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Financial Fair Play

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Re: Re:

13 Sep 2017 10:18

The Hegelian wrote:The point I make is probably a bit uncouth - it is simply that from the standpoint of a spectator, watching procycling has a touch of the Romans going off to the colloseum about it. There's nothing much just or noble about it, but it is admittedly fascinating.....in part because of its capitalistic-anarchic elements.

If I was an insider, I would strongly argue for the concerns you voice.
Just to be clear on something: my concern with cycling's economic tribulations is more with the poorly thought out solutions offered by many and the general lack of understanding surrounding the real economics of cycling. Some people are too attached to certain mythical models they've heard repeated over and over and never actually look for themselves at what is really happening. For the most part, I'm not sure I have a problem, as such, with cycling's economic structure: it's got us this far. There may be a few things around the edges that could be tidied up a bit, and you can argue about the levels that certain things are set at, but for me, most of the key things - minimum wages and revenue sharing - are accepted principles. Like you, I enjoy the way cycling offers a view of a form of capitalism unfettered by too much social conscience. I don't really like the reform nonsense JV has been spouting since 2011: he refuses to defend it when questioned on it - as usual he prefers people who'll just nod along and applaud his ideas - and, at the end of the day, all it is is (as Noam Chomsky would say) socialism for the rich, capitalism for the poor.
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Re: Re:

13 Sep 2017 10:20

myrideissteelerthanyours wrote:All the biggest companies I've seen advertising on Cycling have been targeted Google Ads playing before I open bootleg streams.
What's a big company in your book? A valuation of three, four, five billion dollars?
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13 Sep 2017 12:15

Brian Cookson:
The UCI is essentially a regulator and regulators don’t generally like to see monopolies in any industry. ASO don’t quite have a monopoly but they do have a very strong position. What I would like to see is others in these positions, whether or not they are event organisers; we have Wanda Group involved in China for instance.

As far as I am concerned we can work and develop with them to see cycling develop and become even stronger in future.
and
I think that a budget or salary cap is an interesting idea. I think they work in some sports where there is a closed league system but they are much more difficult to police when you have an open system. There will always be teams that are better funded than others.

What I want to do is spend some time thinking about this. I have been speaking to Yves Leterme - the former Belgian prime minister, who is heading up Uefa’s Financial Fair Play (FFP) unit - about whether there are lessons that we can learn from football in that respect.

After the election I will be working even closer with him discuss the possibility of this. I am open to this and I would be interested to see if a system could be made to work. Men’s professional cycling is still a long way behind sports like football in terms of the budgets of the team and the remunerations levels. So I am not entirely convinced.
and more on Wanda
This is a really exciting development and it is one the most substantial partnerships that the UCI has ever become involved in. Together we will organise the Tour of Guangxi next year. They are committed to building a satellite of our World Cycling Centre in China and they are committed to organising our so-called World Urban Cycling Championships for the next three years, which includes the Olympic discipline of freestyle BMX plus trials and eliminators.

They are committed to investing in Chinese cycling in general. We will be doing a women’s event too this year that will be in the Women’s World Tour next year. They are committed to substantial investment to all forms of cycling in China - they also have number of global subsidiaries - and we are working with them to try to get most out the investment and for our sport.
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Re:

14 Sep 2017 13:53

fmk_RoI wrote:Brian Cookson:
The UCI is essentially a regulator and regulators don’t generally like to see monopolies in any industry. ASO don’t quite have a monopoly but they do have a very strong position. What I would like to see is others in these positions, whether or not they are event organisers; we have Wanda Group involved in China for instance.

As far as I am concerned we can work and develop with them to see cycling develop and become even stronger in future.
and
I think that a budget or salary cap is an interesting idea. I think they work in some sports where there is a closed league system but they are much more difficult to police when you have an open system. There will always be teams that are better funded than others.

What I want to do is spend some time thinking about this. I have been speaking to Yves Leterme - the former Belgian prime minister, who is heading up Uefa’s Financial Fair Play (FFP) unit - about whether there are lessons that we can learn from football in that respect.

After the election I will be working even closer with him discuss the possibility of this. I am open to this and I would be interested to see if a system could be made to work. Men’s professional cycling is still a long way behind sports like football in terms of the budgets of the team and the remunerations levels. So I am not entirely convinced.
and more on Wanda
This is a really exciting development and it is one the most substantial partnerships that the UCI has ever become involved in. Together we will organise the Tour of Guangxi next year. They are committed to building a satellite of our World Cycling Centre in China and they are committed to organising our so-called World Urban Cycling Championships for the next three years, which includes the Olympic discipline of freestyle BMX plus trials and eliminators.

They are committed to investing in Chinese cycling in general. We will be doing a women’s event too this year that will be in the Women’s World Tour next year. They are committed to substantial investment to all forms of cycling in China - they also have number of global subsidiaries - and we are working with them to try to get most out the investment and for our sport.


This is golden irony. The UCI chokes the life out of cycling in order to preserve its (and its federations') monopoly power.
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27 Sep 2017 08:58

After massive budget overruns, Bergen Worlds organisers turn to crowd-funding to fill a financial black hole:
As head of the cycling federation, Hansen is mostly responsible for the party’s hangover that may result in losses of as much as NOK 70 million. He and the boards of both the cycling federation and Bergen 2017 AS have been accused of financial incompetence and lacking control over their spending since Bergen was granted the rights to host what officially was called the UCI 2017 Road World Championships.
More
The event had a budget of NOK 156 million [€17m]. BT estimated that total costs may hit around NOK 220 million [€24m].
Organisers failed to get sufficient sponsorship and Norway's currency tanked. Federation facing bankruptcy without a bailout. One specific area the currency fluctuations hit them was in paying the UCI:
When Bergen 2017 was granted the rights to host the world championships in 2017, a licensing fee of EUR 7 million from the international cycling federation (UCI) was attached. “They should have paid that earlier (when the Norwegian krone was stronger). Instead they put it off.” That means the EUR 7 million now costs nearly NOK 65 million instead of the NOK 50 million that was budgeted.
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27 Sep 2017 15:04

For those who maintain that race organisers have but two sources of income - sponsors and TV - have a look at Bergen's hospitality packages:

First half of the week: Premium package NOK 3,500 (€375) per day, Gold 1,775 (€190)
Second half of the week: Premium package NOK 6,550 (€700) per day, Gold 4,800 (€515)
Final day: Premium package NOK 7,490 (€800), Gold 5,500 (€590)
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27 Sep 2017 17:55

Back to the cap. USAC chairman and newly elected UCI Management Committee member Bob Stapleton - the ex High Road one, not the other - adds to his recent comments on the state of cycling's financial model:
“The haves and haves not have grown even further. You have a small group of wealth and teams who are dominating the sport and turnover in the mid- to lower-level teams that don’t have the money. I do think we need to level the playing field in terms of what it takes to be a competitive team. Even Alberto Contador said that budget caps and salary caps could make sense.”
On the subject of Froome's communist comment he appeared to offer the former economics student a lesson in the dismal science:
“I have to laugh at that a bit. That just presumes that money means innovation. It is absolutely the core of capitalism, that there are always better ways of doing things and always ways to make money go further. Maybe some economic lessons are in order for Chris Froome. I have significant respect for Chris Froome, but I don’t think that’s how communism works!"
Does he intend doing anything?
“I have a couple of actions. I’d like to see the stability improve for both women’s and men’s racing. I have been a passionate supporter of women’s cycling over the years and I hope to find ways to engage and develop women’s cycling. Take what has worked for the men and avoid what hasn’t worked. It looks strong right now, but it also has stability issues."
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Re:

29 Sep 2017 18:55

fmk_RoI wrote:For those who maintain that race organisers have but two sources of income - sponsors and TV - have a look at Bergen's hospitality packages:

First half of the week: Premium package NOK 3,500 (€375) per day, Gold 1,775 (€190)
Second half of the week: Premium package NOK 6,550 (€700) per day, Gold 4,800 (€515)
Final day: Premium package NOK 7,490 (€800), Gold 5,500 (€590)
They may have had expensive hospitality packages on sale, but did they fill all six 'fanzones' they had spread around the course, throughout the nine days of the event? According to CN, it's not clear:
The oil and gas industry, from where they expected to source the bulk of their sponsorship revenue, had fallen on hard times, and they had to look elsewhere and downgrade their projections. They knocked the 21 million NOK off the budget and decided not to go ahead with certain outlays, such as removing all the speed bumps from the race route.

As well as a shortfall in sponsorship revenue, it is feared the organiser failed to sell sufficient hospitality packages for the nine-day event – a key source of income given the majority of fans watch for free.
Is also worth pointing out here that the organisers got slapped with a bill of NOK 15 million - €1.4 m - for security. While some FUD merchants have tried to talk up cycling's 'unique' exposure to the threat of terrorism, it seems the real threat might actually be financial.
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15 Oct 2017 19:19

Wang Jianlin - The Next Saviour of Cycling™ dumps VeloNews. Cycling's third most popular website will now be co-owned by one of the Outer Limits writers - the very people who portrayed Wang as cycling's next saviour - so expect more screeds to fill VN's screens telling us cycling's sky is falling in without revenue sharing, spending caps and franchises for life.
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04 Nov 2017 18:37

Franchises for life would have saved Crapac from implosion,says JV:
If there is a guaranteed entry into those races in the lifetime of the business, then at that point you have created a limited market, you have created scarcity and when you create scarcity sponsors come in and gravitate towards that scarcity."

"What we have now is if you come up with 20 million pounds you can start your own team, there is no scarcity of the commodity," added Vaughters. "It's just a matter of who can scrounge up the money, whether they come up from a very disreputable source or a reputable source, it doesn't matter."
The notion of money coming from disreputable sources: we all know who he's talking about. Anonymous donors on crowd-funding sites, right?

Franchises for life, of course, were not the real root of Crapac's problem. That was all down to bad management:
Much of that stress seemed to be of Vaughters’s own creation. He’d been relying on some creative accounting — to put it kindly — for the last few years to effectively inflate the team’s budget beyond its actual means. Every team in the WorldTour has a bank guarantee with the UCI, so that if the team folds, salaries continue to be paid for about three months. Slipstream had been leaning on this guarantee, only funding itself through October of each year. If it didn’t find a sponsor by then, it would run out of money and the UCI would pay salaries through the end of the year.

“It allowed me to get guys like Rigo [Urán] and Sep [Vanmarcke] and Taylor Phinney,” Vaughters says. It also meant that the team was $3 million in the hole at the end of every season. Vaughters says this debt was not part of the $7 million he needed to keep the team alive, but it was debt that EF, or any new sponsor, would have to eventually pay down.
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