THE ECONOMIC ATTRACTIVENESS OF PROFESSIONAL ROAD CYCLING ANALYSIS AND CHALLENGES
Aantal woorden / Word count: 17 837
Chiel Deckers Stamnummer / student number : 000150447404
Promotor / supervisor: Prof. Dr. Johan Albrecht
Masterproef voorgedragen tot het bekomen van de graad van: Master’s Dissertation submitted to obtain the degree of:
Master in Business Economics: Corporate Finance
Academiejaar / Academic year: 2018-2019
Deze pagina is niet beschikbaar omdat ze persoonsgegevens bevat. Universiteitsbibliotheek Gent, 2021.
This page is not available because it contains personal information. Ghent University, Library, 2021.
Preface The dissertation ‘The economic attractiveness of professional road cycling’ is presented here. It contains an analysis of the evolution of the economic appeal of the sport and a discussion of possible improvements, which ends in a new business model. This Master’s Dissertation is submitted to obtain the degree of Master in Business Economics: Corporate finance.
A long lasting passion for road cycling has made the task of writing a master thesis about the future of road cycling an interesting and fulfilling task. The appeal and business model of road cycling are subjects that have enticed me for years and this assignment gave me the opportunity to research it in depth. I would like to take this opportunity a few people which were vital to the successful completion of this project. First and foremost, I would like to thank my supervisor Prof. Dr. Johan Albrecht for the opportunity, useful insights in the subject matter, and access to his network. Secondly, my gratitude goes to Prof. Dr. Daam Van Reeth and VRT for providing data on television ratings. I thank Iwan Spekenbrink and his Team Sunweb for a nice and insightful talk, and Maxim De Vriese from Renson for making it possible. Last but not least, I thank everyone who has taken the time to review and provide feedback on this thesis. Ghent, August 13, 2019.
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Table of contents Preface ...... II Table of contents ...... III List of used abbreviations ...... V List of tables and figures ...... V List of tables ...... V List of figures ...... VI 1. Introduction ...... 1 2. Analysis ...... 2 2.1. Important events and structures ...... 2 2.1.1. The structural reforms ...... 2 2.1.1.1. First internationalization campaign ...... 2 2.1.1.2. The UCI ProTour (2005) ...... 3 2.1.1.3. The UCI WorldTour (2011) ...... 5 2.1.2. Stakeholder power and interests...... 7 2.1.2.1. Race organizers ...... 7 2.1.2.2. The riders and the teams ...... 10 2.1.2.3. The governing body ...... 11 2.1.3. Doping scandals ...... 12 2.1.3.1.The problem...... 12 2.1.3.2. Operacion Puerto ...... 13 2.1.3.3. Lance Armstrong ...... 13 2.2. Evolution of the economic attractiveness in numbers ...... 15 2.2.1. Television ratings ...... 15 2.2.1.1.Ten most watched races in 2018 ...... 15 2.2.1.2. Tour de France ...... 16 2.2.1.3. Giro d’Italia and Vuelta a España ...... 20 2.2.1.4. The most popular one- day races ...... 21 2.2.1.5. Talk shows ...... 22 2.2.1.6. Comparison with other sports ...... 23 2.2.2. Team budgets ...... 26 2.2.3. Evolution of road cycling sponsorship ...... 27
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2.2.3.1. Stability in team sponsorship ...... 28 2.2.3.2. Nature of the sponsors ...... 31 2.2.3.3. International character ...... 32 2.2.3.4. Comparison with other sports ...... 35 2.2.3.5. Event sponsorship ...... 37 2.3. Conclusions ...... 38 2.3.1. Interesting evolutions and links ...... 38 2.3.1.1. Impact of structural reforms ...... 38 2.3.1.2. Impact of doping scandals ...... 38 2.3.1.3. Relationship among budget, viewership and sponsorship evolution ...... 39 2.3.1.4. Globalization ...... 40 2.3.1.5. Power of ASO and RCS ...... 40 2.3.2. General conclusion on economic appeal ...... 40 3. Challenges ...... 42 3.1. Challenges and possible solutions ...... 42 3.1.1. Race attractiveness ...... 42 3.1.1.1. Alternative race formats and Hammer Series ...... 42 3.1.1.2. Investing in women’s professional road cycling ...... 43 3.1.2. Financial attractiveness ...... 44 3.1.2.1. Television rights ...... 44 3.1.3.2. New media rights ...... 45 7.1.2.3. Fan experiences ...... 45 3.1.2.4. Ticketing systems ...... 46 3.2. Integrated new business model ...... 46 3.2.1. New business model integrated in current media landscape ...... 46 3.2.1.1. A united stakeholder model ...... 47 3.2.1.2 Unified brand and product ...... 47 3.2.1.3. Financial fair play ...... 48 3.2.2. Adaptations for the future ...... 49 4. Conclusion ...... 50 Reference list ...... VI Attachments ...... 1 Attachment 1: Team sponsors through the years ...... 1 Attachment 2: Sponsor entrance, exit and global character ...... 10 Attachment 3: Football team sponsorship 2019 ...... 13 Attachment 4: Interview with Iwan Spekenbrink (10/7/2019)...... 14 Attachment 5: Bibliography for data used in calculations and creation of tables and figures ...... 20 Attachment 5.1. Bibliography WorldTour race organizers ...... 20 Attachment 5.2: Bibliography television ratings data (Figure 11, 12; Table 5, 6) ...... 20 Attachment 5.3: Bibliography for team sponsor data (Figure 17-20 and table 5) ...... 21
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Attachment 5.4: Bibliography for event sponsorship data (Table 6) ...... 34 Attachment 5.5. Bibliography for football sponsorship data (Table 5) ...... 36
List of used abbreviations AIGCP Association Internationale des Groupes Cyclistes Professionnels AIOCC Association International des Organisateurs de Courses Cyclistes ARD Arbeitsgemeinschaft der öffentlich-rechtlichen Rundfunkanstalten der Bundesrepublik Deutschland ASO Amaury Sport Organisation CAS Court of Arbitration for Sport CPA Cyclistes Professionnels Associés’ FDJ Française des Jeux FICP Fédération Internationale de Cyclisme KNWU Koninklijke Nederlandse Wielerunie MCMMG Media- Corporations- Merchandising- Markets Global MPCC Mouvement Pour un Cyclisme Crédible NBA National Basketball Association NFL National Football League RCS Rizzoli- Corriere della Sera UCI Union Cyclisme Internationale UEFA Union Européenne de Football Association USADA United States Anti- Doping Agency VRT Vlaamse Radio en Televisie WADA World Anti-Doping Agency
List of tables and figures List of tables Table 1: Ten most watched races……………………………………………………………………………………………………………16 Table 2: Tour de France viewership trends in 14 TV markets……………………………..…………….…………………….17 Table 3: Viewership trends of one- day races in Flanders, France, Italy, Netherlands, Spain and Wallonia…………………………………………………………………………………………………………………………..……………………22 Table 4: Comparison of TV ratings of Extra Time and Extra Time Cycling………………………………………………….23
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Table 5: Sponsorship comparison between cycling and football……………………………………………………………..36 Table 6: Sponsorship comparison Tour de France, Rolland Garros, UEFA Champions league and Formula One………………………………………..…………………………………………………………………………………………..…………………37 Table 7: Proposal renewed “Champions league of road cycling” calendar……………….………………………………38
List of figures Figure 1: Three divisions of road cycling events………………………………………………………..………………………………6 Figure 2: Races and their organizers……………………………………………………………..………………………………………….8 Figure 3: Consolidated UCI revenues by type………………………………………………….………………………………………11 Figure 4: Evolution of Tour de France viewership in France, Germany, Italy and Spain…………………………….18 Figure 5: Evolution of Tour de France viewership in the Netherlands, the UK, the US, Flanders and Australia……………………………………………………………………………………………………………...…………..……………………18 Figure 6: Evolution of Tour de France viewership in Denmark, Wallonia, Norway, Switzerland and Sweden…………………………………………………………………………………………………………………………………….……………19 Figure 7: Giro d’Italia viewership in Denmark, Flanders, Italy, the Netherlands and Sweden…….……………20 Figure 8: Vuelta a España viewership in Denmark, Flanders, the Netherlands, Spain, Sweden and the UK…………………………………………………………………………………………………………………………………..…………..………..21 Figure 9: Vive le Vélo viewership…………………………………………………………………………………………..…………….…23 Figure 10: TV ratings for Europa league and several cycling events in Flanders……………………….……………..24 Figure 11: TV ratings for UEFA Champions League Final and several cycling events in the Netherlands……………………………………………………………………………………………………………………………..……………24 Figure 12: TV ratings for four sport events in the United Kingdom………………………………………………………..25 Figure 13: Evolution of mean and median team budget growth……………………………………….….……………….26 Figure 14: Amount of teams and sponsors in the top league…………………………………………….…………………..28 Figure 15: Average and median duration of sponsorship…………………………………………………….………………...29 Figure 16: Sponsorship turnover…………………………………………………………………………………………………………….30 Figure 17: Activity of the sponsor………………………………………………………………………………………………..………..31 Figure 18: Countries of origin…………………………………………………………………………………………………….………….32 Figure 19: Continents of origin……………………………………………………………………………………………………..….……33 Figure 20: Global character of the sponsors……………………………………………………………………………….………….34
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1. Introduction Professional road cycling has undergone a turbulent last 20 years with structural changes, doping issues and a lot of disagreements among stakeholders. A lot of people involved in the sport in this period say that something has to change drastically and that the sport is not fulfilling its potential (Coorevits, 2019; I. Spekenbrink, Personal communication, July 10, 2019; Lagae, 2014; Nieuwsblad, 2015;). This thesis aims to research the state of the economic appeal from 2003 to 2019 and to formulate some options to resolve the problems that come up. In short, the following questions shall be answered in this research. How has the economic attractiveness of cycling evolved in the field of television ratings, team budgets and sponsorship between 2003 and 2019? How can road cycling become economically more appealing for all stakeholders?
First, the attractiveness and its evolution are analyzed by looking at three aspects that co-determine the commercial success of a sport. These aspects are TV ratings, team budgets and sponsorship in the sport. The TV ratings concerned are viewing numbers of a selection of important races in several countries and two Flemish talk shows centered around road cycling. The analysis of the budget growth of the biggest teams originates mainly from literature in addition to limited published data. The sponsorship landscape of teams and events is assessed on the length of sponsorship, identity of sponsoring organization and international character of the sponsors. Before the three subjects are discussed, context is provided including the structural changes, the field of stakeholders and some doping scandals from the period considered in the data analysis. Finally, the three topics discussed in the data analysis will be put in to context in the conclusions of the first part.
After identifying a number of problems cycling encounters on the front of economic attractiveness, possible solutions are provided in the part called ‘challenges’. This part starts off with a description of several individual possibilities that can improve the situation in the following areas: race attractiveness and financial attractiveness. The synthesis is a new business model for road cycling that can serve as a basis for the solutions proposed in the first part of the challenges.
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2. Analysis
2.1. Important events and structures
In part 2.2, the evolution of the economic attractiveness of road cycling in the 21st century is analyzed by looking in to multiple factors. Of course, this evolution has no meaning without providing context. The first two subtitles give a timeline of what has changed on a structural level, and a deeper look into the stakeholders of road cycling and how the power is distributed. This has a major impact on all the things that happen in the world of road cycling. The third subsection provides an insight of some of the biggest doping scandals in road cycling.
2.1.1. The structural reforms 2.1.1.1. First internationalization campaign
The organizational form in which road cycling entered the 21st century came in to existence at the end of the 1980’s. It is the foundation of the modern organizational system and it can be traced back to the former president of the FICP1 Hein Verbruggen. He assessed the sport and concluded that its evolution had stagnated. Before these reforms, cycling had undergone decades of natural evolution (Brewer, 2002) and in response to the stagnation, the world of cycling embarked on a path to professionalization and globalization.
When Hein Verbruggen was appointed as head of the UCI in 1991 (UCI, n.d.a), he wanted to scale up the sport and attract fans and riders from all around the world. The three intertwined pillars on which he based his reform are globalization of the sport, creation of a new competition called the World Cup and a computerized rankings system that governs the admission of teams to races.
The globalization plan institutionalized and tried to feed the spark lighted by the “Foreign legion2” (Guinness, 1993), and the Colombian riders who entered in the 1983 Tour de France. Because the Soviet Union collapsed around the same time, they also tried to integrate the riders from the communist regions into the existing system. To bring this plan in to practice, UCI included races outside of Western Europe and gave opportunities to more teams and racers from non- traditional cycling countries. More races, teams and racers from other continents would then bring more international companies to road cycling (Brewer, 2002).
1 The UCI was formally split in to a federation for professional cyclists FICP and a federation for amateur cyclists FIAC 2 “the Foreign Legion” is name that was given to first batch of English speaking riders that came to the professional road cycling circuit
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The World Cup series is a competition that rewards the athlete that is most consistent in one- day races over the course of a season. Older monuments and classics were included in the World Cup alongside some new races that were held in other parts of the world instead of in Europe. The World Cup was a way to ensure that the biggest teams and riders would also take part in these new races and make these new races important artificially. Although these races did not survive, the concept lived on in future endeavours to globalize professional road cycling.
The third reform turned out to be the most impactful one. The computerized rankings system is very similar to the World Cup ranking but it is to measure a riders consistency over all races and not just the one- day events. It both tries to encourage riders to chase after points, creating a race within the race and it makes invitations to big races dependent on your points instead of an invitation of the race organizers. Because you needed points to appear in the big races, points became the main point of interest for investors. It also changed the team dynamics. Teams got bigger and instead of one star surrounded by servants, it became important for all riders to get results and earn points.
Sponsorship deals in the 1990s were based much less on the goodwill of wealthy benefactors. The professionalization that was triggered by the reforms of the FICP were followed by an increasing commercialization of the team sponsorships. The money comes out of the marketing budget of companies and its ‘Return on Investment’ compared to other forms of advertising is the most important factor to sponsor or not. The better the team, the more money they can expect because good results provide free press coverage where you otherwise have to pay money for direct advertisements. By 2001, cycling is still a mainly Western European sport but the North Americans, Australians, Scandinavians, Eastern Europeans, Latin Americans and Brits that have entered the sport have given the sport a slightly more global outlook (Brewer, 2002).
2.1.1.2. The UCI ProTour (2005)
A new professional sport format was formed over the years but its stakeholders were not able to fully profit from the changes. Race organizers were unsure about the quality of the teams that took part in their competition because teams couldn’t be forced to join. This influenced the willingness of TV stations to broadcast the race as a result of which the price organizers get for their TV rights dropped. Additionally, the Tour de France can choose for itself whether to invite a team or not. The Tour de France is by far the most important race in the world with its market share of television income of 63% in 2005 (Lagae, Vanclooster, Heijl, Benijts, 2015). Because teams could not promise potential sponsors that they
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participated the Tour de France, prices of sponsorship were lower than they could be and on top it scared away potential sponsors.
In 2005, the UCI ProTour was introduced to replace the existing system that governed the top flight of professional road cycling. The main goal of this reform was to solve the uncertainty problems discussed in the previous paragraph and to create a more value generating platform. Adjacent, it aimed to increase the number of sponsors for the UCI and, together with the new continental systems it aspired to boost globalization. The ProTour was a closed competition resembling the American closed league system used by, among others, the NFL and the NBA (Rebeggiani & Tondani, 2007). Licenses were distributed by the UCI and given to 20 teams for a period of four years. These teams were licensed based on financial, sportive, ethical and judicial criteria and were obligated to enter the 273 races under the umbrella of the ProTour (Benijts, Lagae & Vanclooster, 2011). These races took up a space of 157 racing days in the yearly calendar (Benijts & Lagae, 2011) and the ranking system to measure consistency was transferred from the previous system.
To make this work, the UCI centralized the race admissions and took over the power from the race organizers, who traditionally governed these admissions. This constituted a threat to the autonomy of the major race organizers like RCS Sport, ASO and Unipublic, later referred to as G3. These three organizers represented 84 out of the 157 ProTour racing days in 2005 and four of the five monuments4 (Wynn, 2019). Because these organizations were more certain of having the best teams and cyclists, they did not profit from the introduction of the ProTour as much as the smaller race organizers. Therefore they had no incentive to give up a part of their autonomy. Although they originally agreed that all the ProTour teams could start in their events, the ProTour immediately started out as a compromise. The G3 refused to pay for a license, give up a part of the money they earnt by selling their broadcast rights and to pay a starting fee to the teams. In return, the UCI threw the organizers out of the ProTour board. This caused rising tensions between these big race organizers and the UCI, which resulted in some notable clashes.
In 2006, the UCI and the three important organizers mentioned above were not able to reach a deal about the format of the 2006 ProTour. Notwithstanding, the UCI included the events of these organizers in their calendar even though they had not applied for a ProTour license. But, apart from the refusal of RCS to
3 The 27 original ProTour races: Paris- Nice, Tirreno- Adriatico, Milan- San Remo, Tour of Flanders, Tour of the Basque Country, Gent- Wevelgem, Paris- Roubaix, Amstel Gold Race, La Flèche Wallonne, Liège- Bastogne- Liège, Tour de Romandie, Giro d’Italia, Volta a Catalunya, Critérium du Dauphiné Libéré, Tour de Suisse, Eindhoven Team Time Trial, Tour de France, HEW Cyclassics, Eneco Tour of Benelux, Classica San Sebastian, Deutschland Tour, Vuelta a España, GP Ouest- France, Tour de Pologne, Züri- Metzgete, Paris- Tours, Giro di Lombardia 4 The five monuments are the biggest one day racing events in cycling history: Milano- San Remo, Tour of Flanders, Paris- Roubaix, Liège- Bastogne- Liège and The Giro di Lombardia
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allow Alejandro Valverde to wear his ProTour leader’s jersey during the Giro d’Italia of that year, the consequences were confined. The struggle for power got more heated in 2007, when ASO denied ProTour team Unibet.com access to the Tour de France. The conflict reached its peak with a big display of power from ASO and the UCI right before Paris- Nice in 2008. Following this fall out, the G3 even withdrew their races from the ProTour to remind everyone where the real power in road cycling lies (Morrow & Idle, 2008). Because of this action, the 2008 Protour was decapitated and only contained 15 races and a total of 72 racing days.
Finally the International Olympic Committee even had to mediate between the UCI and the G3 to ensure the continuation of professional competitions. In 2009 and 2010, the top flight of cycling was run under two separate flags with their own participation rules. The G3 centralized their races under the umbrella named ‘the historical calendar’ and the ProTour continued with the remaining races.
2.1.1.3. The UCI WorldTour (2011)
As the 2011 season approached, the two competitions were integrated once more and the failed ProTour made a restart as the UCI WorldTour. The new competition is basically the same as the ProTour but with a few concessions to the organizers of the Grand Tours.
The number of Pro Teams, the name given to teams with a WorldTour license, was reduced from 20 to 18 as a first step to the WorldTour (2008), which gave the race organizers some more freedom to invite ProContinental teams of their choice. However, these Pro Continental do have to meet the same license conditions as World Tour teams, except the sporting prerequisites, if they want to compete in a WorldTour race. These sporting criteria were added to the license requirements together with the possibility of relegation. The relegation decision is based on a two year internal ranking that measures the team’s performance. Also, the UCI guaranteed the position of the three grand tours in the cycling calendar and RCS, ASO and Unipublic acquired a promise to be favored when they wanted to organize new cycling competitions around the world.
The WorldTour has created a relative stability in the world of road cycling. In 2017, ten new events brought the total amount of WorldTour races to 37. Six of these new races are held outside of continental Europe and are meant to boost globalization and the other four are old Western European classics that got an upgrade. The WorldTour teams are not obligated to participate in all WorldTour events. For the smaller events they all get an invitation but they don’t have to take part in all of them. The UCI guarantees the organizers that there will be a minimum amount WorldTour teams at the start of their race. At the end of 2018, the UCI (2018a) made the announcement that they are going to make some reforms.
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Figure 1: Three divisions of road cycling events (UCI, 2018a)
The WorldTour will continue to envelop all 38 races it did in 2018 and will take up 181 racing days. Within the WorldTour a new classification will be created, called the UCI Classics Series. This series comprises 20 one- day races. These races are selected based on prestige and strategic location. Immediately below the WorldTour, races that were previously classified as HC are placed in a new division, named the UCI Pro Series. Underneath this the UCI Continental circuits continue to be organized the way they were.
Also, the categorization of the teams will be rebranded. The 18 teams in the WorldTour will now be called UCI World teams and will consist of 27 to 30 riders. These licenses are awarded for a period of three years and will be administered based on an evaluation of all candidate teams. The administrative, ethical, financial and organizational criteria will have to be met every year and the sporting criterion will be assessed at the end of a three- year period. Under the top league you have UCI ProTeams (20-30 riders) and UCI continental teams (10-16 riders). There is no maximum number of teams in these classes and admission in these classes only depends on meeting license requirements.
The biggest changes can be seen in the new admission system for World Tour races. There are four different categories that have different admission rules for organizers (grand tours, UCI classics series, the other WorldTour stage races and the other WorldTour one- day races). For the WorldTour teams, participation is mandatory in the Grand tours and in the other categories they either must take part or get an invitation from the organizers. This is based on the current participation rules. The biggest change is that the organizers have to invite the best two or three (depending on the category) ProTeams. This is decided by the UCI World ranking at the end of the previous season. For the remaining spots in the peloton, race organizers are free to invite other ProTeams of their own choosing. For a more detailed description of these criteria I would like to refer you to the UCI website.
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The last big change is the simplification of the rankings and this already applies in the 2019 season. The UCI WorldTour ranking disappears and is replaced by the UCI World Ranking. There is an individual ranking which covers all international races and will also have two subdivisions for one- day races and for stage races. The team ranking will take into account the same races and have the same sub- rankings as the individual ranking and the points for the team will be calculated based on the points of their ten best cyclists.
2.1.2. Stakeholder power and interests
As indicated above, the modern history of road cycling is filled with conflicts and fights to gain power among several stakeholders. Morrow and Idle (2008) have applied the stakeholder and network theory to the different stakeholders and the relationship among them. They found that dialogue is an important prerequisite to accomplish a policy change within the network but that the power distribution among the stakeholders in the network is the most vital factor. This can be seen in practice in the failure of the ProTour and the events leading up to that as described above. The next paragraphs will provide insight in the power and the goals of the most important stakeholders.
A successful cycling event requires four different types of people/organizations. First, someone needs to organize events for riders and teams to race in. Next, you need athletes to ride the races. These athletes are grouped in teams who make sure the riders can race in the best possible circumstances. And finally, an event needs independent oversight to ensure a clean peloton, a fair race and communication among the other three stakeholders.
2.1.2.1. Race organizers
The revenue of race organizers traditionally originates from advertisements and sponsors, television rights and from public funds paid by local and regional governments to host the start/ finish of an event (Morrow & Idle, 2007). In more recent years VIP villages have been introduced in some races, for example the one on the “Oude Kwaremont” in the Tour of Flanders.
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In the top flight of road cycling, the WorldTour, there are not as many organizers as there are races. The most important races are under control of a few organizers which makes them very powerful. In the pie charts you can see that three race organizers represent nearly half of all the WorldTour races in 2019 and 55% of all the days raced in the World Tour. The 20 remaining races are events of 18 organizations where two organizers host two events and the rest only organizes one.
AMOUNT OF WORDTOUR RACES AMOUNT OF WORLDTOUR RACING DAYS ASO
ASO Others Others RCS sports
Flanders Flanders RCS Classics Classics sports
WORLD TOUR POINTS ALLOCATED TO WINNER
ASO
Others
RCS Flanders sports Classics
Figure 2: Races and their organizers
Own creation based on data race websites, included in attachment 5.1. The weight of the race organizers’ portfolios reveals the distribution of power among the race organizers. In this table we use WorldTour points allocated to the winner of the race in 2019 as a proxy for the importance of the race. Here you can also see that the three largest race organizers represent more than half of the WorldTour points distributed in 2019.
Comparing these numbers with the history described earlier delivers some conclusions on the power distribution between race organizers and other stakeholders. The three biggest organizers of that time
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(ASO, RCS and Unipublic) had the power to make the Pro Tour fall (Scheerder, Lagae & Boen, 2011). In 2019, you see that ASO has gained even more power by incorporating the Dauphiné and Unipublic and that there is a new player on the scene uniting six Flemish classics under the umbrella of Flanders Classics. It is clear that approval of the important organizers is essential for any change you want to make in the WorldTour formula. Therefore it is crucial to determine their motives and openness for reform.
First on the list is the smallest of the big three. Flanders Classics is an organization that took control over the Tour of Flanders and the “Omloop het Nieuwsblad” in 2009 and four5 other Belgian semi- classics in 2010. All of these races take place in March and April and four6 of them are part of the WorldTour. The driving force and boss of this project is Wouter Vandenhaute. Before he took over these six Flemish races, he already attempted to reform cycling with his Cycling 2020 project in 2007. With this reform, he proposed a significant calendar change with redistribution mechanism of money for the teams (Lagae & Van Reeth, 2016). His proposal eventually did not make it, but it gives a clear indication that he is, or certainly was open for reform.
The two other big race organizers, ASO and RCS are the traditional heavyweights. The Italian market leader in sports and media RCS sport organizes a number of professional sport events in cycling, basketball and running and also some mass participation events like the Color Run. In professional road cycling they organize seven7 events of which five are in the WorldTour, among others the Giro d’Italia (RCS, n.d.a). The Amaury sport organization arranges several cycling, motor sports, sailing, golf and mass events. Road cycling is their main business and they own 158 elite races, nine of which are part of the current WorldTour circuit (ASO, n.d.a). Most importantly, they organize the crown jewel of each cycling season, the Tour de France.
Both companies main goal is to make a profit for their shareholders. Next to this, leaders of both organizations also claimed to have a responsibility towards their respective countries (Morrow & Idle, 2008). They are often reluctant to changes in the existing model. In the past, they have spoken out firmly against the sharing of television rights (Benijts & Lagae, 2011) and they made the ProTour system fail. The current model is profitable for them so they want to preserve it and are not willing to give up short term revenue in order for the sport to grow.
5 Dwars door Vlaanderen, Gent- Wevelgem, Scheldeprijs and Brabantse Pijl 6 Omloop het Nieuwsblad, Dwars door Vlaanderen, Gent- Wevelgem and The Tour of Flanders 7 Strade Bianche, Tirreno- Adriatico, Milano- San Remo, Giro d’Italia, Milano- Torino, Gran Piemonte, Il lombardia 8 Le Tour de France, La Vuelta, Madrid Challenge, Paris- Roubaix, Paris- Nice, Liège- Bastogne- Liège, La Flèche Wallonne, Criterium du Dauphiné, Paris- Tours, Eschborn- Frankfurt, Volta Cyclista a Catalunya, Tour de Yorkshire, Tour of Oman, Arctic race of Norway, Tour of California and the Deutschland Tour
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The AIOCC or Association International des Organisateurs de Courses Cyclistes represents the organizers of over a 100 races from the WorldTour and the EuropeTour. It is a very heterogenous group and their main function is to plan the race calendar together with the UCI. While the AIOCC represents both small and big race organizers, the power clearly lies with the big forces. The president of the organization is Christian Prudhomme who is the director of the Tour de France (ASO) and one of the two vice presidents is RCS boss Mauro Vegni (AIOCC, n.d.).
2.1.2.2. The riders and the teams
For riders to compete in professional racing events, they have to be in a team. Even though cycling is in its core an individual sport, no one can participate in a professional competition without being in a team that holds a license to participate in that competition. Since 1999, the cyclists have their own coordinating organization to protect their interests. The ‘Cyclistes Professionnels Associés’ or CPA is the only association for riders that is recognized by the UCI. Their mission is to defend the interests of all riders in WorldTour, Pro Continental or Continental teams. They see to it that the rights of the riders are respected and they demand improved working conditions. They are funded by a 2% share of the prize money of all international elite races and also receive an annual contribution of the WorldTour (CPA, n.d.).
The teams also have an UCI recognized organization to protect their interests named AIGCP. The International Association of Professional Cycling Teams represents 17 WorldTour teams and 27 Pro Continental teams. On the one hand, AIGCP can be seen as an employers’ association. Every two years, they make and renew a joint agreement with CPA that covers standards regarding working conditions like wages and insurance (CPA, 2018). Complying with the agreement is mandatory if you want a WorldTour license. Other interesting discussion points with other stakeholders like the UCI in the past or the present are the use of team radio use during races, the number of riders teams can have and the issue of revenue sharing.
While the AIGCP is the official organ that represents teams with the UCI, continuous disagreements among the team leaders have led to teams leaving and rejoining the group. Also other interests group have been created by a part of the teams. Two examples of this are the MPCC (Mouvement Pour un Cyclisme Crédible) that mainly focuses on strict ethical codes on doping use and Velon group. This joint- venture company aims to come up with a new financial model to ensure the future for the teams (Rebeggiani, 2016). This lack of unity makes it hard to pressure the other stakeholders in to reforms in their favour.
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2.1.2.3. The governing body
The regulator and coordinating organization of road cycling and eight9 other cycling based sports is the UCI. Of these disciplines road cycling is by far the biggest discipline with 18 797 of the 33 755 events organized under the umbrella of the UCI. Its main goals are the management and promotion of these disciplines and the development of cycling as a competitive sport. In their agenda 2022 (2018b) report they put out a comprehensive view for the future. For this thesis, the most relevant points are their intention to make cycling a sport of the 21st century, to increase the credibility and to enhance their authority. They represent 194 national federations, 1500 professional cyclists and more than half a million licensed riders.
In professional cycling the UCI organizes the official World Championships in all its disciplines, World Cup series in some disciplines and they work with the World Anti-Doping Agency (WADA) to make sure that cycling uses the most efficient anti-doping program. Furthermore they provide 11 236 commissaires/ classifiers to the road races organized by others to make sure everything runs smoothly (UCI, 2018b). In 2017 and 2018 respectively 65% and 50% of all revenues (excluding Olympic Games) originate in road cycling with the second largest revenue creator being Mountain bike with 17% and 20%. In these two years the UCI reported revenues of 41 637 000 CHF in 2017 and 40 247 000 CHF in 2018. These are distributed as shown in figure 3 (UCI, 2019).
Figure 3: Consolidated UCI revenues by type (UCI 2018 annual report, p.106)
The influence of the UCI is traditionally rather limited, as they are financially dependent on national cycling associations and they only own the rights to very few of the important road cycling events (Morrow & Idle, 2008). Consequently, they do not have a lot of leverage to push their agenda. In the last decades, the UCI has positioned itself more centrally with the WorldTour for which they receive registration fees and
9 Road, Track, Mountain Bike, BMX Racing, BMX Freestyle, Para-cycling, Trials, Cyclo-cross and Indoor
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control the admissions. With this power they try to influence the other stakeholders. This is similar to what UEFA does with the champions league. This is the most lucrative club competition in the world and to enter you have to qualify and fulfill license requirements. They have repeatedly threatened to deny Champions League access to clubs that do not comply with their financial fair play rules. Most recently Manchester City faced such a threat (Morgan, 2019). Unfortunately for the UCI, they don’t have the same market power because they do not own the rights to the events in the WorldTour which makes them dependent on the race organizers (Rebeggiani, 2016).
2.1.3. Doping scandals 2.1.3.1.The problem
Since the ancient Olympic games, doping has been a part of sport. In the late 1960s, several big sporting events like for example the Tour de France or the Football World Championships started to check competitors for doping (Danylchuk, Stegink & Lebel, 2015). Sports that are more physiological and less about technical skills, like athletics and cycling have experienced the most doping issues, simply because it is more effective than for playing football or golf for example (Vandeweghe, 2016). A general theory is that when the benefits outweigh the costs, it is a rational choice for athletes to use doping. However, this benefit has to be high enough to trump the ethical standards of the athlete (Van Reeth & Lagae, 2014). In a survey among 2000 Flemish respondents, Van Reeth & Lagae (2014) aspired to find out some insights in the public opinion on doping use in road cycling. Among other things the respondents claim that doping damages the credibility of cycling and that it makes it harder to find sponsors willing to invest in cycling.
Researching the economic impact of doping use, Danylchuk, Stegink & Lebel (2015) have found no significant impact negative impact in short term on the stock price of companies that were name sponsor of a team involved in a doping scandal between 2001 and 2010. Although the numbers do not show an immediate negative impact, a fair amount of sponsors that withdrew from sponsoring road cycling teams have named doping scandals as a reason (e.g. Würth and Liberty Seguros) (Danylchuk, Stegink & Lebel, 2015).
The next section of the thesis shall check whether doping scandals can be linked to drops in viewing figures and increased turnover of sponsors in the period between 2003 and 2019. While there were multiple scandals throughout the period, only two major ones will be discussed further. This makes it easier to see if there is an impact on the parameters of appeal in the next segment. The importance here lies not with the time the cheating occurred but when it got out to the public and sponsoring companies.
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2.1.3.2. Operacion Puerto
‘Operacion Puerto’ is the code name of the Spanish police investigation of gynaecologist Emiliano Fuentes. The doctor from Madrid performed blood transfusions and provided other kinds of doping to boost the performance of riders. May 23, 2006 the police had gathered enough evidence to charge him. Main pieces of evidence were a video featuring Liberty Seguros team leader Manolo Saiz next to a box filled with blood and doping and large amounts of growth hormones and doping found in house searches. Because Spain did not have an anti- doping law back then Fuentes was not convicted in 2006. In 2010, he was however arrested again in ‘Operacion Galgo’ (Vandeweghe, 2016). In 2013, Fuentes got convicted to one year in jail, a fine of 4500 EUR and a ban for being a sport doctor of four years (De Morgen, 2013b). However, another judge cleared him of these charges in 2016 (De Morgen, 2016).
Most important for the image of road cycling are the dates of accusations and confessions of star riders in ‘Operacion Puerto’. In order to place these events, newspaper articles mentioning ‘Operacion Puerto’ in the Belgian newspaper ‘De Morgen’. When details on Fuentes’ customers came out, teams CSC and T- Mobile excluded two of their biggest favourites, Ivan Basso and Jan Ulrich, from participating in that years’ Tour de France (Pauli , 2006). Following a year of suspicion, at the end of April 2007, the evidence against former Giro winner Ivan Basso mounted so high that he was forced to resign and confess (De Morgen, 2007). While the name of Spanish superstar Alejandro Valverde was already mentioned when the news first broke in 2006, he only became the center of attention in august of 2007. The UCI concluded that the blood from code name ‘Valv. Piti’ is from Valverde and they tried to deny him access to that year’s World Championships, for which he was the favourite (Spoormakers, 2007). These few examples are the most sensational incidents in the case but they were definitely not alone. In the period 2006- 2008 there was a regular stream of accusations at the address of several riders and the case dominated the news during this period.
2.1.3.3. Lance Armstrong
The Texan Lance Armstrong was the greatest rider in Tour de France history. Between 1999 and 2005 he won the race seven times in a row, two times more than Merckx, Anquetil, Hinault and Indurain. In the middle of June 2012, American anti- doping agency USADA formally accused Armstrong of being the center of an elaborated doping network. The accusation was backed by multiple testimonies of former cyclists and coworkers (Van Driel, 2012). At the end of August 2012, the American anti- doping agency USADA suspended him for life and took away his seven Tour de France victories (De Morgen, 2012a). In October the UCI got the report that provided evidence against Armstrong, 11 former team mates and
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team leader Bruyneel (De Morgen, 2012b). A little later the UCI confirmed that Lance Armstrong lost all his yellow jerseys. In the beginning of January 2013 Armstrong confessed to cheating and lying for years in an interview with Oprah Winfrey (De Morgen, 2013c).
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2.2. Evolution of the economic attractiveness in numbers 2.2.1. Television ratings
The money media companies pay for the right to broadcast a race and the sponsors and local governments who pay for visibility on and off air are two important revenue sources for race organizers. Teams get most of their budget from sponsors who pay for visibility in those races (Van Reeth, 2016, p.71). The riders on their turn are paid out of that team budget. Higher viewing figures for road races means higher visibility for sponsors, which is the basis for a large amount of the revenues in the sport and therefore its economic appeal. The data on live broadcasts included in this analysis originate from the Road Cycling TV Viewing Report by Prof. Dr. Daam Van Reeth (2018). The 13 countries in the dataset are Australia, Belgium, Denmark, France, Germany, the Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom and the United States. In the dataset, Flanders and Wallonia are considered separately as they are two separate TV markets. This assumption is adopted in this analysis as well.
The information in this report comes from public sources and a network of journalists and media people (Van Reeth, 2018). Live broadcasts are not the only cycling related programs on television. The success of talk shows around the topic of road cycling is evaluated looking at the case of a few Flemish television programs. This data is provided by the research department of VRT.
All evolutions fall within the period 2003- 2018. Data on the composition of the viewing public (Age, gender, etc.) would be an interesting addition to this analysis but cannot be included as it is not in the report (Van Reeth, 2018) and VRT does not make this information public (VRT, personal communication, July 31, 2019). The only indication on this front is given by Iwan Spekenbrink, who has insight in more data as president of the AIGCP and Team Sunweb. He indicates that the public that watches cycling on TV is ageing (I. Spekenbrink, personal communication, July 10, 2019).
2.2.1.1.Ten most watched races in 2018
The first table includes an overview of the 10 races with the highest viewership in the dataset. For multi- day events like the Tour de France this number is the average number of viewers per stage. Data about Australia, Germany, Norway, the United Kingdom and the United States are not included in this table because of limited information available on other races than the Tour de France which impacts comparability. The eight remaining markets are taken in to consideration. Important to note is that there are datapoints missing in some countries but this underestimation probably does not change the order of these table to much, according to Van Reeth (2018). The most underestimated race is Giro d’ Italia,
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because of limited information from Eurosport in the dataset. The only countries available are Denmark, Italy, the Netherlands and Sweden.
Van Reeth (2018) concludes that the actual worldwide TV interest for these races is twice as big as the numbers in the table. He bases this on findings from other countries, older data and viewership counts from sports channels like Eurosport. This conclusion does not count for Giro d’ Italia which he does not include in his table.
1. Tour de France 7 355 022 2. Paris- Roubaix 5 107 549 3. UCI World Championships: Road Race 4 366 395 4. Tour of Flanders 4 136 895 5. Milano- San Remo 3 094 690 6. Amstel Gold Race 2 481 143 7. Liège- Bastogne- Liège 2 348 293 8. Giro d’ Italia 2 154 147 9. Vuelta a España 1 607 391 10. Gent- Wevelgem 1 400 278 Table 1: Ten most watched races Own creation based on data provided by Van Reeth (2018)
2.2.1.2. Tour de France
The Tour de France is an event that includes 21 race broadcasts in the afternoon over a span of 24 days. The graphs that specify the evolution over the years use the average number of viewers per stage. The 14 markets are split up into three graphs to increase visibility. First, the table below provides trends throughout the period for all markets considered. Next, some striking cases are elaborated using the graphs.
2003-2008 2008-2013 2013-2018 Overall France -21% +17% -17% -23% Germany -51% -72% +228% -56% Italy - +28% (*) +36% +75% (*) Spain - +7% -6% +1% (*) Netherlands -1% -4% +17% +12%
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United Kingdom +126% (*) +58% +2% +263% (*) United States -77% +7% +15% (*) -72% (*) Flanders -4% +10% -7% -1% Australia - -26% (*) +68% +24% (*) Denmark -13% -4% -6% -21% Wallonia -12% +22% -3% +5% Norway +13% +7% -24% -8% Switzerland - - -1% (*) -1% (*) Sweden -31% +5% +14% -19% Table 2: tour de France viewership trends in 14 TV markets Calculations based on data provided by Van Reeth (2018)
The asterisk (*) behind some of the percentages in the table indicates that begin and/ or end year do not match the years mentioned in the first row of the table. If there was no available data for these years the closest available year was used to calculate the trend. The specific difference between indicated and actual period used can be seen in the graphs below.
The overall trend in 2003-2018 is positive for seven markets and negative for the other seven. Split up in the three periods you can see the following. In the first period, there is a downward trend in eight of the ten available markets. In 2008- 2013, nine out of the 13 countries show a positive trend. The last period shows 50% with a positive trend and 50% with a negative trend.
It is notable that everywhere except in the Netherlands, Australia and Denmark, viewership went down from 2017 to 2018. This makes the 2018 edition the least watched Tour since 2012 and 2013. The overlap with FIFA World Cup broadcasts can provide part of the explanation but it remains a low point (Van Reeth, 2018). On the other hand, the Tour of 2011 marks a viewership peak in France, Spain, the Netherlands, Flanders, Australia, Denmark, Wallonia and Norway.
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Figure 4: Evolution of Tour de France viewership in France, Germany, Italy and Spain Own creation based on data provided by Van Reeth (2018)
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Figure 5: Evolution of Tour de France viewership in the Netherlands, the UK, the US, Flanders and Australia Own creation based on data provided by Van Reeth (2018)
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Denmark Wallonia Norway Switzerland Sweden
Figure 6: Evolution of Tour de France viewership in Denmark, Wallonia, Norway, Switzerland and Sweden Own creation based on data provided by Van Reeth (2018)
Individually, the cases of Germany and the United States are the most interesting to discuss. Up and until 2005, Germany recorded audiences of around three million viewers. From 2005 to 2006 they lost more than one million, which is a loss of 39% of the audience. After that big drop, the ratings remained quite constant a little above 1,6 million. A second big crash in 2012 caused the viewership to drop 74% compared to the year before. In 2012- 2014 less than 500 000 Germans watched the Tour de France. This coincides with the decision from TV channel ARD to stop live broadcasts of the Tour de France due to numerous doping scandals. In 2015, Germany and the ARD embraced cycling once again boosting the ratings up to 1,5 million in 2015 and a peak of 1 890 571 viewers in 2017 when the Tour started in Düsseldorf (De Morgen, 2015).
Viewership in the United States sees a sharp rise of around 100 000 viewers a year between 2003 and 2005. But, 1 433 000 viewers disappeared between 2005 and 2006, which is 82% of the viewership in 2005. This coincides with the retirement of Lance Armstrong after the Tour de France of 2005 (Vanwalleghem, 2005). The coming years, approximately 300 000 people watched the Tour de France in the US. In 2009, when Armstrong made his comeback (De Standaard, 2008), the ratings went above 500 000 again. This remained the maximum in the period 2006- 2017 and afterwards ratings kept quite stable around 300 000. In 2018, the only datapoint available is the viewership of the final stage. 485 000 Americans watched this stage which is 50 000 more than the year before (Van Reeth, 2018).
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2.2.1.3. Giro d’Italia and Vuelta a España
The Giro d’Italia is the second biggest Grand Tour in cycling. As you can see, it ranks above the Vuelta d’España even with the underestimation of viewership. Five regions in the dataset provide data on Giro d’Italia viewership.
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Figure 7: Giro d’Italia viewership in Denmark, Flanders, Italy, the Netherlands and Sweden Own creation based on data provided by Van Reeth (2018)
The Giro d’Italia viewership remains quite stable in Sweden and Flanders. In Flanders, Eurosport has taken over the TV contract from VRT in 2017 and 2018 but there is no data available to see if there is an effect. The Giro had a minimum in Italy in 2011 when it only had 1 190 000 viewers on average per stage. Afterwards the popularity rose again and TV ratings fluctuate around 1,8 million. Denmark only has information available from 2018. Because it lies so close to the Swedish rating it is not visible on the graph. An average stage in the Giro was watched by 18 000 Danish people.
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Figure 8: Vuelta a España viewership in Denmark, Flanders, the Netherlands, Spain, Sweden and the UK Own creation based on data provided by Van Reeth (2018)
The last Grand Tour of the cycling season knows a pretty stable viewership in Denmark, the Netherlands and Sweden. It was also very stable in Flanders but since 2015, ratings are declining slightly. Popularity in the United Kingdom rose until 2017, but has known a fall in 2018. Before 2012, ratings in Spain never went above one million viewers, reaching a low point of 689 667 viewers in 2010. A 124% increase in viewership from 2011 to 2012 took the ratings to its highest point of 1 618 048 viewers. In the remaining years of the dataset, the ratings fluctuate between 1 and 1.5 million.
2.2.1.4. The most popular one- day races
The last races that are discussed in this analysis of TV ratings are the one- day races in the top ten of most watched races given in 2.2.1.1.. The Giro di Lombardia would also fit in this list as it is one of the five monuments (Wynn, 2019) in cycling. However, due to limited data on this race it does not make the top 10.
As viewership data from the period 2003-2007 is only available for the Tour of Flanders in the Netherlands, the period is adapted to 2008- 2018. This is a fairly long period, so a trend over the entire time can give a distorted image. Combined with the fact that most country data does not go back further than five years, the decision has been made to focus on 2014- 2018. This will give a meaningful overview of the evolution in the most recent past. Countries with shorter available time periods are also not included in this table because there is not enough information to derive a useful trend.
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Flanders France Italy Netherlands Spain Wallonia Milano- San +10% - +23% - - -20% Remo Gent- +15% - - - - -5% Wevelgem Tour of +10% -12% +50% -6% - -10% Flanders Paris- Roubaix +6% +13% +44% -35% -69% -34% Amstel Gold +4% - +1% -27% - -1% Race Liège- -15% - -13% -26% -57% -34% Bastogne- Liege UCI World +54% - - +81% -33% - Championships: Road Race Table 3: Viewership trends of one- day races in Flanders, France, Italy, Netherlands, Spain and Wallonia Calculations based on data provided by Van Reeth (2018)
Liège- Bastogne- Liège has known a negative evolution as all available trends show a negative slope steeper than -10% going down to -57% in Spain. In Wallonia and Spain road cycling viewership of all available races went down. Important to note is that the ratings concerning Paris- Roubaix in Spain are from a broadcast in the evening and not live. Flanders and Italy see positive movements except for Liège- Bastogne- Liège.
A predominantly negative trend can also be seen in the Netherlands, where only viewership of the UCI World Championships: Road Race increased. The TV ratings of the Tour of Flanders increased in Flanders and In Italy, but in all the other regions it lost viewers. Gent- Wevelgem, Paris- Roubaix and Amstel Gold Race lost viewers in as many markets as they gained viewers. The balance is positive for Milano- San Remo and the road race of the UCI World Championships.
2.2.1.5. Talk shows
Fans’ interest in sports goes further than the game itself. There are a lot of TV programs centred around a sporting event that elaborate about the sport and things happening around it. In Flanders, Extra Time and its derivative Extra Time cycling are talk shows around the topic of football and road cycling. Underlying table provides the average amount of viewers who watched the program live for at least 10
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consecutive minutes between September 2018 and June 2019. Extra Time has 1,26 times as many viewers on average as Extra Time Cycling.
Extra Time Extra Time Cycling Number of viewers 383 443 303 588 Number of broadcasts 29 9 Table 4: Comparison of TV ratings of Extra Time and Extra Time Cycling Calculations based on data provided by the research department of VRT (2019)
Situated around the Tour de France, VRT broadcasts a prime time show called “Vive le Vélo”. The host, together with changing guests, discusses the race day, the riders, cycling in general and the touristic highlights of the region they are passing by (VRT, 2019a).
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After two slower years in 2017 and 2018, Vive le Vélo reached almost one million viewers again in 2019. Again, these are viewers who watched live for at least 10 consecutive minutes. Just as Tour de France viewership in 2018, Vive le Vélo may also have suffered from the competition of the FIFA World Cup in 2018. In 2019, Vive le Vélo represented a market share of 40,8% (Sporza, 2019).
2.2.1.6. Comparison with other sports
A complete and accurate comparison between road cycling and other sports is only possible if a similar analysis like the one above is conducted for those other sports. Therefore, the comparison with other sports here just provides a few cases and aims to give an idea how cycling compares to some other sports
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when talking about TV ratings. It is important to keep in mind that it cannot be guaranteed that the exact same methods were used to determine the viewing figures.
The first case places the TV ratings for the Europa league final (Football) broadcast on Canvas in Flanders among four cycling races that were also broadcasted by VRT. UCI World championships and Tour de France viewership stays below the Europa league final numbers. In the case of the Tour de France this can be partly attributed to the fact that all other included events are one- day events and a final is more likely to generate a peak audience. While in 2015, Gent-Wevelgem viewership exceeds the Europa League final with 445 980, Gent-Wevelgem only has a surplus of 75 258 viewers left in 2018.
1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 - 2015 2016 2017 2018
Europa League Final Tour of Flanders Tour de France (Average per stage) UCI World Championships: Road Race Gent- Wevelgem
Figure 10: TV ratings for Europa league and several cycling events in Flanders Own creation based on data provided by Van Reeth (2018) and the research department of VRT (2019)
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UEFA Champions League Final Tour of Flanders Paris- Roubaix Tour de France (Average per stage) Amstel Gold Race
Figure 11: TV ratings for UEFA Champions League Final and several cycling events in the Netherlands Own creation based on data provided Van Reeth (2018) and RTL Nieuws (2018) (See Attachment 5.2)
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In the Netherlands, 1 654 000 more people watched the 2009 Champions League final than an average stage of the Tour de France. Road cycling viewership remained constant over the entire period, if you look at the Tour de France and three one- day events. After rising to a peak of 3,4 million in 2011, the TV ratings for the Champions league final dropped to 1 549 000 viewers in 2018. While 2,87 times as many people watched the Champions league final compared to the Tour de France in 2009, only 1,77 times the people watched it in 2018.
Finally, we compare some TV ratings from different sports in the UK, with the Tour de France. This is the best watched cycling race in that country. Even though it is the only multi- day event of which an average number is taken, the Tour de France is by far the worst rated event in this list. No fewer than 13,84 times more people watched the Champions league final. Important note is that the rating for Wimbledon is from 2017 while the others are all 2018 numbers.
9 000 000 8 000 000 7 000 000 6 000 000 5 000 000 4 000 000 3 000 000 2 000 000 1 000 000 - UEFA Champions Formula 1 Grand Tour de France Wimbledon Men's League Final (2018) Prix of Azerbaijan (Average per stage) Final (2017) (2018) (2018) Figure 12: TV ratings for four sport events in the United Kingdom Own creation based on Van Reeth (2018) and websites found in attachment 5.3
All these cases are not nearly enough to make a worldwide conclusion on how cycling viewership compares to other sports. However it is striking that of all cases, cycling is watched by the same number of people that watch football, while it does not even come near TV ratings for other sports in the other countries.
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2.2.2. Team budgets
In theory, the team budget equals the revenues as well as the expenses of a cycling team, as the UCI does not allow them to make profit (Van Reeth, 2016).
€18 000 000,00 €16 000 000,00 €14 000 000,00 €12 000 000,00 €10 000 000,00 €8 000 000,00 €6 000 000,00 €4 000 000,00 €2 000 000,00 €-
Average budget Median budget
Figure 13: Evolution of mean and median team budget growth Own creation based on data provided by Rebeggiani & Tondani (2008), Benijts, Lagae & Vanclooster (2011) and Wallace (2016)
Research from 2005 suggests that a cycling team’s budget is made up of revenues from sponsorship (approximately 87%), prize money and start fees (approximately 10%), and 3% out of merchandising and others. Other sources even say that 98% of a team’s budget exists out of sponsorship (Van Reeth, 2016, p.71; Benijts, Lagae, & Vanclooster, 2011). While these proportions might have shifted slightly over the years, teams have not procured major new revenue sources since then.
Figure 13 provides an overview of the mean and median budget from 17 to 20 top teams, depending on the year. These teams are all ProTour/ WorldTour teams in 2005-2008 and 2016, and a selection of teams made by Rebeggiani & Tondani (2007) for 2003 and 2004. As teams, and the UCI refuses to publish the budgets, periods 2009-2015 and 2017-2019 cannot be included in this analysis.
From 2003 to 2008, the mean budget grows with an average of 433 333, 33 EUR a year, while the median budget grows by 200 000 EUR a year. If the trend from this period were to continue until 2016, the mean and median budget would have been 11 466 666,64 EUR and 8 600 000 EUR respectively. Compared to the 16 750 000 EUR and 13 750 000 EUR it was according to L’Equipe in 2016 (Wallace, 2016), it is clear that the budget growth for cycling teams has accelerated between 2009 and 2016. The last statistic allows to judge on the inequality in team budgets. In 2003- 2008, the team with the smallest budget had on
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average 27,67% of the budget of the richest team. In 2016, this has dropped to 20%. A short comparison can place these budgets in context: the average amount of yearly revenues of a top 20 football club according to Deloitte (2019) is 417,22 million EUR.
2.2.3. Evolution of road cycling sponsorship
Road cycling is organized as a platform for sponsors to promote their brand in the media. The profile of an ideal sponsor for the sport is a wealthy, multinational corporation that makes a long term investment (Mouton, 2014). For this to work, the cost of the sponsorship deal has to generate a return on investment that makes it interesting for the companies to stay in cycling. In this segment, the evolution of the sponsorship landscape will be analyzed. Sponsors can choose to fund the teams or specific events. The data analysis mainly envelops the title sponsors of all top flight cycling teams from 2003 to 2019. In the last segment, the main sponsors of the Tour de France are compared with those of big events in other sports.
Focus remains with the title sponsors of teams because these sponsors are vital for a team’s existence. For most teams, the money that comes from sponsors amounts to 87%-98% of their budget, depending on the source (Van Reeth, 2016, p.71; Benijts, Lagae, & Vanclooster, 2011). Teams also partner with other sponsors but those are not included because it is estimated that the sub-sponsors only account for 10- 20% whereas the rest of the sponsorship revenue of the team comes from the title sponsors. The sponsorship revenue of the team. The sub- sponsors only account for 10-20% and the rest comes from suppliers (Van Reeth, 2016,p.71). The different parameters of the analysis are stability of the sponsor commitments, nature of the sponsor’s activities and multinational character. For all these criteria, the evolution in the last 17 years shall be tracked and compared with the important events and structural changes from the previous chapters.
All sponsors used in the analysis from 2005 until 2019 originate from the UCI official website (UCI, n.d.b), and Cyclingnews (n.d.). All data on the companies were found on their official website. In this analysis, only the best cycling teams are discussed. In the period 2005-2019 the ProTour and WorldTour teams are the top league. Tour de France participation is the criterium for top league cycling team in all previous years (ASO, n.d.b). This is justified because the Tour de France is by far the biggest cycling competition in the world. Important to note is that this is no perfect representation of the biggest cycling teams as the organizer ASO could choose who to invite in those years and these invites often go to French teams. This can create a couple of biases which shall be addressed in the appropriate paragraphs.
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2.2.3.1. Stability in team sponsorship
Stability in sponsorship concerns the length of sponsorship and the changes in organizations sponsoring teams through the years. A longer partnership of a team with an organization creates the possibility of planning on the long term, and it increases certainty of employment for riders and staff.
35 1,8 30 1,6 25 1,4 1,2 20 1 15 0,8 10 0,6 5 0,4 0 0,2 0
Amount of teams Amount of name sponsors Average amount of sponsors per team
Figure 14: Amount of teams and sponsors in the top league Calculations based on data from the official website of UCI (n.d.b) and ASO (n.d.b)
The number of teams that are considered as top league teams in this data analysis drops from 22 to 18 during the 17 years considered. The highest numbers, in 2003 and 2004, are solely due to the bias created by the different sources of data. In the 2018 Tour de France there are also 22 competing teams. The decrease in teams in 2008 can be attributed to the reorganization of the ProTour leading up to the WorldTour. Since then there have been no structural changes to the number of Pro Teams. In 2013, Katusha attained its license last minute by appealing at the CAS10 after initially not receiving a license from the UCI, which makes it 19 that year (De Morgen, 2013a). In 2015, only 17 teams fulfilled the license requirements.
Between 2003 and 2008, the number of sponsors dropped lower than can be explained by the lower number of teams. In 2003, there was an average of 1,36 sponsors per team while this was only 1,17 in 2008. It took until 2011 to regain the level of 2003 after which it rose to its highest peak of 1,61 in 2018. This has remained quite stable throughout 2019. If you consider a minimum of one and a maximum of two title sponsors, this graphs show that more teams opt to have two sponsors on their jersey nowadays. This can mean that more parties are interested to become a title sponsor of cycling team. But, it can also
10 The court of Arbitration for sport is an independent tribunal to solve disputes
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mean that funding this part of the budget exclusively has become too expensive for a company or organization.
Looking at the duration sponsors stay in the peloton, somethings need to be mentioned. Only sponsorship of the top league is concerned. For example, the year that FDJ fell out of the WorldTour in 2011 is not considered in this analysis. Some sponsors in the list have been sponsors in a distant past and stopped sponsoring high quality cycling teams before reappearing at the top of the peloton. These years of sponsoring are only taken into account if the absence is shorter than five consecutive seasons.
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Figure 15: Average and median duration of sponsorship Calculations based on data from the official website of UCI (n.d.b) and ASO (n.d.b)
There are two obvious local minima in both the average and the median in 2005 and 2011, after which these two statistics take a significant rise for three and four years respectively. In 2017, the departure of long term sponsors Lampre and Omega Pharma causes a small dip but average and mean remain stable. The mean is bigger than the median for every year in the dataset. This means that the results are skewed to the right, partly due to some relatively large numbers in the dataset. In this case that means that some sponsors who have been in cycling for a very long time considerably increase the mean.
The best example here is the Belgian Lotto that already had its 19th season as cycling sponsor in 2003. Up and until 2008 we see that the difference between the median and average duration of a sponsorship is limited and constant. After that season, where the average sponsor was in the peloton for 6,95 years and the median sponsor for 5 years, the median plummeted to its lowest point of 2,5 years in 2011, which is
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a 50% decrease. The average duration of sponsorship also drops after this year but it remains limited to 23,66%, which results in an average duration of sponsorship of 5,31 years in 2011.
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Sponsors who left after the previous year Sponsors joining
Figure 16: Sponsorship turnover Calculations based on data from the official website of UCI (n.d.b) and ASO (n.d.b)
Figure 16 can provide more insight in to this evolution. Simultaneous with the drop in average and median duration in 2009, 2010 and 2011, we see a peak in sponsorship turnover and more specifically these are three of the five years where more new sponsors enter the peloton than leave. The mean drops significantly less than the median because the enterprises that leave are the ones that only had a short involvement before leaving. If we take season 2011 for example, we can see that of the eight leavers11, five were only sponsor of a ProTeam for one season. From the six12 sponsors that already had the longest run in 2010, four are still active in the WorldTour now. This softens the blow on the average.
In 2011, a record of eleven new sponsors entered the peloton. However, seven of them left within three years and only two of them are still a sponsor in the 2019 season. Overall we can see that the last 17 years have been turbulent when it comes to turnover. In only five of the 17 years in this dataset, four or less sponsors left title sponsorship of a top league team. There are two final years that interesting to discuss. Running up to 2008 and 2014, respectively seven and six sponsors left while only two new sponsors entered in both seasons.
11 Doimo, Caisse d’Epargne, Columbia, Milram, Servetto, Footon, Transitions, Farnese Vini and Highroad
12 Lotto, FDJ, Rabobank, Quickstep, AG2R La Mondiale, Euskaltel
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2.2.3.2. Nature of the sponsors
Five categories have been established to get an insight in which kinds of organizations invest in road cycling and to look at the evolution herein. First category are the for-profit companies. They invest in cycling to increase the visibility of their brand. The second category are also for-profit enterprises but they have a clear connection with cycling. This can be bike manufacturers and other cycling related companies. For this kind of companies sponsoring cycling is more niche advertising. Third, there are government controlled organizations like state lotteries, postal services, etc.. They also sponsor cycling for publicity but they are less bound to making profit than private firms. The fourth category is also government related but they are even more closely linked to a government agency. These are sponsors like Astana, Bahrain, etc. that are specifically created for running a team by a country or powerful forces in that country. Last category are the cases where the management company that owns the license gives its own name to the team.
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
For-profit company Cycling related company Government controlled organization Government agency Management company
Figure 17: Activity of the sponsor Calculations based on data from the official website of UCI (n.d.b), ASO (n.d.b) and company websites found in attachment 5.3.
Up and until 2010, for-profit companies who have no direct link with bikes or cycling take up of at least 80% of the title sponsors with the exception of 74% in 2009. In four years’ time this percentage drops below 60% and only in 2019 it has risen beyond this threshold to 68%. In 2003 and 2004, the remaining 15-20% was mainly occupied by state owned enterprises. Their share in the peloton gradually drops to a lowest point of 4% in 2011, after which it restored its market share to above 10% in four consecutive years following 2015. In 2019, they have a share of 7% of all title sponsorship places. In 2006, the Kazakh Astana was the first government agency to enter the ProTour peloton. In 2009, Katusha entered which doubled their share to about 8% of the title sponsors. This remained constant until 2017. Last season, the middle
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eastern Bahrain and United Arab Emirates found their way in to cycling. In 2019, Government agencies are the second largest group of sponsors, taking up 14%. Before 2011, cycling related companies were only sporadically the main sponsor of a cycling team on the highest level. In the eight years this dataset envelops before 2011 they never exceed 5% and three times, including 2010, not even one cycling related company is a title sponsor. Four bike manufacturers enter the stage in 2011, making cycling related sponsors the second biggest group of sponsors after for- profit companies. This will remain the case until after 2018, and at its peak in 2014 24% of all sponsors are cycling related companies.
The last group can be considered as a rest group. In most of the cases this only happens when there is a vacant place on the jersey of the team that has to be filled. It is usually a short term solution with only Greenedge lasting four years, Highroad two years and the rest only one year. It first appeared for a year in 2009. In 2010 there was no management company on the main place of the jersey and from 2011 to 2015 they took up a share of 4-8%.
2.2.3.3. International character
Globalization has been a main goal in every structural change that road cycling has gone through. The status of globalization in the team sponsorship is tested based on the countries and continents of origin of the title sponsors and by looking at the global character of those firms. This last criterium also gives an insight in the size of the company.
20 18 16 14 12 10 8 6 4 2 0
Figure 18: Countries of origin Calculations based on data from the official website of UCI (n.d.b), ASO (n.d.b) and company websites found in attachment 5.3.
A clear trend emerges in the number of countries where the sponsoring organization has its headquarters. Only seven countries were represented in the top peloton of 30 sponsors in 2003. This number grew with an average of one country per year for eight years to reach 15 in 2011. Afterwards, this remained stable
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for six years and following this period the diversity increased to 18 countries for 27 sponsors. This evolution has mainly been at the cost of Italian and Spanish firms. Between the first and the last year of the analysis they both went from seven to one sponsor in the top flight. To analyze the evolution away from these traditional Western European countries, the geographic origin of the organizations throughout the years is shown in the following table.
To accurately display the distribution of the sponsors’ origins over the world, the dataset groups the countries in eight different continents. Western Europe contains all European countries west from the eastern borders of Italy, Austria, Germany and Sweden. The middle east are all countries between Egypt and Iran, and south of Turkey running until the Arabian sea including these three countries.
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Western Europe North America South America Eastern Europe and Russia Middle East Asia Oceania Africa Figure 19: Continents of origin Calculations based on data from the official website of UCI (n.d.b), ASO (n.d.b) and company websites found in attachment 5.3.
The other six speak for themselves. The biggest group clearly is Western Europe with 90% in 2003. Even at the lowest point in 2014, Western European countries still represent more than 50% of all title sponsors in the WorldTour. From 2003 to 2007 the percentage remains quite steady around 85%. From 2008 and onwards this number started to decrease gradually ending up at a minimum of 52% in 2014. In 2015, the Western European countries see a surge to 64% and in the following years it remains stable at that level. In the first three years of this analysis the places left by Western Europe are entirely taken by North America. The number of North American sponsors swings between two and three during the first eight years. In 2011, there is a peak of seven North American sponsors in the peloton which represents 27% of the total. This peak only lasts for one year because the following eight years North America delivers between two and four sponsors. South America has no title sponsor among the biggest teams throughout the entire duration of the analysis.
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Astana (2006) is the first Asian organization to enter and remains so for three years. Their population grows to four in 2013 and 2014 but drops back to two at which level it stays in 2019. 2012 marks the first year of Oceania delivering a sponsor. They start out with four sponsors for four years and two for the next four years. The South African Dimension data gives Africa a presence of one sponsor from 2016 onwards. Since 2017, seven of the eight defined world parts are represented with two sponsors from the middle east joining. In 2019, the middle east is even the second most represented continent with three organizations.
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Figure 20: Global character of the sponsors Calculations based on data from the official website of UCI (n.d.b), ASO (n.d.b) and company websites found in attachment 5.3.
The global character of a sponsor is determined in this dataset by the number of countries the organizations are active in. Data about this was primarily collected on the respective websites of the organizations. The difference in reporting their global presence can constitute a bias here. For example, some companies give their distribution centers, others give all the countries they sell into. Even when a set of companies reports distribution centers a difference in firm strategy can result in different results.
Also, almost all data is retrieved from their own website so it is likely these are recent numbers. This creates a bias that increases as you go further back in time. The global character of a company that sponsored in 2004 for example can have changed in 15 years. It is important to keep all of this in mind. Also important is that the numbers that make up table are just a minimum number of countries an organization is active in. When there was ambiguity, the lowest number is reflected in the dataset. A more specific overview of the activity countries can be found in the appendix. Statistics of importance here are
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the average amount of countries a sponsor is active in and in how many countries the median sponsor is active.
The average number of countries fluctuates around 17 with an amplitude of 5 from 2003 to 2011, after which it remains stable around 20 for 3 years. In this period the minimum 12,52 countries per sponsor is reached in 2007. The big drop in average can be explained by the departure of Phonak Hearing Systems that claims to be active in 115 countries, while newcomer Unibet.com is only active in 13. Important note is that there is no data on Discovery Channel in this dataset which has a big international presence (Discovery Channel, n.d.) and would have raised the average in the years 2005- 2007. During the period from 2003 to 2013, the median remains stable around 6,5. Going from 2013 to 2014 we see the biggest rise in median and average of the analysis. The 39,59% rise in mean and 75,92% rise in median can be attributed to Giant (82 countries) and Europcar (122 countries) joining, while leavers like Leopard, Euskaltel, Argos Oil and DCM are active in maximum 5 countries. Europcar leaving again the next year explains the drop in average going in to 2015. The median decreases again to 13,5 in 2015.
2014 is the first year were mean and median come close to each other, which means that the growth in global character here is not carried by a couple big companies but by at least half of the companies in the analysis. The entrance of Scott, Emirates, Bora and Hansgrohe in 2017 bring the average to its maximum of 36,89 countries per sponsor. The median also reaches a peak of 35 in this season. Compared to the previous maximum in 2014 it means that this peak is carried by an even bigger number of multinational enterprises. In the following years there is a slight decrease in mean and in 2019 the average amount of countries where a sponsor is active equals 34.
The median takes a drop to 14 in 2018 but recovers to 17,5 in 2019. Interesting insight is that there is one kind of company that really increases the average. The two peak years 2014 and 2017 provide the perfect example. In 2014 there are 10 companies that are active in more countries than the average, 5 of which are cycling related companies. In 2017, this correlation is already less clear but still 5 out of 12 companies that exceed the average are cycling related.
2.2.3.4. Comparison with other sports
The comparison with team sponsorship of other sports exists of a small case study between the title sponsors of the 10 biggest cycling teams and the shirt sponsors of the 10 biggest football clubs (Deloitte, 2019). While the criterium for biggest football club is the budget, this data is not available for cycling
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teams in 2019. Therefore the UCI WorldTour ranking13 of August 11, 2019 (Pro Cycling Stats, 2019) is taken as a proxy.
Road cycling Football Main sponsors 16 10 Countries of origin 13 7 Type of company • For- profit company 11 10 • Sports related company 2 - • Government agency 3 - Continents • North America 1 1 • Western Europe 9 3 • Middle East 3 3 • Asia 2 3 • Oceania 1 - Mean number of activity 38,875 65,9 countries Median number of activity 21 69 countries Table 5: Sponsorship comparison between cycling and football Own creation based on data provided by company websites found in attachments 5.3 and 5.5
The two parameters of global character give an opposite image. While cycling’s sponsors come from a bigger number of countries, even if you look at it relatively, nine out of the 16 come from Western Europe. In football we see that this is more evenly spread across the continents. On the first sight, football has no wealthy benefactors to put their name on the shirt as they are all for profit companies. However, as the sponsor situation is not completely the same as in cycling the conclusion that football does not have this problem cannot be drawn. When it comes to global character, football has a big lead over cycling in both mean and median. This suggests that the biggest multinationals are more inclined to sponsor football than cycling.
13 The 10 biggest cycling teams according to this ranking are Deceuninck- Quick Step, Bora- Hansgrohe, Team Ineos, Team Jumbo- Visma, Astana Pro Team, UAE- Team Emirates, Team Movistar, Mitchelton- Scott, EF Education First and Bahrain- Merida
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2.2.3.5. Event sponsorship
To get a view on the situation of event sponsorship in road cycling, a comparison is made among the Tour de France and three other big sports events. These are the Rolland Garros tennis tournament, the UEFA Champions league in football and the entire Formula one racing competition. The analysis is limited to the current main sponsors of these events. The events have been selected based on the fact that they have a similar status in their respective sports.
Tour de France Rolland Garros UEFA Champions Formula 1 league Main sponsors 5 6 8 5 Countries of 3 4 5 5 origin Continents 2 2 4 2 Mean number of 32 98,6 72 136,5 activity countries Median number 11 101 65 130,5 of activity countries Table 6: Sponsorship comparison Tour de France, Rolland Garros, UEFA Champions league and Formula One Calculations based on data from the official website of UCI (n.d.b), ASO (n.d.b) and company websites found in attachments 5.3 and 5.4.
Three out of the five Tour de France sponsors come from France making it the event with the least international character in this respect. The Champions League has sponsors coming from four different continents which is double the number of the three others. The most striking difference can be found in the global character of the sponsors. The Tour de France has by far the least global partners.
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2.3. Conclusions
The analysis of the economic attractiveness of road cycling ends with some interesting insights that can be drawn from the previous paragraph, links with the structural changes and doping cases, and an evaluation of the current situation.
2.3.1. Interesting evolutions and links 2.3.1.1. Impact of structural reforms
Structural reforms discussed here are the introduction of the ProTour in 2005, followed by the introduction of the WorldTour in 2011. No impact can be distinguished on TV ratings. Most countries did reach a maximum in 2005, but mostly this was a continuation of the trend from previous years. Furthermore, the budgets do not seem to be directly influenced by the introduction of the ProTour. A lack of data does not allow conclusions about the WorldTour introduction. The reorganizations into ProTour and WorldTour do not have a direct visible impact on the globalization of the sport.
There are some correlations between the structural changes of 2005 and 2011 and sponsorship. 2011 and 2005 rank first and second on the number of sponsors that enter the field. On the longer term, they both mark the beginning of a rise in median and mean duration of sponsorship that lasted for three years with the ProTour and four years with the WorldTour. Also, the collapse of the ProTour during the 2008 season, marks the beginning of a drop in average and mean duration of sponsorship that lasts until 2011. During the WorldTour, which is still operational as of this moment median and especially mean stayed quite stable after their rise.
2.3.1.2. Impact of doping scandals
Two doping scandals have been discussed in the first section of this paper. The influence of both these scandals are compared to the evolutions discussed in part 2.2. The first point is also a doping related issue of which the effect can clearly be seen in the graphs on Tour de France viewership, but it is not about these two cases. It concerns the decision by ARD to no longer broadcast the 2012 Tour de France live, which is discussed before. This is however not directly related to one of these scandals because the decision was made in 2011.
The exclusion of Ivan Basso and Jan Ulrich from the 2006 Tour de France related to ‘Operacion Puerto’ can be a major factor in the first massive drop in viewership in Germany between 2005 and 2006. The same change in viewership also happened in the Denmark, France, Norway and Wallonia but to a lesser
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extent. The United States also loses a lot of viewers, but here the retirement of their biggest superstar Lance Armstrong is probably responsible for a part of this effect.
The fall of this biggest American cyclist unfolded leading up to, during and after the Tour de France of 2012. After the very successful Tour de France of 2011, this scandal went together with a severe drop in viewers in France, Denmark, Norway, Wallonia and even Flanders. Interesting is that that year’s Vuelta which took place only a month later, still in the middle of the scandal, registered its highest Spanish viewership of the entire available period.
While the budget evolution shows no signs of an impact, a correlation can be detected in the sponsorship landscape. After seasons 2007 and 2013, the highest number of leavers compared to joining organizations can be seen. This could be a delayed reaction to the scandals of 2016 and 2012. One could argue that sponsors already wanted to leave after the scandal broke, but that there were already contracts in place for the following seasons, or that they did not fully understand the impact at that time. However, these doping scandals seem not to have had a direct impact on the global character of a cycling team sponsor.
2.3.1.3. Relationship among budget, viewership and sponsorship evolution
Visibility and therefore TV ratings are a key driver for the return on investment that sponsors get for investing in cycling. In an efficient market, when investing in a cycling team is more profitable, the price for sponsorship should become higher because demand rises. Higher visibility means a higher ROI, which should translate in higher budgets for the teams.
In reality, cycling team budgets have seen a huge boost in the period 2003- 2016 while the TV ratings have not grown accordingly. While there are a few markets that emerged, other markets have stable figures at best. This implies that the budget growth is not conform with the actual market situation.
A first possible explanation is information asymmetry. Making sponsorship of road cycling seem way more rewarding than it actually is and the difficulty to calculate the actual return on investment can provide an explanation to the distorted image. A second possible reason can be found in the sponsorship analysis.
As described in figure 17, you see that the percentage of for-profit companies backing a cycling team is 75-90% of the total in 2003- 2010. In this period, there is a relatively stable small budget growth. In the second half of the time period the percentage of for-profit companies is 55-75% which much lower. This coincides with an accelerated budget growth from 2008 to 2016. The place of for-profit companies is taken by government agencies, government controlled organisations, some management companies and a bunch of cycling related companies that stepped up in absence of other options.
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Even if the names on the jerseys are still mostly companies that have to make a profit, they are not always responsible for filling the budget by themselves. For example BMC Racing team was/is backed by Andy Rihs, Tinkoff Bank by Oleg Tinkov, Quick step by Zdenek Bakala, IAM Cycling by Michel Thétaz and GreenEdge (Mitchelton- Scott in 2019) by Gerry Ryan (Lagae, 2016). These wealthy benefactors can pay very high wages and force the others to follow in their path (Mouton, 2014). A trend that also fits in this vision is the fact that the number of sponsors per team has risen after 2009, which indicates that a company alone cannot pay the bill anymore.
2.3.1.4. Globalization
Because all viewership data comes from Europe, except for Australia and the United States, it is impossible to make a conclusion on globalization of viewership. Viewership in Spain and Italy has remained constant for the grand tours, positive in Italy and negative in Spain for the classics. The disappearance of national sponsors from the peloton seems to have had no impact on the popularity of cycling and vice versa
The positive signal transmitted by a more international pack of sponsors looking at country of origin has a small downside. Four out of the ten sponsors with headquarters outside of Western Europe are not for- profit companies. The fact that the sponsorship peloton has a more multinational character even when government agencies etc. draw mean and median back, is a very promising sign.
2.3.1.5. Power of ASO and RCS
The analysis of TV ratings only confirms the power of ASO and RCS even more. In 2018, 60% of the ten most watched races is controlled by them.
2.3.2. General conclusion on economic appeal
The TV ratings see a quite stable, although slightly negative evolution in the classic Western European markets. The United States has been degraded from one of the biggest markets to the level of a small country like Denmark. Only the United Kingdom sees an unambiguous positive evolution, which is probably driven by their success in the Tour de France. These evolutions do not paint a nice picture for the attractiveness of road cycling races.
The rise in WorldTour team budgets implies a rise in salaries for the best riders, which is a positive evolution for them. As teams remain almost completely dependent on sponsors for their revenue, a higher investment is needed by sponsors to reach the same level of results and visibility. This makes the return on investment drop. This means that financial attractiveness of road cycling is going down and
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therefore the dependency on wealthy benefactors rises. Last but not least, there is no evidence that suggests that the UCI has succeeded in creating a more unified attractive product by their structural changes.
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3. Challenges
The analysis has laid bare a number of challenges that road cycling faces. In order to grow, changes need to be made to the existing format to increase the appeal for all stakeholders. In this segment, a number of changes, both inside and outside the existing business model are elaborated and commented on by an expert in the field.
Iwan Spekenbrink is the Dutch CEO and owner of Team Sunweb. He started the team, called Skil- Shimano, back in 2008. He has an economic background in sports management and marketing (Sunweb, n.d.). Skil- Shimano started out as a Procontinental team and entered the WorldTour in 2013 as Team Argos- Shimano (UCI, n.d.b). Today, Sunweb is one of the largest organizations in the cycling with teams for men, women and youth. In total there are 75 employees and 50 riders involved (KNWU, 2017). Since 2015, he is the chairman of the official association for professional cycling teams (AIGCP). In march of 2019, he was reelected for two more years in this function (Vanbuggenhout, 2019).
3.1. Challenges and possible solutions 3.1.1. Race attractiveness 3.1.1.1. Alternative race formats and Hammer Series
There are a lot ideas to increase the tension of a road race. For example it is a trend to include more grind roads in races following the success of the Strade Bianche. In the Tour de France they have been experimenting with cobbled sections and heavy mountain stages of less than 150km to make it exciting from the start. Another popular idea is shortening the grand tours entirely to limit the boring transition stages. According to Iwan Spekenbrink this is not a good idea, because it will change the nature of an event that works (in the case of Giro and Tour). “It’s like organizing Wimbledon and saying hardcourt gives you a better game. Wimbledon is grass”. Instead, you have to filter the races that do not work commercially and replace them with other formats (I. Spekenbrink, personal communication, July 10, 2019).
A new concept that has been introduced and that has been proven quite a success is the Hammer Series. The Limburg edition of June 2019, already got an average of 327 090 viewers on VRT (VRT, Personal communication, July 31, 2019). Looking purely at online viewership, you see that the Hammer series not only has four times as many viewers as the Tour de France, but also an audience that is 20 years younger, which is all very hopeful.
The Hammer series was first organized by Velon in 2017. It started as a three day event at Limburg in the Netherlands and one year later the Hammer Series held two three- day events and one two day event.
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Respectively in Stavanger, Norway, Limburg, the Netherlands and Hong Kong, China. In 2019, the Hammer series takes place at the same location it did in the previous year and in 2020, Colombia will be added to the locations. A Hammer series competition is structured as follows.
First, a Hammer Climb (only in three day events), followed by a Hammer Sprint and the last day, there is a Hammer Chase. In the Hammer Climb and the Hammer Sprint the teams cover multiple laps on a short closed circuit. Every lap, the riders can earn points for their teams when they cross the line by finishing as high as they can. The team with the most points at the end wins the stage. Evidently the Hammer Climb involves a stage where there is a considerable height difference and the Sprint stage is battled on a rather flat course. The finale of the event is the Hammer Chase. The teams are ranked based on their performances in the previous days and this will determine their starting position in the chase. The team with the highest number of points will start first and the other teams will follow after a specific time interval and try to catch the leaders. At the end of the day the winner of the Hammer series event will be the team that crosses the finish line first. The finishing time of the team is determined by the fourth rider over the line. Based on the ranking at the last day, the teams get points and the team that has the most after the three Hammer events is the overall winner (Velon, n.d.).
The Hammer Series is a revolutionary concept for a number of reasons. Unlike a traditional road cycling race, there is no individual winner. The team wins or loses. Second major difference to the classic structure of a race is that the winner is not necessarily the one who finishes first at the end of the race. Because there are points to be earnt during the race, the tension which is normally concentrated at the end of a race is distributed over the entire duration of the race. Third, not all the riders in the squad have to take part in every event. You can select seven riders but only five of them start each day. This means you can make substitutions. All of these changes seem to be inspired by successful team sports like European football, American Football, Basketball, etc. The Chase holds the unique feature that everything is still possible on the last day. This counters the frequent situation that mainly unfolds in the Grand Tours, where the winner is already known with a week left to race. This dramatically reduces the tension that attracts viewers. On top of all these race characteristics, the Hammer series is unique for its business model. This will be explained further when the new business model is discussed.
3.1.1.2. Investing in women’s professional road cycling
In recent years, women’s professional cycling is starting to get more attention. In 2018, Prof. dr. Daam Van Reeth was able to get 62 observations of women’s cycling broadcasts for his yearly TV viewing report. This almost equals the 74 observations collected from 2008 to 2017 (Van Reeth, 2018). In the Netherlands, the average women’s TV audience for all races as a percentage of the average audience for all the
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equivalent men’s races is 72% (Van Reeth, 2018). Promoting women’s cycling further and creating equivalent races to for example the Tour de France is a priority for the UCI, according to their goals for 2022 (UCI, 2018b). Recently, president David Lappartient unveiled that he is pushing for an expansion of the one- day event, La course by Tour de France in to a multi- day Tour de France like event organised by ASO (Tol, 2019). Equivalent races for women can create another moment of tension during an afternoon of watching road cycling, which could boost viewership. Iwan Spekenbrink agrees with the fact that women’s cycling should be boosted, but not with the methods of the UCI. He believes women's cycling should be marketed as a product of its own and not try to copy men’s cycling. Also, contrary to the men, women’s cycling is not yet dominated certain race organisers, which generates an opportunity for women’s cycling teams to be a stakeholder in their own cycling league (I. Spekenbrink, personal communication, July 10, 2019). The issue of cycling teams not being treated as stakeholders will be explained further on in this thesis .
3.1.2. Financial attractiveness 3.1.2.1. Television rights
In recent years, the economic model of sports has changed to the MCMMG14 financing model which means the most important source of income are derived from television rights (Evens & Lefever, 2011). In cycling, these revenues are currently not shared with the teams contrary to what happens in other sports, for example football. National football competitions are the commercial property of the teams, most of the money generated by the UEFA Champions league flows to the teams. In Formula 1 the division is 50% for the teams and 50% for owner Liberty Global (I. Spekenbrink, personal communication, July 10, 2019).
This is a highly political discussion among the stakeholders and will be discussed in the business model. However, this is not the only interesting idea about television rights that can be copied from other sports. There are two ways of selling your television rights to a broadcaster. All other forms are combinations or variations of the two. These two options are individual television rights selling or television rights pooling, where a group sells their rights as a cartel. Currently, all organizers sell their rights separately. This gives them the independence to make their own decisions.
It also means that the broadcasters have a lot of supply and this results in a lower selling price according to the law of demand and supply. In theory it could give significant gains if the race organizers bundle their forces and sell together. Looking at European football, the Italian and Spanish teams in their respective top leagues can be defined as individual rights sellers and the English premier league can be
14 MCMMG: Media- Corporations- Merchandising- Markets Global
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characterized as a league pooled seller. This means that the Premier league sells and negotiates a price for all matches in the league and distributes its income among the clubs. A pooling system is also used in Germany and France.
The practice in European football agrees with the theory if we look at the five biggest national competitions. From the 1991-1992 season to the 2001- 2002 season, the revenues from broadcasting rights multiplied with the following factor in these competitions: England (x43), Italy (x8), France (x19), Germany (x11) and Spain (x8). When comparing the countries that use a pooling system with the countries that do not, we can conclude that the revenues in the pooling countries have risen much more than the individual selling countries (Andreff & Bourg, 2004). Iwan Spekenbrink claims that there are reliable models that predict the revenues would get four or even five times bigger if pooling happened in cycling (I. Spekenbrink, personal communication, July 10, 2019).
3.1.3.2. New media rights
People, and particularly the younger generations, are less interested in long television broadcasts and want their information as soon as possible (I. Spekenbrink, personal communication, July 10, 2019; Verhaeghe, 2019). This is a trend no sport can ignore. The stakeholders of road cycling should have two objectives in this regard. First, they have to generate content like behind the scenes footage etc. and bring it to the public via social media channels etc. Good content and marketing can lead to a high number of followers, which gives you a great platform to reach people. Secondly, they have to make sure that they get a good deal if other actors want to use their assets to generate content. Pooling media rights similarly to pooling television rights is one of the points Bart Verhaeghe (2019) is pushing for in the new media deal of the Jupiler Pro League and can also prove a profit generating idea in cycling.
7.1.2.3. Fan experiences
Cycling should become more than just a race between point A and point B. Creating experiences under the brand of a race or a team could boost revenue and a better, deeper experience for cycling fans. Two options are discussed.
Tourist races give cycling fans to ride on the track of a well-known cycling race a few days before the professionals. This gives them the opportunity to feel what these riders experience without worrying about traffic. ASO organizes a tourist version a mountain stage in the Tour de France every year. In 2018, 11 734 people finished the race, with 31% coming from another country than France (ASO, n.d.c). Another organization is the Belgian Peloton, which organizes tourist versions of the Flemish classics and more.
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They organize close to 50 events (Peloton, n.d.) each year with around 120 000 participants in total (Peloton, personal communication, June 6, 2019). Adding this to the product/brand ‘road cycling’ could generate a lot of extra revenue considering that you pay 8-20 EUR for an early bird ticket to participate in the Tour of Flanders Cyclo in 2020 (Vlaanderens mooiste, n.d.).
The second and last proposition that is made here is a trip organized to give customers a unique experience surrounding a cycling competition or a team in that competition. You can go as far as you would like in this regard but the center of a trip like this would be tours behind the scenes, special access to multiple interesting viewpoints during the race, etc.
3.1.2.4. Ticketing systems
Almost all sports have a revenue source in charging spectators for watching their event in the stadium or around the circuit. As cycling happens on the public road, it is impossible to charge the people on the side of the road. Normally, such spectators only see the riders pass once and don’t have a good overview of the race situation. Here lies a possibility to generate an added value that can be monetized. Arranging special locations where spectators see the riders multiple times, where they can have an overview of the race through big screens and other side animation can deliver an experience people want to pay for.
3.2. Integrated new business model 3.2.1. New business model integrated in current media landscape
All the propositions above and other possibilities are of secondary importance according to Iwan Spekenbrink. Nowadays, the sport is kept fragmented for the benefit of a monopolist called ASO. Smaller stakeholders like the teams are not provided with enough stability to introduce the necessary changes. They are afraid that if they come up with something, the UCI is going to take the revenues away. Currently, ASO mainly uses its power to prevent that the teams share in the revenue from television rights. That way they can make huge profits by not paying the actors of their races (I. Spekenbrink, personal communication, July 10, 2019). Creating a stable platform of income to ensure the viability of teams and decrease sponsor dependency is the basis for the sport to survive. This view is share by other experts as well, among others Prof. dr. Wim Lagae (Lagae, 2014) and Patrick Lefevere (Coorevits, 2019).
On top, teams are forced to enter a lot of races a year just to get enough points to survive. This way all star riders are scattered among smaller races that now all have a semi- interesting field of participants and one race only serves as preparation for the next and so on. This makes cycling a chaotic and uninteresting product to sell (I. Spekenbrink, personal communication, July 10, 2019).
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Creation of a new business model that works for all stakeholders and that creates a united and more attractive product/brand in order to increase the appeal of the sport and the revenues made in it, seems necessary. In the remainder of this paragraph, three pillars for a new business model are presented and integrated in the current media landscape. This business model should serve as a basis for the changes in part 3.1.
3.2.1.1. A united stakeholder model
The basis of this business model is that all shareholders unite in one organization that shares all costs and revenues, and where all decisions are made together. A perfect example of this is Velon. The organization behind the Hammer series follows the principle: When a participating team provides excellent entertainment and this generates economic returns, you share in the profit. When you share in the profit you are also automatically more inclined to do an effort to be of more value for your partners (I. Spekenbrink, personal communication, July 10, 2019).
Secondly a united front puts you in a better position to negotiate all types of contracts, going from TV contracts to appearances from riders in commercials, for example (I. Spekenbrink, personal communication, July 10, 2019). As proven by the success of television rights pooling in football, joining forces can enable you to significantly boost revenue. Last but not least, this provides a basis for stakeholders to work together in creating new sources of revenue instead of being competitors.
3.2.1.2 Unified brand and product
Pooling all broadcasting rights and being able to tell broadcasters you have road cycling or you don’t in negotiations sounds very good but is practically impossible if you include all 181 racing days that are in the WorldTour at this moment. This are too many broadcasts to sell at once and it includes to many preparation races with an uninteresting field of participants. Therefore, a split between a “champions league of road cycling” with only the best races and riders, and a second division and so on is necessary. After creation of these separate leagues you can put them in the market separately.
Currently there are only two healthy race formats in cycling according to Iwan Spekenbrink. On the one hand, you have the grand tours, Giro d’Italia and Tour de France. A battle of three weeks of long hard stages on epic mountains appeals to the imagination of fans. Two of these three week events work but Iwan Spekenbrink believes that there is no market for more than that. The four spring monuments make the other working concept in road cycling. Again, history, bad roads, cobbled stones and long races appeal to the public. The remainder of the season is filled with shorter stage races and light versions of the classics
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(I. Spekenbrink, personal communication, July 10, 2019). Adding the knowledge gained from the TV ratings analysis above, the UCI World Championships, Amstel Gold Race and Gent- Wevelgem can prove to be interesting to add to the top tier calendar (Table 1). To ensure that all the best riders can start in most of the races in this “Champions league”, there should be no more than 100 racing days in it. Because a final decision on this requires deeper analysis and negotiations, following table provides only a basis for the calendar. It is also important that races are placed strategically so riders can be at the start of as many races as possible in a good condition without stretching the season unnecessarily, and to maximize the reach for your races by placing them on strategic days.
Race Number of racing days Tour de France 21 Giro d’Italia 21 Milano- San Remo 1 Tour of Flanders 1 Paris- Roubaix 1 Liège- Bastogne- Liège 1 Gent- Wevelgem 1 Amstel Gold Race 1 UCI World Championships 1 Total: 49 Table 7: Proposal renewed “Champions league of road cycling” calendar Own creation based information provided by Iwan Spekenbrink and Van Reeth (2018)
For the remaining 50 racing days, you can look at new formats like Hammer series that can take place in strategic locations across the globe in order to boost globalization. The second division could then take the races just below the first division and be marketed to the niche audience that is interested in these races. In the same fashion you could build a women’s cycling league and again put it in the market with a focus on its own characteristics.
3.2.1.3. Financial fair play
The conclusions from the attractiveness analysis point at a distortion created by wealthy benefactors that can pay wages that are not conform with the market situation. If you introduce a system that redistributes income among the teams, they become less dependent on sponsorship but this is no guarantee that the market will not be disrupted again with bigger amounts of money. To ensure that the created financial basis remains strong enough, a financial fair play system should be introduced according to Prof. dr. Wim
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Lagae (2014). This system should make it impossible for wealthy benefactors to buy the best riders with their own money.
3.2.2. Adaptations for the future
The assumption that road cycling is broadcasted by TV channels that pay for that right to the stakeholders in the new road cycling organization is now abandoned. Nowadays, sponsor visibility is the most important factor in choosing a medium to broadcast a race. The main concern when choosing a broadcaster is that as many people as possible can see the race, which means it is mainly broadcast on free-to-air TV (for example VRT in Flanders) instead of pay tv channels.
This is the case because sponsor revenues are the most important income of cycling teams and more exposure means a higher return for the sponsors. The dependency on often short-term sponsorship contracts is one of the main problem creators for road cycling. It has a negative impact on long term plans and stability within the teams. Another option to replace income dependency on sponsorship that is perfectly compatible with the three pillars from the new road cycling organization proposed above, is a streaming service.
On this platform, you could directly provide fans with live broadcasts and all kinds of other content like behind the scenes, talk shows, etc. in exchange for a subscription fee and/or direct advertising. Also, the creation of different packages to represent the different leagues of cycling from 3.2.1.2 can fit perfectly in to this strategy. Whether/ when it is opportune to start up a streaming platform is solely dependent on whether it can provide higher profits than the current system and it gives you another asset in negotiations with TV channels.
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4. Conclusion
The first part of this research has tried to formulate an answer to the question: ‘How has the economic attractiveness of cycling evolved in the field of television ratings, team budgets and sponsorship between 2003 and 2019?’. To measure this, evolutions in TV ratings, team budgets and sponsorship have been charted and put in to context.
TV ratings from 2003 to 2018 see a small negative trend in most of the classic Western European markets. Two big markets, the USA and Germany shrunk significantly over the period. While, viewership in Germany is restoring again, it is still not at the level it was before. In these markets and others, a clear correlation between doping scandals and drops in viewership can be distinguished. Also, in comparison to other major sports events, cycling has rather low TV ratings in the case studies that are included.
On the subject of budgets, a big increase can be noted throughout the period. While this seems positive at first sight, this rise is driven by wealthy benefactors that pay non market conform wages which creates a distortion and pushes for-profit sponsors out. This puts the entire business model at risk. While rising, the budgets of road cycling teams remain very small compared to football team budgets.
The sponsorship analysis shows some interesting trends. First, the last years show that sponsors stay in the peloton longer. Another positive evolution is seen on the front of globalization. All three figures mapping this evolutions show a positive trend. A negative trend can be seen when looking at the activities of the sponsoring organization. Where in the first half of the period, it were almost exclusively for-profit companies, this percentage has dropped drastically in the second half. This evolution contributes to the distortion that is discussed above. Here, there is also a correlation with doping scandals but also with the structural changes. Sponsorship turnover increases in the wake of a doping scandal and length of commitment starts to rise with every structural change. Like with TV ratings and budgets, sponsorship of road cycling teams is less developed than in football.
The second part provides an answer to the challenges that surfaced in the first part and answers the question: ‘How can road cycling become economically more appealing for all stakeholders?’. The most important conclusion here is that the stakeholders of road cycling have to start working together and on the long- term to ensure a beautiful future for the sport.
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Attachments Attachment 1: Team sponsors through the years
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Attachment 2: Sponsor entrance, exit and global character
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Attachment 3: Football team sponsorship 2019
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Attachment 4: Interview with Iwan Spekenbrink (10/7/2019)
Q: I will start with shortly explaining the set- up of the thesis. The first part is an analysis of the economic attractiveness of road cycling. In this analysis I look at viewing numbers, budgets and sponsors of the period 2003-2019. Among others, I check the impact of some doping scandals and structural changes to the sport like the ProTour and the WorldTour. In the second part I attempt to find possible ways to match the challenges of road cycling. For this, I am looking for the vision of an expert and that is why I contacted you. I: All right.
Q: I am going to ask you some questions and then I will give you the time to elaborate, give your opinion. We start with alternative cycling formats, of which Hammer Series is the best example. What is your vision on this Series? Do you think it is fun for a couple times a season or do you believe this is the future of cycling? I: It is a very elaborated answer. At a given time, when you have a connection with your fans/ target audience, you can start to change the sport. You can do this by creating extraordinary economical positions, make money, etc.. This is important and there is also a second, equally important challenge. This is that you divide your burdens and benefits equally among the stakeholders. If this doesn’t happen you have a fragmented sport, but if you do people are going to bundle their rights and market them. There are two kinds of ways to look at Hammer. One way is purely conceptual. The sport only has two healthy formulas. On the one side this are the two first grand tours of the season, Giro d’Italia and Tour de France. Traditionally people want to know who is the strongest over three weeks of long stages on epic mountains. In total we are interested in watching this for six weeks. I don’t think there is a market for watching more of that. The other working concept are the four big monuments in spring. This are races that exist for a long time, that are historic, on cobbled stones, on bad roads. The heroics of nearly 300km of drama, endurance, etc.. All other 500 races on the calendar who are often not that successful are light versions of those races. It are shorter tours or shorter one day events. They are not that profitable. People who watch those kind of races are an ageing niche, that is where our problem lies. Instead of creating even more of that kind of races, who are not successful to begin with, you can say the following. Next to the two grand tours and four spring monuments there is room for a third format, that lies closer to a more global and younger target audience. That is a very healthy thought. Those people are different. They want to absorb as many information as possible in five minutes. They look at their smartphone and see what is happening in the world, in culture, in politics, in sports. They consume news in an entirely different way, much faster. They want to watch cycling on their mobile device for two hours but then they want to see an entire story, from beginning to end, from start to finish. They don’t want to fall in to a broadcast after
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four hours. That story does not have to be waiting, waiting and waiting until the final. That story has to be action. Every lap the biggest stars that sprint against each other. What it is really about is not a model that conflicts the 4 spring monuments and two grand tours but an additional model. Practice proves it. It is comparing apples to oranges because there are also a lot of races on television. But if you look purely online you see four times as many viewers as in the Tour, ten times more as in Liège- Bastogne- Liège and fifteen times more as in the Amstel Gold Race and the audience is twenty years younger. Of course the model could be perfected and needs a little bit of evolution but the format is necessary. On top, the riders like it. You give everything for two hours. You cannot afford to wait to the final, every lap counts. That is the format. When you look at the model you see something where the organizer works together with the teams and where we say: At the moment that you engage yourself with good participants and with great sport and it takes of economically, you profit from that as well. This is a very sane thought. On top, you have created a brand. This means you can market the Series and you create a narrative during the year. If that becomes a success than the rights to the series lie with the teams, which can only be positive.
Q: Are you, as of this moment already making money of it as a team? I: In the entire Velon story, we are making money, but for now that is use for building the organization. What is earned flows back to the organization in order to grow. It is completely independent qua resources and growing, which increases the value of the company. Someone interested to buy Velon, it is not for sale but if, would have to put up a serious amount of money.
Q: As you have mentioned, the two grand tours work. But does there need to be a change in that model to make more people watch for a whole afternoon? I: When you are going to change to much to that formula, the allure of the event is going to disappear. It’s like if you organize Wimbledon and say hardcourt gives you a better game, but Wimbledon is grass. You can change somethings in the margin but you can’t create an entirely different race. That would not work.
Q: To return to the Hammer Series. How do you see that evolving? For example I saw that it is moving in to Columbia next year. I: There is a lot of interest. Not only because you have the best riders and best teams starting but also because of the following. In the current economic model we are only participants and the money goes to different people. Therefore there is not much appetite to be of more value to your partner in this case. There is expected of us that participate but we are not paid for it, which is not a good model. In Hammer the riders are really ambassadors of the organization we work with so that is the second example. So, the
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riders are happy and the partners are happy. The partners are happy because they reach a younger, more international audience but also because the actors are great ambassadors.
Q: All right. On to the next subject. The popularity of women’s cycling is increasing and there races are more and more broadcasted. Would a equivalent women’s race that finishes right before the men’s final create more interest for viewers to watch all afternoon? I: The ideal situation would be like in tennis where there are equal men’s and women’s competitions. I believe you should implement that in Hammer. Equal, same race, same distance. But more important, where women are not only participants but also stakeholder. If you make the sport successful you profit from it. That would be very good. If you look at women’s cycling, you see other values than with men. You have to market that in its own way, I think. The biggest mistake you can make is try and copy men’s cycling. You have to market it in its own way and with Hammer that is perfectly possible. You can show five minutes of women cycling during Paris- Roubaix but that is not where it is for. It is no second tier sport to the men, if you will. Adding to that is that you are going to say we are only participants and the profits are for someone else. That is fundamentally wrong. The women still have a chance to be a stakeholder. There are no races that they absolutely cannot miss. The women have to position themselves at the very center of the model. The women and the teams have to work in partnership with a select number of organizers.
Q: Indeed. The following part is about TV rights. I give the example of football, where the teams started to sell their broadcasting rights together and made enormous profits on that. Of course those rights lie with the organizers in cycling. If this scenario were to happen in cycling, with or without ASO, would there be an opening where organizers are willing to share their TV money? I: I believe there are two things at play here. You are totally right. In all healthy sports the rights are bundled and the money flows to the actors. Take the Champions League for example, where the UEFA gets something but most flows to the clubs. The national competitions are even full commercial property of the clubs, NBA idem, Formula 1 50/50. Teams and Liberty Global. Cycling is the only exception. There a couple of thing to say about this. There a certain forces in the market that benefit from the fragmentation. If you were to bundle it is very clear for broadcaster. Either I have cycling or I don’t. You can negotiate completely different then. There are reliable models that suggest that with bundled rights, income would go times four or even five. It is an absolute fact that you are going to make more money if you bundle TV rights. Important factor. You can’t keep 500 races. You have to have a select number and you have to put that in the market in an exclusive way. Second thing is the role of the UCI. It is very absurd and very disputable. Are the TV rights the absolute privilege of the organizers, question mark? In every sport the rights go to the actors. Everyone who wants to zoom in on our cyclist, everyone who wants to interview our cyclist in front of a publicity panel, all
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sponsors who want our riders has to pay. Because it is the image and appearance of our rider that is paid by us. And then you have races where they make a lot of money by showing the same riders, in close up, in rewind with a name under,… and they don’t have to pay anything. Which is pretty strange. People make money without paying the people who pay the actors. A lot of money is made without paying the people who make things happen and finance it. The UCI should take a position on this. Everyone says rights belong to organizers but is this right? Q: How has this grown to be like this? Why can’t teams get this in order? I: That is historical. You know as well that there is a model where one big commercial party has that much power over the UCI that the UCI is forced to compromise constantly. The UCI has to make it economically attractive enough for ASO to keep their support. And this means that they bring ASO closer to a monopoly position and make the position of the ones who make the sport alive and finance it weaker.
Q: Is it possible to make a system of for example 20-25 races and sell them together with the teams without the support of ASO? I: Could be possible. I think there is a key role for the UCI. They are going to have to decide which kind of organization they want to be. Do they want to keep ASO as a friend, keep taking rights away from other parties and leave the sport fragmented for the winnings of a monopolist? Or do they make it their mission that every stakeholder is treated fairly? You can’t put the organizers in a cartel and put the teams in an on life and dead points system where degradation means end of existence. The only reason that Velon or Hammer exists is because teams say we have to make partnerships because the model of the UCI makes it nearly impossible for us to function. Therefore we have to take matters in to our own hands. This is only going to escalate even further. The UCI is going to have to make a choice. What can we, as governing body, do to give all stakeholders the same perspective? Or is this impossible and do we want to keep ASO happy? This is a difficult exercise for the UCI. If they aren’t going to solve this, parties are going to keep taking initiatives of their own.
Q: Do you see them making this decision in the near future? I: You never know. You are in this situation because of a fragmented sport. Great initiatives like Velon, Technology, Hammer are going to be continued.
Q: Do you see other possible sources of income for teams, apart from sponsors and tv money? Other ways to create assets for the teams? I: It might sound weird but this is of secondary importance. There are enough smart people in the sport, both with teams as with organizers. If you have a connection to the fans you can market that in loads of different ways. I am thinking of merchandise, TV, internet, entry tickets to races, behind the scenes,… .
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The question is: are you enabled to do so? If so, you have the techniques. You can say we do it all fragmented or we do it all together and drive up the price so we all make more. The question is do they provide us with enough stability, just like with organizers to do all of this? Or are they going to say: No, we take all rights that teams have built up away by making new rules and as of tomorrow this belongs to UCI and the race organizers. The ways are there, people know how to market it. I mean, if you can already get this much money out of a market this chaotic and this uncertain than people are definitely smart enough to think of ways. But, are they enabled to do so?
Q: Right, Next idea. Visibility is very important for sponsors. For that reason cycling is mainly broadcast on networks that can be easily watched by as many people as possible. Is the future to organize a ‘Netflix of road cycling’, ran by teams and organizers, where cycling fans can take a paid subscription to watch the races and where there is a possibility for direct commercials? I: Definitely, but same story here. Enough smart people to work it out but you have to create a product that makes the fan say I am going to watch this instead of something else. How are you going to market the product better? This is a combination of factors. You don’t need 500 races with a semi- interesting field of participants where one race is preparation for the next and so on. You need a select number of races that can all be raced, that all count for points, where all the best riders and the best teams start. With that you have to create a broadcasting product you can market with technology, behind the scenes, etc.. And then, you can do the same thing on the second level. That is also going to make some money. The question is, can you make a nicer product when you realize that? Then you are going to be able to market it to the fans. We often start with how are we going to market it but first you have to make a nice product. Once again the question is are we enabled to do so? Because if you start with a points system where all 500 races count to score points you need to survive with a license then you can’t be working on making a good product.
Q: How many races did you have in mind? I: Hard to say. I think that if you want to have top level races with a pretty consistent field of competitors you have to aim at a maximum of 100 days.
Q: And for those races you think mainly of Giro, Tour, Milano- San Remo, Tour of Flanders, Paris- Roubaix, Liège- Bastogne- Liège supplemented with races like Hammer Series. I: It goes too far to decide that now but if you want to do it consistently you have to think in that direction.
Q: Great, I think that were all the questions that I wanted answered. I: Nice, I need to make another call so that is convenient.
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Q: I want to thank you for the talk. I gained some useful insight and can definitely use it. I: Great, I am curious. If you are ready, you can send it to me. I would like to read it.
Q: I will definitely do that. Best of luck in the remainder of the Tour. I: Thank you, will do.
Q: Thank you again and bye. I: Greetings
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Attachment 5: Bibliography for data used in calculations and creation of tables and figures Attachment 5.1. Bibliography WorldTour race organizers
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Attachment 5.2: Bibliography television ratings data (Figure 11, 12; Table 5, 6)
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Attachment 5.3: Bibliography for team sponsor data (Figure 17-20 and table 5)
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Us Postal. (n.d.). Who we are. Retrieved June 22, 2019, from https://about.usps.com/who/
Vacansoleil. (n.d.). Over vacansoleil. Retrieved March 11, 2019, from https://www.vacansoleil.be/nl/over-vacansoleil/
Vacansoleil. (n.d.). Vind de mooiste camping vakanties bij Vacansoleil. Retrieved March 11, 2019, from https://www.vacansoleil.be/nl/?gclid=EAIaIQobChMIy8epuZf44gIVKrvtCh1CUQeNEAAYASAAEgIdZvD_B wE#
Vaillant Group. (n.d.). Innovations for hot water, heating and cooling. Retrieved May 15, 2019, from https://www.vaillant-group.com/our-company/about-us/
Velowire. (n.d.). Team presentation Team High Road cycling team 2008. Retrieved May 15, 2019, from https://www.velowire.com/article/102/en/team-presentation-team-high-road-cycling-team-2008.html
Vini Caldirola. (n.d.). Caldirola and soccer: a marriage made in heaven. Retrieved July 4, 2019, from http://www.caldirola.it/speciale_eng.aspx
Vini Caldirola. (n.d.). Company. Retrieved July 4, 2019, from http://www.caldirola.it/azienda_eng.aspx
Visma. (n.d.). Over Visma. Retrieved March 10, 2019, from https://nl.visma.com/over-visma-software/
Würth. (n.d.). Participations. Retrieved June 22, 2019, from https://wurth- international.com/en/company/wuerth-international-ag/participations/
Würth. (n.d.). Würth group. Retrieved June 22, 2019, from https://wurth-international.com/en/company/
33
Attachment 5.4: Bibliography for event sponsorship data (Table 6)
ASO. (n.d.). Partners. Retrieved July 26, 2019, from https://www.letour.fr/en/partners
BNP Paribas. (n.d.). About the group. Retrieved july 26, 2019, from https://group.bnpparibas/en/group
Continental. (n.d.). Continental in numbers. Retrieved July 26, 2019, from https://www.continental- tires.com/car
Continental. (n.d.). Over 145 years of innovation and progress. Retrieved July 26, 2019, from https://www.continental-tires.com/car/about-us/history
DHL. (n.d.). Een dynamische, wereldwijde spupply chain die voor uw deur begint. Retrieved August 1, 2019, from https://www.logistics.dhl/be-nl/home/over-ons/wereldwijd-netwerk.html
E.Leclerc. (n.d.). Les magasins. Retrieved July 26, 2019, from http://www.e- leclerc.com/catalogue/magasins
Emirates. (n.d.). Choose your country or territory. Retrieved July 26, 2019, from https://www.emirates.com/be/dutch/?page=/be/english/
Expedia Inc. (2019). Expedia Group Overview. Retrieved August 1, 2019, from https://www.expediagroup.com/about/
Forsdick, S. (2019). Champions League 2018/19 sponsors: Profiling the eight big backers, from Sony to Gazprom. Retrieved August 1, 2019, from https://www.ns-businesshub.com/transport/champions- league-sponsors-2018-19/
Gazprom. (n.d.). About Gazprom. Retrieved August 1, 2019, from https://www.gazprom.com/about/
Heineken. (n.d.). Our global presence. Retrieved August 1, 2019, from https://www.theheinekencompany.com/About-Us/Our-Global-Presence
Krys. (n.d.). Trouver un magasin. Retrieved July 26, 2019, from https://www.krys.com/krys_shopfinder/
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Lacoste. (n.d.). About Lacoste. Retrieved July 26, 2019, from https://www.lacoste.com/be/nl/corporate- group.html
LCL. (n.d.). Trouver une agence LCL. Retrieved July 25, 2019, from https://agence.lcl.fr/
Mastercard. (n.d.). Global Locations. Retrieved August 1, 2019, from https://www.mastercard.us/en- us/about-mastercard/who-we-are/global-locations.html
Nissan. (n.d.). Our company. Retrieved March 12, 2019, from https://www.nissan- global.com/EN/COMPANY/PROFILE/SALESNETWORK/
Oppo. (n.d.). About Oppo. Retrieved July 26, 2019, from https://www.oppo.com/en/about-us/
PepsiCo. (n.d.). About the company. Retrieved August 1, 2019, from https://www.pepsico.com/about/about-the-company
Peugeot. (n.d.). In brief. Retrieved July 26, 2019, from http://www.peugeot.com/en/brand/peugeot-in- brief/peugeot-in-brief#listen
Pirelli. (n.d.). Pirelli in the world. Retrieved August 1, 2019, from https://corporate.pirelli.com/corporate/en-ww/aboutus/worldwide-presence
Rolex. (n.d.). World of Rolex. Retrieved July 26, 2019, from https://www.rolex.com/world-of-rolex.html
Rolland Garros. (n.d.). Main Partner. Retrieved July 26, 2019, from https://www.rolandgarros.com/en- us/partners
Santander. (n.d.). Financial results. Retrieved August 1, 2019, from https://www.santander.com/csgs/Satellite/CFWCSancomQP01/es_ES/Corporativo.html?leng=en_GB
Skoda. (n.d.). Skoda Auto company. Retrieved July 26, 2019, from https://www.skoda- auto.com/company/about
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Skoda. (n.d.). Websites. Retrieved July 26, 2019, from https://www.skoda- auto.com/company/importers#anchor-M27-6b5534e8
Sony Entertainment. (n.d.). Corporate data. Retrieved August 1, 2019, from https://www.sony.net/SonyInfo/CorporateInfo/data/
Attachment 5.5. Bibliography for football sponsorship data (Table 5)
AIA. (n.d.). Why AIA?. Retrieved August 8, 2019, from http://www.aia.com/en/about-aia.html
ALL. (n.d.). Accor in the world. Retrieved August 8, 2019, from https://group.accor.com/en/group/who- we-are/accor-worldwide?Version=1?
Arsenal FC. (n.d.). Our Partners. Retrieved August 8, 2019, from https://www.arsenal.com/the- club/sponsors-partners
Bayern Munchen. (n.d.). Bayern Munich. Retrieved August 8, 2019, from https://fcbayern.com/en
Chelsea FC. (n.d.). Club partners. Retrieved August 8, 2019, from https://www.chelseafc.com/en/about- chelsea/about-the-club/club-partners
Chevrolet. (n.d.). Chevrolet Worldwide. Retrieved August 8, 2019, from https://www.chevrolet.com/worldwide-websites
Deutsche Telekom (T-Mobile). (n.d.). Worldwide. Retrieved June 22, 2019, from https://www.telekom.com/en/company/worldwide
Emirates. (n.d.). Choose your country or territory. Retrieved July 26, 2019, from https://www.emirates.com/be/dutch/?page=/be/english/
Etihad. (n.d.). About us. Retrieved August 8, 2019, from https://www.etihad.com/en-be/about-us/
FC Barcelona. (n.d.). Main partners. Retrieved August 8, 2019, from https://www.fcbarcelona.com/en/club/partners
Liverpool FC. (n.d.) Home. Retrieved August 8, 2019, from https://www.liverpoolfc.com/
Manchester City. (n.d.). Our partners. Retrieved August 8, 2019, from https://www.mancity.com
Manchester United. (n.d.). Global partners. Retrieved August 8, 2019, from https://www.manutd.com/en/partners/global
PSG. (n.d.). Top sponsors. Retrieved August 8, 2019, from https://en.psg.fr/the-club/sponsors
Rakuten. (n.d.). Our services. Retrieved August 8, 2019, from https://global.rakuten.com/corp/about/
Real Madrid. (n.d.). Sponsors. Retrieved August 8, 2019, from https://www.realmadrid.com/en/about- real-madrid/the-club/sponsors
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Standard chartered. (n.d.). Our locations. Retrieved August 8, 2019, from https://www.sc.com/en/our- locations/#globalhq
Tottenham Hotspurs. (n.d.). Our partners. Retrieved August 8, 2019, from https://www.tottenhamhotspur.com/the-club/partners/our-partners/
Yokohama. (n.d.). Worldwide subsidiaries and affiliates. Retrieved August 8, 2019, from https://www.y- yokohama.com/global/profile/overseas/
37