Professional Cycling Teams

I wrote a post yesterday about the small prizes that were on offer compared to other sports and @pele23 mentioned that most of the money comes from various sponsors. I decided to do a bit of reading and it is quite a delicate operation.

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Cycling is different to most other sports as where do the teams make money? The races are on public roads with free access by the public. There are no ticket sales as in stadiums so there is no money made that way. The Tour de France covers France with an estimated spectator number in excess of 12 million over the 3 weeks. The only revenue that could be handed over to the teams is the televison money which I feel should happen at some point, but doubt it.

The professional cycling eco system is very fragile and could collapse at some point and rethinking this needs to happen. Sponsors are in it for the exposure and having a huge audience around the world is very appealing. having your brand on television for 5 hours a day for a solid 3 weeks

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The more funding a team has the better they should do as their time is spent on working with the team and not worrying where the next paycheck is coming from. Not only that but it should mean better riders and better equipment. Team Sky was a good example as they have now been sold to Ineos which is a plastic company and have agreed to keep existing budgets and contracts in place.

A cyclist in a team will normally have a one or two year contract in place as the team doesn't know what might happen in the future. Professional bicycle teams come and go and it is all down to the sponsors keeping them going. Sky were reported to be sponsored in the region of $30 million per year which is way above the other teams hence the caliber of their squad. When Bradley Wiggins won Sky's team at the time had cyclists who would be good enough to lead other teams with Richie Porte, Chris Froome and Matt Rogers. They had all been bought it at some expense to do specific jobs to help Wiggins win.

Some teams find a rich biking enthusiast to back them with a few extra sponsors. Some receive government aid like Katusha, but then are limited to riders from that country. Teams may come and go , but the structure normally stays the same with different sponsors and team names. If the normal team without major superstars costs on average of 20 Million to run per year then the title sponsor would have to pay about 60 percent (12 million). A secondary sponsor would then make up 20 percent ((4 million) and entering races would roughly account for the remainder. The teams are paid by the various race organizers so no winnings are included in the budgets.

Lotto Jumbo is a prime example of just this and over the years have been called Belkin, Rabobank, Novell, WordPerfect and a few others. I recognize Rabobank and Belkin and honestly didn't know it was the same team under a different name. This doesn't always work so simply though and the likes of Tinkoff have disappeared altogether.

What is interesting is that the UCI which is cyclings governing body requires all teams to have a set amount deposited that is the guarantee that covers cyclists wages. A number of teams register outside of their countries in order to gain better tax exemptions. Tinkoff Sports was Danish and owned by a Russian, but it's holding company Holbird International is registered in the Virgin Islands.
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We know Sky are spending around 30 Million Euros in 2018 but Tinkoff's wage bill was escalating as they were looking for success and bought in the likes of Peter Sagan The staff compliment went from 66 to 97 in the space of one year. Oleg Tinkoff took full control of the team and started splashing out. Having a billionaire backer was one way of doing it. When Tinkoff spent nearly 23 Million Euros in 2015 ninety percent of that went on wages.

The teams don't actually make money then and are a tool for getting the exposure required by companies to a huge audience for not that much money if put into context. An advertising budget can be partially written off as an expense.