation empire. Omega Pharma-Quick Step can also be included in this list thanks to Czech billionaire co-owner Zdeněk Bakala, but they rely mostly on sponsorship money.
So then, the seemingly large increase in money flowing through the teams coffers can be, in a large part, put down to the mega-rich backers of these new teams. Quasi-nationalism also seems to be a trend with these teams, with Sky, Katusha, Astana and GreenEdge all more or less acting as a ‘national team’ for their respective countries. Take away these new teams, and the number of major sponsors that have come into the WorldTour since 2009 is not that impressive. Of course, Movistar replaced Caisse d’Epargne, Belisol has come in as co-sponsor at Lotto, with Omega Pharma moving away to Quick Step, BigMat are a co-sponsor of FDJ, Garmin have a new co-sponsor in the shape of Barracuda, Liquigas have Cannondale as a co-sponsor, and Lampre have brought in ISD (run by a billionaire cycling fan) to replace Farnese Vini, and NGC before that.
A quick glance at Professional Continental level, the number of sponsors seems to have decreased since 2009, with several teams such as Acqua & Sapone, Andalucía (who recently had financial problems after losing their co-sponsor Caja Granada), Caja Rural, Cofidis, Europcar, NetApp and UnitedHealthcare all reliant on one major sponsor. Project 1T4I is the team we are all waiting on for their sponsor announcement next month, and RusVelo are part of the same system as Katusha. The number of named major sponsors at Pro Continental level is 29 this year, while there were 36 in 2009.
The UCI press release also notes that the average wage of pro cyclists has risen from €190,000 per year in 2009 to €264,000 this year. This is quite a useless figure as far as any real analysis goes, as the figure is undoubtedly skewed by the big-name riders who earn many many times that of the riders earning the WorldTour minimum wage of €35,000 (€24,000 for neo-pros), and the Professional Continental minimum wage of €27,500 (€23,000 for neo-pros). The new super-rich teams in the sport can pay riders massive amounts, pricing teams relying on traditional sponsor income out of the market (For example, Europcar wanted Thor Hushovd for this year, but BMC offered him around €2 million per year to ride for them instead).
It seems to be the case that the new mega-rich superteams are able to price everyone else out of the market. While this is a problem for the sponsored teams in itself, it is also a problem for the sponsors, and indeed any potential sponsors looking to come into the sport. Why should they put up €7 million a year to co-sponsor a team when there are state/tycoon-sponsored teams around that can easily spend €20 or so million every year? While it is a positive point that cycling is seeing new money, it doesn’t look like this is a sustainable way for the sport to move forward, as sponsors might be put off from coming in to the sport by the teams with unending pockets.
As I have recently written about, Spanish cycling on the whole has been in bad way financially as of late, something which is totally at odds with what the UCI has reported. Their press release does not mention the financial state of any races as they are all run by different organisers, but it has been well documented that races in Spain, Italy, France and even the GP Herning in Denmark have either had to be cancelled, or downsize in an attempt to stay afloat, while many are struggling to run year-by-year.
The UCI can put out some horrifically skewed figures and tell us that, economically, things are looking up for professional cycling, but in light of all the news over the past year or two, they aren’t achieving a whole lot apart from looking pretty ignorant.