AIRmail 12-12-22: The State of Sports Sponsorship
The State of Sports Sponsorship, Mo Wilson Saga Continues to Gain Wider Media Exposure, Layoffs Continue Across the Sport, Relegation Results Finally Released, Lopez Terminated by Astana
Key Takeaways:
The State of Sports Sponsorship
Mo Wilson Saga Continues to Gain Wider Media Exposure
Layoffs Continue Across the Sport
Relegation Results Finally Released
Lopez Terminated by Astana
SportsPro Media this week summarized the state of sports sponsorship in 2022, highlighting several major points. First, as is pretty obvious by now, crypto is not the silver bullet that the industry hoped it would be – but it’s also not going away. Second, there are more sponsorable sports assets than ever, a trend which seems likely to continue as more and more sports are building streaming services and other ways of delivering their product to fans. Sports sponsorship also ran up against the culture wars in a number of places this year – for example the Shell Oil sponsorship of British Cycling. But, the study asks, are there really any potential partners or sponsors out there that won’t bring some sort of potential controversy or issue with them? “Try hard enough and you’ll be able to poke holes in just about any partnership.” Many sports rely very heavily on sponsorship to bring their products to their audiences; cycling is perhaps more dependent on sponsorship than almost any other sport. Can or should sports organizations be expected to turn down large sums of money solely on perceived moral grounds?
Strava announced its "Year in Sport" data report with several interesting findings and conclusions, as the sporting world begins to emerge from the pandemic era. "Global trends in this year's data show tremendous energy for activities we can do together. The feelings of joy and connection we get by being active together can be amplified and inspire others when we share all the aspects of our active lives with our community," said Michael Horvath, CEO of Strava. The share of runners completing a marathon almost doubled compared to 2021 – suggesting that pandemic-era runners continue to want to participate after almost three years of social distancing. Hiking's popularity has tripled on Strava over the last 3 years; the share of cyclists taking at least occasional e-bike rides increased 26% this year; e-bike rides are 30% more likely to be commutes than non-ebikes. Finally, international travel seems to be nearly back to pre-pandemic levels, with the share of athletes uploading activities outside their home country doubled over 2021.
The sordid and sad tale of gravel racer Moriah Wilson’s murder continues to gain wider visibility. NBC’s Dateline true crime program recently ran a rare two-hour special on the case, and it has been closely followed on other mainstream media outlets. A few weeks ago, it was chronicled as a feature article in the pages of the venerable New Yorker magazine – a detailed article which unfortunately focused primarily on Colin Strickland. The piece did little to improve the reputational standing of any of the players in or around the melodrama, or the sport of bike racing in general. The suspected killer, Caitlin Armstrong, remains in custody in Texas, with bail set at $3.5 million, and a trial now scheduled for late June 2023. Her defense counsel has suggested that evidence was gathered improperly by homicide detectives and thus should not be available for use against Armstrong in the upcoming trial. However, on November 9, the Austin judge announced that “the defense was not able to convince the court that detectives acted unconstitutionally when they brought her in for an interview following Wilson’s death,” and confirmed that the court would not suppress the evidence in question. With its compelling story lines of fallen heroes, international manhunts, jealousy and love triangles, the story will continue to command broad attention, and it seems the trial will likely be something of a media circus.
A few weeks ago, we commented on the turmoil and downsizing occurring in the cycling and other niche sports media platforms. As economic headwinds and uncertainties continue, this trend continues to intensify – in both the overall media business as well as the broader bicycle industry. With declining ad revenue and more hesitant subscribers, media platforms across the board are tightening their belts. Substantial cuts have more recently been made at mainstream media firms like CNN, the Washington Post and USA Today. As former CNN host Brian Stelter put it in an essay for The Atlantic, “Media Winter is here once more, and it is getting ugly.” It seems that a “prerequisite for working in media in the 21st century is a tolerance for turmoil and constant change; continuing consolidation and ownership change; politicians and CEOs like Elon Musk fighting about coverage; AI threatening to replace writers; and not to mention that the pay is often terrible.” And it may be tougher in smaller niche media markets like individual sports verticals. Another observer summarized it more concisely, saying, “Media is one of the worst businesses known to man.”
And it's not just in the media; layoffs have spread far beyond the editorial side in the cycling world, just two years after the historic “COVID boom.” This retrenchment was best illustrated by COVID-darling Wahoo reportedly laying off at least 15% of their staff – likely largely due to over-extending itself after incorrectly assuming pandemic consumer habits would remain even after things returned to normal. In addition, its partner turned competitor, Zwift, released a smart trainer significantly undercutting Wahoo’s indoor riding products. Strava has also reportedly laid off about 15% of its staff, as did The Pro's Closet. And Specialized just discontinued its special ambassador program. Beyond being a reflection of the current economic and financial headwinds, all of these recent developments also suggest that rather than COVID causing a boom in consumer spending, it may have just brought forward several years of spending. Hence, because of this over-optimistic forecasting, we will likely see the industry enter a prolonged lean time – the whiplash that we discussed two weeks ago.
The first edition of the UCI’s highly-touted promotion/relegation battle officially ended today when the UCI released the list of teams receiving WorldTour licenses for the next three seasons. As expected, the teams moving up to the 2023 WorldTour are Alpecin-Fenix and Arkéa-Samsic, and those being relegated down will be Israel-PremierTech and Lotto-Dstny. The only surprise in the announcement was that instead of being granted a three-year WorldTour license like the rest of the qualifying teams, Team DSM was given a one-year license with the second and third years being “conditional on the provision, during the season, of additional documents related to the financial criteria.” Interestingly, despite seemingly endless debate around the general fairness and specific criteria of the promotion/relegation system, the recent collapse of the B&B Hotels Team leaves only a single French second-division team for the 2023 season (Team TotalEngeries). This in turn suggests that Israel-PremierTech will be in a pretty good position to score a 2023 Tour de France wildcard invitation despite its relegation. Indeed, they could totally lock down an appearance at the French grand tour if they were to sign the currently-available Mark Cavendish. If these some version of these events were to actually unfold, it would render largely irrelevant all of the debate, controversy and hand-wringing over the promotion/relegation process which dominated much of the cycling media this year.
Former Lotto rider Reinardt Janse van Rensburg provided insightful commentary on the promotion/relegation announcement, strongly criticizing the policies as being destructive to smaller teams. In his view, the model created a dysfunctional, self-cannibalizing sport in which teams race against each other's interests to gain points in smaller races, while devaluing the more prestigious grand tour stages and ultimately diluting the overall racing product. He believes that there will be further team collapses as the points system reduces opportunities for teams and riders to gain exposure, especially new teams that lack points to appear in premier races from the outset. We will continue to examine the pros and cons of the relegation process as well as upward mobility challenges faced by ProTeam level squads, but we hope the negative racing which characterized the latter part of the 2022 season is not repeated in 2023. The sport needs to delight its fans and sponsors to thrive.
Astana Pro Cycling team announced today that they have terminated their contract with Miguel Angel López. A few months after suspending and then reinstating their star GC rider, due to his alleged links to Dr. Marcos Maynar Mariño, the team cited "new elements" which have recently come to light. This development – combined with Nairo Quintana’s Arkéa-Samsic team's recent termination of his contract due to his positive test for the banned painkiller tramadol – marks the second time in just the past few months that high-profile riders have been cut loose by their teams for doping infractions. This is even more notable since in both cases the riders were not actually banned by the UCI and could have technically continued competing. While the vague nature of these infractions merits further discussion, it is encouraging that teams are holding riders accountable for potentially rule-breaking behaviors even without intervention from the sport’s governing body.