Like a can of peaches [cringe], the Tour de Georgia is on the shelf. It’s been the best in North America from a pure racing standpoint, although they have had financial trouble in the past. The dismal economy obviously isn’t helping their cause, but I don’t think that’s really the problem. It’s that bike races always cost a lot to put on, but the value for sponsors depends on where the event is held. Unfortunately, the Tour de Georgia is probably too big and expensive to stage in small towns like Dahlonega, Georgia (Pop. 3,638).

Without a significant TV or web audience, the best thing a bike race like the Tour de Georgia can monetize is feet on the ground. A lot of people would say media coverage too, but I think the value there is more about marketing the event itself than delivering direct benefits to the sponsors. In any case, small towns in Georgia can’t send a lot of foot traffic through the expo and have little value for corporate hospitality. Atlanta is a good location for the final stage, but apparently not lucrative enough to offset spending $150,000 a night on hotels in places like Tybee Island.

Sure, the Tour of California costs a lot more to organize and sponsor. But look at the large and bike-loving Nielsen DMA’s it will run through in 2009: #2 (LA), #6 (Bay Area, twice), #20 (Sacramento), #28 (San Diego). This year’s TdG, meanwhile had one day in #8 (Atlanta) but the next biggest market was #96 (Savannah).

I think the lesson is that you need to tailor your bike race to the to revenue potential of your local market. Or, if you have your heart set on running a UCI 2.HC stage race, you need to find a really big market.

(image: Ben Jacques-Maynes on Brasstown Bald, 2006 Tour de Georgia)

Perhaps my favorite sportswriter, Salon’s King Kaufman wrote a couple interesting pieces this week about what it means to be a fan. His point, in a nutshell, was that the idea of “hardcore” vs. “bandwagon” fans is misguided. Both groups are just consumers of sports entertainment, where a winning team is a good product. Some consumers buy tickets and hats and stuff whether the product is good or bad, but most only buy when the product is good.

King was talking about American team sports, primarily baseball, but it’s an interesting thing to think about relative to cycling. Of course, cycling fans realize that teams are crucial to how the sport functions economically and tactically. But the emotional experience for fans is about individual riders or national identity, but rarely about the concept of “team”.

Stefano Garzelli fan club by Mike Knell

Of the spectators at major races like the Tour who are actively rooting for anything specific, a lot cluster in official and unofficial fan clubs of certain riders. This is more common among people from the traditional cycling nations who have a lot of riders to choose from, and a lot choose to support a rider from their home region whom they follow from team to team. On the other hand, plenty of fans, especially from non-traditional cycling nations, support their country in general; you’re more likely to see Norwegians waving their flag than waving a poster of Thor Hushovd.

So where to do teams fit in? Some have loyal fan bases, but I think that’s most often about nationalism as well. Euskaltel-Euskadi and Rabobank are perhaps the clearest examples. CSC and Garmin-Chipotle are two other cases, although much of the loyalty they engender comes from their anti-doping programs and progressive images. Still, they have strong national identifiers. Even though CSC started only one Dane at the Tour, Bjarne Riis is a major hero in Denmark and his incoming co-title sponsors (Saxo Bank and IT FACTORY) are both Danish. Garmin and Chipotle are both American companies, and the team’s identity as a whole is clearly an American one.

Columbia has the same new-school persona and anti-doping ethos, but they’re a formerly German team run by an American and that started riders from 8 countries at the Tour. Are they too multi-national? Are they not mono-national enough? They’ve been through enough rebrandings lately that it’s probably to early too tell, but wresting the mantle of “America’s team” from Garmin won’t be easy.

If you accept that having a loyal fan base is having a good thing for a team, it seems like playing on national pride is the way to go… as long as you’re good enough to embody that pride.

I got an email from CSC-Saxo Bank’s list a couple days ago that this was their fourth consecutive year as the #1 team in the world. Extremely telling is that they’re referring to Cycling Quotient, a comprehensive but entirely unofficial ranking site run by a few Belgian fans. Now that we’ve got the UCI’s ProTour and the Historical Tour run by the Grand Tour organizers, Cycling Quotient will be the best system out there for the foreseeable future. Ah, politics.

At least for the foreseeable future, it’s over. Not surprisingly, the Grand Tours got what they wanted. Although there will still be something called the ProTour, there will also be something called the Historical Calendar including all events organized by ASO, RCS, and Unipublic. These organizers will keep full control over team selections and presumably won’t have their TV rights bundled in with the ProTour. I said a long time ago that the best the UCI could hope to get from ASO would be to handle drug testing, and that’s pretty much what they got. They also get to say that they “sanction” the HC races, which in practical terms doesn’t mean anything.

Furthermore, allowing the UCI to hang around means that the headaches of drug testing, global marketing, and athlete development for HC races are subsidized by the rest of the cycling world. Then again, the rest of the cycling world owes much of its existence to the Tour de France.

The UCI will claim that the ProTour still gives them the opportunity to expand globally, with the Tour Down Under, the Tour of Sochi in Russia, and the Tour of China that will eventually  get off the ground. That’s not insignificant, but the US market is has the most potential outside of western Europe and ASO remains the gatekeeper here because of their partnership with AEG and the Tour of California.

Pat McQuaid has said that he expects the teams to re-up on their ProTour licenses now that a settlement has been reached, but I’m not sure why they would. The license offers no guarantee of starting the Grand Tours or any cut of TV revenue, but still requires teams to send riders and staff all over the world to markets where their sponsors might not have any business interests. I don’t see the incentive.

Velonews.com has the projected calendars.

I had a chance to meet Hunter Muraira, who manages the skateboard division of Nike, while I was working with Sneakerplay and he told me that “team sports are dead.” That’s not true yet, but there’s a kernel of truth in it for sure.

Brandweek reported last week that the International Fight League “will be acquired by a rival company or shut down.” The IFL, which two years ago had a $500 million IPO (seriously!?!?) is apparently now worth a million, tops. Their gimmick was basically to be the UFC but with teams instead of individuals fighters. Since the only realistic buyer, the UFC, doesn’t appear particularly interested, shutting down looks likely. 

As an aside, the Ultimate Fighting Championship is the dominant promoter but the sport isn’t called “ultimate fighting.” It’s mixed martial arts. I prefer boxing.

Anyways, I imagine the the IFL’s founder thought to themselves, “City-based teams work for baseball, football (US), basketball, hockey, football (rest of the world), so that format is a sure thing for MMA!” Apparently not. My guess is that demand for city-based teams is pretty much tapped out. New ones always seem forced and cheesy, like the IFL’s San Jose Razorclaws or Los Angeles Anacondas. The appeal of a team like the Celtics has so much to do with their history in Boston, and the appeal of expansion teams like the Bobcats has a lot to do with the recognition of Charlotte as a major city on the same level as Boston. Arena Football and Major League Soccer are doing ok with city teams, but that’s probably about meeting unmet demand for those sports rather than local pride. Meanwhile, the UFC’s individual format gives MMA fans all they could want - a (team-based…) reality show plus taped and live fights on Spike, major pay-per-view cards, and big events in major markets.

I think we’ll see more and more of a trend towards individual sports. The UFC is a great example,
but action sports is even more emblematic.At the very least, there’s probably no room for more team sports. Plus, if you look at how the NBA is marketed internationally, it’s based on individual star power.

What does this mean for cycling? I think it’s probably good. Both the business structure and tactics of cycling are based on teams, but fans seem to prefer rooting for people instead of corporations. And at the end of the race, it’s one guy on the podium by himself…

…with his kids. Cute!

Just sent in my column for the September issue of ROAD. The piece talks about the recent sponsorship deals with Garmin, Columbia, and Saxo Bank for the teams formerly known as Slipstream, High Road, and CSC, respectively. Here’s an excerpt:

On the surface, the trio of deals seems like an unquestionably auspicious sign for cycling. But ESPN’s Bonnie D. Ford, a veteran chronicler of the sport and of Slipstream in particular, speculated that the team’s deal with GPS device maker Garmin and High Road’s deal with Columbia sportswear aren’t sufficient to run a Tour de France team. A statement from High Road owner Bob Stapleton seemed to confirm her hypothesis.

If it’s true, it could put smaller teams in a difficult position by setting a precedent that the title sponsorship of a competitive Tour de France team can be had for less than what it currently costs to run one. For a program without the backing of a billionaire like Stapleton or Slipstream’s Doug Ellis, the only choice would be to cut costs, with reduced salaries for riders being a likely result.

The issue hits newsstands on August 14. My past columns are archived here.

There’s been a flurry of news in the UK (1, 2, 3) that Dave Brailsford, architect of British Cycling’s dominant track program, is planning a top-flight road team for next year. Not that anyone had to do much digging to find that out. Brailsford has embarked on what amounts to a press tour, outlining his plans in a BBC interview for “establishing a team brand which will be around for the long term, which you can emotionally tie into.” Apparently, he has a business plan ready to go that will derive revenue from sources other than selling naming rights to a title sponsor.

British Cycling seems to be on board but I’m not sure about Brailsford using his position as a publicly funded employee to launch his own private business. Furthermore, his concept sounds a lot like the original model for United Pro Cycling, which didn’t exactly go as planned. However, that model makes more sense for a “Team Britain” with the best British riders racing in the Tour de France than for a “Team America” with second-tier US riders racing on the domestic circuit.

As for Brailsford’s PR campaign, I think it’s a great move. At best, he catches the eye of a sponsor that otherwise wouldn’t have been in the picture. At worst, the embarassment of the team not panning out would be far outweighed by his track program’s near-certain success in Beijing.

Plenty of reports this morning that Slipstream has signed Garmin as its new title sponsor, but Velonews explains the deal in the most detail. I might write something later about this, or maybe just wait until the next ROAD column to go over all three recent deals. Anyways, congrats to Slipstream.

Good news came on Monday that High Road Sports, the former T-Mobile team, has signed Columbia Sportswear as title sponsor for its men’s and women’s teams through 2010.

Outside of the implications for cycling, what’s interesting to me about this deal is the shift in Columbia’s brand. Earlier this year, they dropped the agency that developed their long-running ad campaign featuring their everyman president, Tim Boyle, being tormented by his mother under harsh conditions to test their jackets. Now, with a major global sponsorship like High Road and a slew of other athletes and events, Columbia appears to be deemphasizing a playful, approachable tone in favor of high-end performance. The last year has been pretty rough for them, which might explain the new, more North Face-y look.

In any event, this is great news for High Road and it’s really encouraging that they and Riis Cycling were able to sign major deals this spring. Reports of cycling’s demise may once again have been exaggerated.

Just got a press release from AEG’s PR agency announcing that they’ve partnered with ASO to co-market the Tour of California and the Tour de France. Based on the release here’s my impression of the agreement:

ASO receives:

• Sponsorship packge of the Tour of California
• Assistance from AEG with sponsorship sales to US companies

AEG receives:

• Sponsorship package of the Tour de France
• Assistance from ASO with TV production
• Assistance from ASO with international broadcast rights sales

Sensibly, AEG is now aligned with the most important organization in cycling while ASO gets greater access to a potentially lucrative US market. The UCI, meanwhile, gets, well…

Full text of the press release after the jump.

(more…)

A lot of major teams are looking for new title sponsors for next season and Riis Cycling (aka Team CSC) is the first to provide some good news: Saxo Bank! Hopefully, the fact that Riis was able to replace CSC within 3 months is a good portend for High Road, Gerolsteiner, etc.

Saxo will come on board immediately as a co-title sponsor with CSC starting with the Tour de France, then become sole title sponsor for 2009-2010 or 2009-2011 (the team’s press release is unclear). According to Wikipedia, Saxo Bank’s revenue comes mostly from White Label Services, where Saxo quietly provides back-end infrastructure that Citibank and others re-brand and use to service their customers. Obviously, now that they’re sponsoring the world’s #1 cycling team, they’re trying to reach out and establish their own brand. I’m a big fan of Bjarne’s program and this seems like a great fit.

The bank also reportedly (i.e. it says it on Wikipedia without a citation) distributed 10,000 copies of Atlas Shrugged as a marketing initiative, which is a bit odd. The book’s Objectivist philosophy teaches that the highest purpose is to pursue one’s own self-interest, which isn’t exactly in line with Bjarne’s philosophy of being “the team that takes its staring [sic] position in the team rather than the individual.” We’ll see if Team Saxo Bank can provide as eloquent a rebuttal to Objectivism as did one of my favorite video games, Bioshock.

Ayn Rand aside, this is great news for all involved and for pro cycling generally.

I highly recommend that you download this PDF of Organizational Forms in Professional Cycling – Efficiency Issues of the UCI Pro Tour, a research paper on the economics of the sport by Luca Rebeggiani of the University of Hannover and Davide Tondani of the University of Parma.

ABSTRACT: This paper gives a first economic approach to pro cycling and analyses the changes induced by the newly introduced UCI Pro Tour on the racing teams’ behaviour. We develop an oligopolistic model starting from the well known Cournot framework to analyse if the actual setting of the UCI Pro Tour leads to a partially unmeant behaviour of the racing teams. In particular, we show that the blamed regional concentration of their race participation depends on a lack of incentives stemming from the licence assignation procedure. Our theoreticalresults are supported by empirical data concerning the performance of the racing teams in 2005 and 2006. As a recommendation for future improvements, we derive from the model the need for a relegation system for racing teams

By “relegation system”, they’re talking about something like in European football leagues, where the worst teams in the first division are replaced by the best teams from the second division at the end of the season. They also use some pretty sweet equations:

Anyways, just read the paper!