Repercussions from Merger Mania; Who is the Best Team? Lack of TV Coverage Hinders Women's Racing; Wiggle/CRC in Financial Trouble; More on Sustainability; Sport's Most Marketable Athletes
Key Takeaways:
· Longer-term “Merger Mania” Repercussions
· UAE Claims to be the Best Team?
· Financial Woes at Wiggle/CRC
· Lack of TV Coverage Holds Back Women’s Cycling
· Recycling Cycling’s Sustainability
· No Cyclists Among “Most Marketable Athletes”
Now that the dust has largely settled from the merger mania of a few weeks ago, it’s worth a look at the longer-term implications. As we reported last week, things seem to be fine with the Jumbo-Visma team, and although new sponsor names have not yet been confirmed, the team seems financially secure for the future. The team is continuing to sign new young talent, and a newly emboldened Sepp Kuss opined this week that maybe it’s better for everyone that Roglič has moved on. However, the mood is notably less upbeat at Soudal-Quickstep, where team members are still suffering from merger fallout. Team chairman Bessel Kok hinted at future financial uncertainties, pointing out that team owners Zdenek Bakala and Patrick Lefevere “won’t be around forever.” Despite rumors repeated (or shouted) by some outlets that Jumbo-Visma was trying to steal Soudal as its new sponsor, the drivers behind the planned merger aren’t really known, and it may have worked the other way around. If Bakala originally approached Jumbo-Visma in an attempt to shed his involvement in the sport, he is likely to eventually try some other avenue to exit. Hence, team may have to continue under a shadow of financial uncertainty – and it is worth asking how this might affect Evenepoel’s future. He will certainly want to be on a team that can support a strong phalanx of GC domestiques if he is to ever legitimately challenge for the maillot jaune.
The Ineos-Grenadiers team, which has struggled to match its dominant performances from the mid-2010s in recent years, has yet to announce a full roster for the quickly approaching 2024 season. And the team seems happy to see another transfer window pass by without signing one of the sport’s major GC stars – after Primož Roglič left Jumbo-Visma for a lucrative contract at Bora-Hansgrohe. (Geraint Thomas did sign a two-year contract today.) But with team owner Jim Ratcliffe signaling intentions to buy 25% of Manchester United and take full control of the operations of the historic club, the situation has escalated. The £1.3 billion price tag for a one-quarter interest in the club likely won’t dent Ratcliffe’s spending power in the near future. However, over the longer term, the combination of the required investment to keep the club competitive vis-a-vis the sovereign wealth-owned super-teams – and potentially purchasing the other 75% stake – could conceivably redirect financial resources away from the cycling team. In addition, Ratcliffe and his Ineos sports management team will have to refocus their oversight priorities on such an expensive crown jewel, which might trigger a reevaluation of their presence in cycling altogether.
The final UCI rankings for the recently completed 2023 season were recently released, with UAE Team Emirates narrowly taking the top spot over Jumbo-Visma, thanks to Tadej Pogačar’s absurdly strong tally of 7,000+ UCI points. Indeed, Pogačar’s point total was more than the entire Astana team could generate. Team manager Mauro Gianetti celebrated the achievement by announcing that the rankings confirm UAE is the sport’s best team. While point totals are certainly one way of ranking performance, (see The Outer Line’s deep dive on this question later in the week) it seems a tenuous claim to make when their rivals, Jumbo-Visma, have just wrapped up one of the best seasons by any team in the history of the sport. Gianetti’s squad may have been chasing the points title to impress the team’s funding patrons at the Emirates – who perhaps don’t follow the nuances of the sport and may take the points standings at face value. Whatever the reason, it is refreshing to have a top team finally overtly care about the UCI point standings, and it adds significant firepower and competitiveness to late-season races as a result. For example, UAE's Marc Hirschi racked up a staggering 1,525 points in just September and October – just a few points more than the final 1,473 point differential with Jumbo – due to his team's strategy of stacking the odds with their top riders at second and third-tier late-season Italian races. As we have long suggested, and analogous to the focus in Formula 1 racing, the UCI and the sport’s stakeholders should be exploring ways to continue to put more focus on this points competition in the future, and with incentives to encourage a season-long battle.
The women’s professional road calendar also wrapped last week, and retrospectives of the 2023 business, competitive, and organizational aspects of the women’s WT season suggest some complexities and nuances. One recent article points out the impact the WWT, and in particular the re-launch of the Tour de France Femmes in 2020, has had on team size. This measure is indicative of overall team investment, as it requires more cash to cover the costs, but similarly highlights the inequity that develops when highly-capitalized teams hoard the best talent. This certainly reflects the current peloton, where the top six or so teams dominate the sport and essentially monopolize major race wins and podiums. Another recent analysis takes this view further, suggesting that this financial imbalance is an inhibitor of fan interest and the sport’s growth. Higher salaries and prize money can attract more world class talent into the sport, “but if the increased talent is signed by only a few teams, then it possibly could produce more competitive imbalance… Fans' interest is greater when there is greater parity in the sport.”
However, these conclusions tend to ignore the single most critical factor holding the sport back: broadcast coverage that connects the sport to fans worldwide. As discussed in our colleague Daam Van Reeth’s updated edition of The Economics of Pro Cycling, the core deficiency is that women’s racing is not being placed front and center in many TV markets, and it often lacks production focus in comparison to men’s races. And more critically, many WWT and pro races still aren’t televised at all, despite UCI mandates to the contrary. The recent example of the UCI Women’s Gravel World Championship, which provided zero live coverage for fans, was just one black eye. Critically, the inconsistent coverage is discouraging current and prospective sponsors who are the funding source for adding those new riders, creating new races, and shoring up stability. While the men’s sport has many similar structural issues, broadcast guarantees for women’s cycling will have the greatest single impact in attracting fans and sponsors – and most importantly, demonstrate to sponsors the potential value of the races and the sport’s highly marketable ambassadors.
SportsPro Media released its annual ranking of the 50 most marketable athletes in the world, and sadly (if not surprisingly) there were not even any professional cyclists on the full list of 125 athletes. Indeed, there were no cyclists in the top 125 of the rankings. (Athletes are ranked based upon the following criteria: Value for money; strength in their home market; charisma, willingness to be marketed; and crossover appeal.) This is discouraging, as just seven years ago, cycling actually boasted three names in the top 50 – Peter Sagan, Nairo Quintana and Lizzie Armitstead (now Deignan). At the time, SPM cited the example of Sagan’s wedding as an example of how much he was able to gain media attention off the bike. Quintana was cited for his potential to win the Tour and his wide visibility in Colombia. Armitstead represented the potential growth in women’s sports, particularly cycling. What has changed? Perhaps cycling today lacks the kind of colorful character that Sagan was in his prime, but more critically, it seems that other sports have exploded in terms of popularity and audience in the last decade – in no small part due to huge broadcast distribution deals with verifiable fan reach – while cycling has stood still.
Shockwaves continue to reverberate around the bicycle industry as U.K.-based Wiggle CRC, the world’s largest online cycling products retailer, announced it would enter self-imposed financial administration (analogous to Chapter 11 bankruptcy reorganization in this country). The company’s parent, Signa Sports United (SSU), lost a financing commitment pulled by its largest shareholder, which might not have been a devastating setback except for the overall softening of consumer demand in the industry. SSU has already moved to de-list from the NY Stock Exchange and informed suppliers of the potential disruptions. There are two key takeaways to consider here. First, this process will impact a number of other related outdoor brands including Chain Reaction Cycles, Probikeshop, Outfitter, Vitus bikes and TennisPro. It’s conceivable that some of these brands might be sold off to prop up the larger brand names like Wiggle. More importantly, this implosion underscores the industry-wide market downturn and inventory turmoil which threatens to cause further carnage going into cycling’s northern hemisphere “off season.” This is the second big economic bullet to hit the UK market in particular, as we reported on the Moore Large wholesaler bankruptcy earlier this year. Fewer retail outlets may further depress the market for newly arriving stock from suppliers like Specialized, TREK, and Giant. It will be instructive for the entire cycling retail ecosystem to watch the drama unfold.
The topic of sustainability has resurfaced in cycling’s wider media on two fronts recently. UCI President David Lappartient shared his opinions on sustainability in pro cycling, while the industry-focused Shift Cycling Culture think tank circulated an email solicitation encouraging patron backers and participant companies to support its broad agenda of climate change and related sustainability programs. All of these initiatives are well-intentioned, but as we pointed out in our Outer Line special issue on sustainability, these efforts are largely irrelevant in the bigger picture. The entire sporting industry, including all global events, represents only about 0.3% of the world’s total annual carbon emissions. Indeed, most other sports generate a much larger carbon footprint largely due to far more intensive air travel schedules. Yet, many cycling observers appear to think that by eliminating a few grand tour transfers, cycling can solve the world’s environmental challenges. Lappartient’s - and cycling’s - biggest opportunity would be to utilize the UCI’s platform to build stronger influence with governmental authorities, to help initiate smarter policy changes in the first place. Actually walking that walk has helped Shift build on its sustainability and collective-action climate change initiatives that could yield brighter and greener future impacts.