Competing WT Stage Races; Collaboration on the Horizon Between ASO and RCS? Netflix Sports; Lessons From Women's Tennis; Conflicts of Interest in Sport; Lefevere Mouths Off Yet Again ...
· Dueling WorldTour Stage Races
· Hints of Collaboration Between ASO and RCS?
· Netflix Sports Programming Strategy
· Women’s Tennis: A Model for Cycling?
· Cycling Has No “Corner” on Poor Sports Governance
· Lefevere Sticks Foot in Mouth Again
The pro cycling world got a sneak peek of the looming battle they will likely see at the 2023 Tour de France, when Tadej Pogačar and Jonas Vingegaard went head-to-head at Paris Nice – running from the dreary north of France to the sunny Mediterranean coast. However, while many fans expected a thrilling battle – especially with the innovative stage 3 team time trial giving Vingegaard an apparent opportunity to gain time – they instead saw absolute domination from Pogačar. Despite a stiff challenge from a strong David Gaudu and his Groupama-FDJ team, Pogačar cruised to 53-second overall victory – the largest margin of victory at Paris-Nice since 2013. While it is a long season, and many things will change between now and July, it appears that at least now Pogačar has entered 2023 at or near his best level ever – and intent on storming through the season to reclaim his position at the undisputed star of the sport.
Meanwhile, across the Alps in Italy, fellow Slovene Primož Roglič took victory at Tirreno-Adriatico, reminding everyone that – even with Remco Evenepoel, Vingegaard, and Pogačar dominating the discussion in the grand tour contender conversation – he is still a force to be dealt with. He won three consecutive stages en route to a generally unchallenged overall victory, ahead of João Almeida and Tao Geoghegan Hart. Other major notes from the race were that Wout van Aert appeared to build form through the week-long race after struggling with an illness during pre-season training camp. Meanwhile, Tom Pidcock (coming off an impressive Strade Bianche victory) suffered and eventually crashed out, and Mathieu van der Poel continued to appear out of sorts at the start of his road season.
The elephant in the room for women’s pro cycling this week was the collapse of Silicon Valley Bank (SVB), which, along with TIBCO, had been sponsoring a successful top road team for 17 seasons. While the team moved up in profile and exposure by partnering with Education First (EF) in 2022 and adding rising stars like Zoe Backstedt in 2023, the loss of a named, presenting-level sponsor is bound to be a significant hit financially and strategically for the team’s operations. In the short-term, as the government steps in to wind down operations of the bank over the next 45 days, the sponsorship arrangement will likely be dissolved along with all of the other business agreements, partnerships, and investment management portfolios the former startup-centric institution managed. While it is always disheartening to see a sponsor leave our sport, the strength of the current squad should have it well-positioned to secure a replacement backer – if not this season, then almost certainly by the start of 2024.
The Huddle Up newsletter provided a deeper, number-crunching analysis of Netflix’s sports programming strategy – one that has been wildly successful without the company investing a dime in the escalating live sports rights market. As more and more viewers cut the cable and move to streaming services (an estimated 35 million households in the last few years) many observers believe that the only things holding cable providers together are sports and live news. (The report includes a remarkable graph showing that 94 out of the 100 most viewed programs in 2022 were football games.) Cable providers, eager to sustain the value of their bundled packages, are consistently bidding up the value of live sports rights. However, as streaming service providers grow stronger financially, they are also challenging and outbidding traditional broadcasters for these rights – for example, Amazon just paid $10 billion for Thursday night NFL football rights.
But Netflix, the world’s most popular streaming service, has chosen a different path – original sports content, rather than live rights. It currently offers 55 different original sports programs – from the wildly popular Drive to Survive F1 series and its accompanying knockoffs that we examined last week, to historical perspectives like The Last Dance all the way to individual documentaries like Icarus – which investigated doping in pro cycling and the Olympics. These programs boost profits for Netflix as well as the sport they are covering, and potentially even the market value of those sports media rights purchased by their direct streaming competitors. But for now, the strategy is working for Netflix, and the company has a strong and very profitable place in the sports industry. “We’ve not seen a profit path from renting big-league sports,” said Netflix CEO Ted Sarandos. “We’re not anti-sports … we’re just pro-profit. I’m very confident we can get twice as big as we are without (live sports programming) ….”
While cycling’s early-season stage races served up some exciting racing and gave viewers a compelling mix of breakaways, sprints and mountain finishes, two major WorldTour stage races were competing against each other for broadcast space for an entire week. This recurring calendar overlap highlights how cycling’s splintered landscape creates a confusing schedule. Curiously, banking giant Crédit Agricole appeared as a sponsor of the RCS-owned Tirreno-Adriatico race this year; the company also has a longstanding relationship with direct rival organizer ASO (via its subsidiary LCL, which appears on the yellow jersey of the Tour de France leader). One wonders if this could potentially indicate new collaboration between the sport’s two biggest organizers, ASO and RCS, as RCS has been widely rumored to have financial issues. While a combination would give ASO even more monopoly power than it already has, it could possibly end up benefiting the sport, as a consolidation would likely incentivize the consolidation of the calendar and television rights. Indeed, this was precisely the type of consolidation that we proposed in a formal business plan eight years ago.
Pro cycling receives a fair bit of criticism from all corners – about the way in which many of its events are organized and managed and how the sport is governed. However, a recent story about NBA commissioner Adam Silver being on the shortlist to succeed current Disney CEO Bob Iger – at the same time that he is negotiating with Disney's ESPN unit for NBA media rights – represents a striking conflict of interest. In effect, Silver could be effectively incentivized to accept a lower value for the NBA’s TV rights such that Disney would have a smaller financial burden if and when he took over. This anecdote illustrates the fact that conflicts of interest and poor oversight and decision-making by stakeholders aren’t unique to professional cycling. Indeed, they seem to be fairly common across top-tier sports, even as the value of franchises and sporting rights increase exponentially, and as the inflow of institutional money accelerates.
Speaking of institutional money, private equity investment firm CVC Capital has built a broad sports portfolio and recently closed a $150 million partnership with the Women’s Tennis Association (WTA). While not as big as some of its other stakes, including billion-dollar holdings in European football media rights, CVC’s WTA play may be transformative for one of the world’s most popular women’s sports and demonstrate a possible investment growth pathway for pro cycling. The cash injection is being used to spin off a new WTA division that will be solely focused on monetizing a multitude of broadcasting and marketing value streams, including digital properties and esports/gaming opportunities, under the tentatively named WTA Ventures label. The goal is to accelerate the reach, marketing strategies and activation potential, and overall media rights valuation for the already profitable ‒ and wildly popular – women’s sport.
The ramp-up speed, implementation strategy, and market position of the WTA Ventures should be closely followed by the entire niche sporting community. A well-capitalized, well-connected separate holding company to negotiate and cut deals for road cycling could open broad revenue avenues, particularly for the media rights value streams it sorely lacks. Currently, the commercial alignments in our sport are wildly fractured. Some teams are aggregated in Velon – which has some of the characteristics of the new WTA Ventures, though without comparable capitalization or global portfolio influence. Others choose to be reliant on the AIGCP teams association or UCI WorldTour participation model for collective exposure – but all are limited by a lack of strategic coordination. A CVC Capital-like transformation in cycling may not be feasible until the teams, events, and athlete power base come to a similar unification point. But should that structure materialize – whether driven by internal forces such as athlete unionization (which is how the WTA formed) or an external takeover – the outcomes could be similarly transformative in cycling. One has to ask if this is a path women’s pro cycling could take on its own, given its marketing similarities to tennis and its nascent potential, to reinvent and invigorate the sport.
At the other end of the spectrum, Patrick Lefevere once again spoke out – concurrent with international women’s day – to insult all women, everywhere and all at once. The insufferably tone-deaf Belgian team manager took to the airwaves again last week and suggested that women bring sexual violence upon themselves because they drink too much. Before he could elaborate further on this latest misogynist rant, he was cut off by the television interviewer, warning him that he was going down a dangerous path. Surprisingly, this event received no coverage in the international press and hardly any even in the Belgian cycling press. Perhaps this is because Belgian national TV just started a six-part TV series on Lefevere (in the build-up to the classics) entitled Patrick Lefevere: Godfather of the Course on Lefevere. It was rumored that journalists were advised not to endanger the ratings of that program. But setting aside the hearsay, it once again demonstrates the impunity Lefevere seems to enjoy from his pulpit in pro cycling, able to say anything he wants with few consequences – even though he holds influence over the cycling careers of many young women.
For this week’s closing and uplifting story, we refer you to the story of the Nebraska cheerleader who lost the rest of her team shortly before the state championships, but who nevertheless chose to bravely compete on her own. While not recognized as an official sport, “Cheer” is one of the most popular and competitive niche activities among American youth; team competitions can be highly athletic and artistic battles. Katrina Kohel’s infectious enthusiasm and performance scored a top ten finish and set a school record.