Financial Fair Play

[fmk_RoI]

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)

 

[fmk_RoI]

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."

 

[fmk_RoI]

Re:

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.

 

[fmk_RoI]

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.

 

[fmk_RoI]

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.

 

[fmk_RoI]

From the latest Lappartient interview (French):

According to the UCI, the average budget of a WorldTour team is around €18 million, the largest reaching around €34 million.

 

[fmk_RoI]

With JV's Lost Boys pocketing just fourteen grand (plus the fifty k appearance fee) for three weeks of limping around France - that's less than Lawson Craddock pulled in with his Bad Luck Bears story for that velodrome - we're probably due a fresh blast from the financial wizard on why cycling needs to play fair, financially. He's parked revenue sharing. He's accepted a salary cap won't work. What gem do you think he'll come up with now, crowd-funding?

 

[LaFlorecita]

http://inrng.com/2018/09/team-sky-budget-2017/

Team Sky’s budget for 2017 was £34,496,000, up 11% on the previous year as the screengrab from their filed accounts shows. It was equivalent to US$46.2 million or €38.6 million.
[...]
Team Sky’s budget for 2017 was £34.5 million, their highest amount and by extension the biggest ever seen in the World Tour.

Compare that to teams like Sunweb, LottoNL, EFD, AG2R, Movistar working with anywhere from €10 to €20 million. Kind of surreal.

 

[Benotti69]

Re:

http://inrng.com/2018/09/team-sky-budget-2017/

Team Sky’s budget for 2017 was £34,496,000, up 11% on the previous year as the screengrab from their filed accounts shows. It was equivalent to US$46.2 million or €38.6 million.
[...]
Team Sky’s budget for 2017 was £34.5 million, their highest amount and by extension the biggest ever seen in the World Tour.

Compare that to teams like Sunweb, LottoNL, EFD, AG2R, Movistar working with anywhere from €10 to €20 million. Kind of surreal.

That is a lot of doping and motors being bought!

 

[fmk_RoI]

Wang Janlin's Wanda Sports group - operators of a number of bike races, including the Tour de Suisse, the Chinese stage race, and that German one day one - floated on the NASDAQ last week.

Things did not go well.

They originally wanted to sell 33m shares at $12-15 ($400-500m).

They reduced that target to 28m shares at $9-11 ($250-300m).

They actually sold 23.8m shares at $8 ($190m).

Those shares then fell and are now trading at $3.83 ($91m).

That's quite a poor performance from an entity some saw as being the saviour of cycling...

(As this sometimes helps: that $91m is less than twice Sky's 2018 revenue in dollars, $50.8m.)

 

[fmk_RoI]

The Ironman is a huge asset, but did they buy it at a good price

Wang Jianlin didn't buy anything at a good price, the man was on a spending spree, paying silly money for anything that caught his eye. He originally paid $1.2b for Infront and $650m for WTC, the triathlon part of the empire, and he's added a lot to that with the acquisition of things like Lagardère, the Rock 'N' Roll series etc.

I wonder what is the back-story to this

There are several elements here. First, that Wang's using the money to pay off debts, rather than expand. Second, that while Wang seems to be somewhat back in favour within China, the period of his alleged house arrest and subsequent forced sell-off of international property assets still worries people. Third, there's Trump and his trade war. Which brings us to fourth, and the devaluation of the yuan shortly after Wanda's IPO, which is probably the key driver forcing the share price down to $3+.

Even the Outer Limits bros - who championed Wang from the get-go and also took Tim Kay's Team China in Your Dreams plan seriously - have noticed these things, so imagine what intelligent Wall Street investors must be thinking.

Wang is still a player domestically, he's still got the Chinese stage race and he's still funding development and he's still partnering with the UCI. All of that finds favour politically. But is he the Daddy Moneybags he once was thought to be, capable of buying ASO and RCS and whatever he expressed even a passing interest in?

 

[stephenm]

Great thread.
As someone who is involved in sponsoring pro cycling and other endurance sports, I see the other side of the coin on this subject.
There’s this myth that distributing ASO profits or “TV rights” will save the sport. Or Vaughter’s broken record about the franchise model, or riders as Instagram stars, that’s not going to work either.

 

[fmk_RoI]

There’s this myth that distributing ASO profits or “TV rights” will save the sport. Or Vaughter’s broken record about the franchise model, or riders as Instagram stars, that’s not going to work either.

The ASO money always annoyed me with Vaughters. He'd lie about it, once claiming the Tour's TV rights were worth $200m when ASO's annual profit across all sports €30m or so and total turnover was in the €175-200m range. He eventually did come to accept that TV revenue wouldn't make much of a difference to most teams, be less than €1m. But in his new book he still manages to timply that the Giro TV revenue sharing deal he wanted to sign would have been big bucks when in reality it would have only earned about €50-65k per team.

WRT riders as Instagram stars: can I take it you're not a fan of the Rapha report?

 

[fmk_RoI]

As someone who is involved in sponsoring pro cycling and other endurance sports, I see the other side of the coin on this subject.

Something you might offer some input on here, without going too far into figures.

There's a tendency among many to believe that the money spent on sponsorship is all the sponsor needs to spend. Doubtlessly there are some sponsors who can get away with that. But for most, especially non-endemic sponsors, there is an activation spend too, which at the higher end of the market tends to be a multiple of the sponsorship.

So, for instance, there was a recent story about Hansgrohe growing its awareness on the back of co-sponsoring Bora, but half-buried in the story was that the company was pouring money into advertising campaigns (they have a campaign running in Spain around the Vuelta).

So, if they were getting the Bora sponsorship for (plucking a number out of thin air here) €5m, they were probably spending that much again - and possibly twice as much or more - on actual advertising. The activation spend.

How does that chime with your experience as a sponsor? Are the hidden costs of sponsorship material?

 

[stephenm]

The ASO money always annoyed me with Vaughters. He'd lie about it, once claiming the Tour's TV rights were worth $200m when ASO's annual profit across all sports €30m or so and total turnover was in the €175-200m range. He eventually did come to accept that TV revenue wouldn't make much of a difference to most teams, be less than €1m. But in his new book he still manages to timply that the Giro TV revenue sharing deal he wanted to sign would have been big bucks when in reality it would have only earned about €50-65k per team.

WRT riders as Instagram stars: can I take it you're not a fan of the Rapha report?

You’re right to say take a close look at the ASO numbers. There’s an assumption they’re making huge amounts of money from, for example, the Tour. I’m not so sure. Even if you assumed all their net income was from the Tour and split it 50/50 with the teams, it would make very little material difference.

The other one that gets trotted out a lot is TV income. We live in a world of fragmented media. The net result is that TV is cheap, there isn’t a huge wall of cash there. We occasionally buy TV and the numbers are very low indeed, we can get for example, all ad breaks in a three week tour for a modest sum. We most often don’t take it, because there are measurably more effective and targeted ways to spend that marketing money.

On the Instagram piece. I heard Vaughters and a US bases podcast talking about this new model. The journalists were keen to breathlessly tell us JV had an MBA, which I found odd. The thesis was that certain riders had great Instagram followings and this was the way to reach the fans of the game. We research current and prospective brand assets in all our target countries and by coincidence had completed a US piece of research. A couple of the riders mentioned were in the research and their awareness and other attributes were low. So you can plug the model all you like, the numbers say the return is poor.

 

[stephenm]

Something you might offer some input on here, without going too far into figures.

There's a tendency among many to believe that the money spent on sponsorship is all the sponsor needs to spend. Doubtlessly there are some sponsors who can get away with that. But for most, especially non-endemic sponsors, there is an activation spend too, which at the higher end of the market tends to be a multiple of the sponsorship.

So, for instance, there was a recent story about Hansgrohe growing its awareness on the back of co-sponsoring Bora, but half-buried in the story was that the company was pouring money into advertising campaigns (they have a campaign running in Spain around the Vuelta).

So, if they were getting the Bora sponsorship for (plucking a number out of thin air here) €5m, they were probably spending that much again - and possibly twice as much or more - on actual advertising. The activation spend.

How does that chime with your experience as a sponsor? Are the hidden costs of sponsorship material?

That’s the key point. At least the amount of the sponsorship cheque will be spent on activating the rights. At least. And then you need to check you did actually get a boost in your brand awareness, but even more importantly some consideration and usage. A well known team principal said on a podcast that gold dust for a sponsor was a front page newspaper picture of the winner wearing the sponsors jersey. Strongly disagree, that’s just firing a pop gun into the teeth of a hurricane and hoping it hits the target.

There are a range of sponsors and some simply come about because a rich individual takes a fancy to the sport or the team. No problem with that. Some more trade related companies like us get involved because we can see a potential direct or indirect return. There’s a swathe in the middle where I wonder why they are there - I would guess because there’s someone in an organisation who likes cycling and has a relationship with a team. Without these middle tiers, the teams would really struggle.

We have worked with Sky/Ineos for a number of years. It was a simple commercial decision. They had invested in commercial management skills and the way they had gone about building a database of Sky supporters was impressive. It gave a clear path to generating a return from a sponsorship deal. We looked at a lot of other pro teams and the commercial operation and scope for a viable return were poor. This is a case of old school hard core cycling management teams versus new world more commercially skilled management teams. It’s assumed that Sky had great success because they were lucky enough to have James Murdoch show up. I would say they worked hard to get that investment. Then once they had it, the snowball effect took place, success meant the ability to invest in more success - not just on the sport front, but in having a strong management team.

With our Ineos deal we can measure direct income from sales of product to people who visit our e-commerce site. We can also measure increase in awareness, consideration and usage of our brand. The return on investment is clear. For other brands I can imagine that’s hard - do they have any direct sales as a result? In very few cases. Do they increase awareness - in come cases; but does it result in any usage? Tough to say.

I understand I’m on thin ice here talking about Ineos in the Clinic. But I would say that if more teams invested in the commercial side, they may benefit. I know that’s tough to say because a lot of team owners and principals put heart and soul into their team. I proposed to one that he invest in a commercial manager and he gave me both barrels and told me that would mean one less rider and I responded that he needed to break the cycle at some stage. He bought the rider, but the team is now out of business. Some teams have little commercial nous and a couple are just arrogant and think sponsors should fall over them. Hopefully there’s a new wave of more savvy teams coming forward - the forthcoming McClaren team have some very savvy people for example.

 

[fmk_RoI]

Maintaining a team with multiple leaders on significant salaries then runs the risk of a top-heavy team (as the Movistar of next year looks to be, with a drastic downturn in the domestiques coinciding with adding Landa to the two existing blockbuster leaders - as maintaining a position at the very top on a mid-table budget looks to catch up with them), and teams perhaps unable to ride at a super-controlling pace due to their strength in depth all season long.

The above was said two years ago by @Libertine Seguros . We now know Movistasr's budget increased by only 7% or so in 2018, to €19.5m. How do peeps think the way they spent that money worked out?

 

[Koronin]

That’s the key point. At least the amount of the sponsorship cheque will be spent on activating the rights. At least. And then you need to check you did actually get a boost in your brand awareness, but even more importantly some consideration and usage. A well known team principal said on a podcast that gold dust for a sponsor was a front page newspaper picture of the winner wearing the sponsors jersey. Strongly disagree, that’s just firing a pop gun into the teeth of a hurricane and hoping it hits the target.

There are a range of sponsors and some simply come about because a rich individual takes a fancy to the sport or the team. No problem with that. Some more trade related companies like us get involved because we can see a potential direct or indirect return. There’s a swathe in the middle where I wonder why they are there - I would guess because there’s someone in an organisation who likes cycling and has a relationship with a team. Without these middle tiers, the teams would really struggle.

We have worked with Sky/Ineos for a number of years. It was a simple commercial decision. They had invested in commercial management skills and the way they had gone about building a database of Sky supporters was impressive. It gave a clear path to generating a return from a sponsorship deal. We looked at a lot of other pro teams and the commercial operation and scope for a viable return were poor. This is a case of old school hard core cycling management teams versus new world more commercially skilled management teams. It’s assumed that Sky had great success because they were lucky enough to have James Murdoch show up. I would say they worked hard to get that investment. Then once they had it, the snowball effect took place, success meant the ability to invest in more success - not just on the sport front, but in having a strong management team.

With our Ineos deal we can measure direct income from sales of product to people who visit our e-commerce site. We can also measure increase in awareness, consideration and usage of our brand. The return on investment is clear. For other brands I can imagine that’s hard - do they have any direct sales as a result? In very few cases. Do they increase awareness - in come cases; but does it result in any usage? Tough to say.

I understand I’m on thin ice here talking about Ineos in the Clinic. But I would say that if more teams invested in the commercial side, they may benefit. I know that’s tough to say because a lot of team owners and principals put heart and soul into their team. I proposed to one that he invest in a commercial manager and he gave me both barrels and told me that would mean one less rider and I responded that he needed to break the cycle at some stage. He bought the rider, but the team is now out of business. Some teams have little commercial nous and a couple are just arrogant and think sponsors should fall over them. Hopefully there’s a new wave of more savvy teams coming forward - the forthcoming McClaren team have some very savvy people for example.

Hopefully we get some sort of budget cap so that one team like Ineos CANNOT spend 2 to 3 times what any other team is even capable of spending. Good for you for wanting to sponsor a team that is DESPISED and HATED by the vast majority of people. Good for you for sponsoring a team that is looked at as one of if not the dirtiest teams in the sport.
As a US fan, very few if any of the cycling sponsors mean anything over here anyway. As almost done of the sponsors are even in the US it's not even worth it for US based fans to care what the sponsor is or investigate what they are because it doesn't matter.

As for why you get a grocery store chain sponsoring a team, that's simple. It's the way they chose to use their advertising dollars. it's not different than the reason you get a candy company sponsoring a NASCAR stock car. It's advertising dollars. Doesn't matter that it technically has nothing to do with the sport. There's a southern grocery store chain that sponsors one race every year as that is where they put most of their yearly advertising dollars.

 

[fmk_RoI]

They had invested in commercial management skills and the way they had gone about building a database of Sky supporters was impressive. It gave a clear path to generating a return from a sponsorship deal.

I wasn't aware Skineos had such a back end CRM in place, am quite impressed they do. Too many cycling teams don't operate as businesses yet when it comes to finance we're supposed to think of them as being professionally run.

A well known team principal said on a podcast that gold dust for a sponsor was a front page newspaper picture of the winner wearing the sponsors jersey. Strongly disagree, that’s just firing a pop gun into the teeth of a hurricane and hoping it hits the target.

This is one of the more frustrating aspects of the financial debate, that it has so many myths like this.

We have worked with Sky/Ineos for a number of years.

Do you favour teams over individuals? I recall having a conversation in the noughties with a sponsor who favoured putting his money in events over teams / individuals, because of reputational risk. I'm not sure I see too much reputational risk currently, we've grown used to scandal, and sponsors like Head can actually capitalise on scandal.

 

[stephenm]

Hopefully we get some sort of budget cap so that one team like Ineos CANNOT spend 2 to 3 times what any other team is even capable of spending. Good for you for wanting to sponsor a team that is DESPISED and HATED by the vast majority of people. Good for you for sponsoring a team that is looked at as one of if not the dirtiest teams in the sport.
As a US fan, very few if any of the cycling sponsors mean anything over here anyway. As almost done of the sponsors are even in the US it's not even worth it for US based fans to care what the sponsor is or investigate what they are because it doesn't matter.

As for why you get a grocery store chain sponsoring a team, that's simple. It's the way they chose to use their advertising dollars. it's not different than the reason you get a candy company sponsoring a NASCAR stock car. It's advertising dollars. Doesn't matter that it technically has nothing to do with the sport. There's a southern grocery store chain that sponsors one race every year as that is where they put most of their yearly advertising dollars.

It’s not correct the team are despised and hated by the vast majority of people. We measure areas such as awareness, trust, like, inspire, etc every six months for the team and some of the riders. The numbers of people who support Team Ineos and their riders are extremely strong across a number of global markets.

The other side to the salary cap argument is that perhaps other teams should invest in their commercial teams. Rather than cap one team, develop all teams, so a wider universe of sponsors and fans is reached?

 

[stephenm]

I wasn't aware Skineos had such a back end CRM in place, am quite impressed they do. Too many cycling teams don't operate as businesses yet when it comes to finance we're supposed to think of them as being professionally run.

This is one of the more frustrating aspects of the financial debate, that it has so many myths like this.

Do you favour teams over individuals? I recall having a conversation in the noughties with a sponsor who favoured putting his money in events over teams / individuals, because of reputational risk. I'm not sure I see too much reputational risk currently, we've grown used to scandal, and sponsors like Head can actually capitalise on scandal.

We have a mix of teams and individuals. We research a range of current and potential assets in a range of sports every six months and can make a reasonable judgement on an athlete, team or sport. Events are more difficult, people tend to want to aspire and therefore having personalities involved enables that, a lot of times an event doesn't resonate as well with a consumer. We will also work with federations for strategic reasons, e,g. in new territories.

Yes, Sky/Ineos have by far the best database/CRM programme, and that melded well with our own platform, some good synergies which produced a win for both parties.

 

[King Boonen]

Hopefully we get some sort of budget cap so that one team like Ineos CANNOT spend 2 to 3 times what any other team is even capable of spending. Good for you for wanting to sponsor a team that is DESPISED and HATED by the vast majority of people. Good for you for sponsoring a team that is looked at as one of if not the dirtiest teams in the sport.
As a US fan, very few if any of the cycling sponsors mean anything over here anyway. As almost done of the sponsors are even in the US it's not even worth it for US based fans to care what the sponsor is or investigate what they are because it doesn't matter.

As for why you get a grocery store chain sponsoring a team, that's simple. It's the way they chose to use their advertising dollars. it's not different than the reason you get a candy company sponsoring a NASCAR stock car. It's advertising dollars. Doesn't matter that it technically has nothing to do with the sport. There's a southern grocery store chain that sponsors one race every year as that is where they put most of their yearly advertising dollars.

I think if you judge Ineos from the discussion on this forum, then you probably get a very skewed view. As "the good cyclist" in a lot of the circles I move in I get a lot of people wanting to discuss pro cycling and racing with me. The few who wish to discuss doping rarely talk about Ineos/Sky specifically unless they happen to be in the news for this reason. Most will just discuss that cycling is a "dirty" sport. Most of the people I talk to are either fans of or at worst indifferent to Ineos, with the bias leaning heavily towards the fans. This is mainly UK-based people (although not all British nationals) so I can't comment about anywhere else and it's a small sample size. But I'd be surprised if it wasn't pretty representative.



Pretty sure salary caps have been discussed before, either here or elsewhere. They seem to rely on the premise that you have a stable team structure with an abundance of potential sponsors. This isn't the case in cycling. I think salary caps will likely just drive out larger potential sponsors.

With our Ineos deal we can measure direct income from sales of product to people who visit our e-commerce site. We can also measure increase in awareness, consideration and usage of our brand. The return on investment is clear. For other brands I can imagine that’s hard - do they have any direct sales as a result? In very few cases. Do they increase awareness - in come cases; but does it result in any usage? Tough to say.

Is it possible for you to tell if income is related to success? This is always presumed in these discussions, but I sometimes wonder if it's true.

 

[stephenm]

I think if you judge Ineos from the discussion on this forum, then you probably get a very skewed view. As "the good cyclist" in a lot of the circles I move in I get a lot of people wanting to discuss pro cycling and racing with me. The few who wish to discuss doping rarely talk about Ineos/Sky specifically unless they happen to be in the news for this reason. Most will just discuss that cycling is a "dirty" sport. Most of the people I talk to are either fans of or at worst indifferent to Ineos, with the bias leaning heavily towards the fans. This is mainly UK-based people (although not all British nationals) so I can't comment about anywhere else and it's a small sample size. But I'd be surprised if it wasn't pretty representative.



Pretty sure salary caps have been discussed before, either here or elsewhere. They seem to rely on the premise that you have a stable team structure with an abundance of potential sponsors. This isn't the case in cycling. I think salary caps will likely just drive out larger potential sponsors.




Is it possible for you to tell if income is related to success? This is always presumed in these discussions, but I sometimes wonder if it's true.

Three great insights/points there -

People tend to be fans of Ineos across a lot of geographies. The exception to some extent is the USA where national federations in endurance sports seem to be more valued than teams or individuals. Ineos are still high in the popularity ranking even there though. Fans or at worst indifferent is a nice descriptor.

Salary caps will drive out larger sponsors, I agree. We keep trying to blame the player and not the game. The sport needs to get its act together and teams need help to be more commercially sound, not just sound on the sport front.

Your last point is great. No, I do not believe that income is directly linked to success. I think perception and likeability and trust and being able to identify can all or separately mean more than just success and therefore can drive more income. I can point to retired athletes driving good income, I can point to losing sports teams driving good income.

 

[fmk_RoI]

Pretty sure salary caps have been discussed before, either here or elsewhere.

It's been discussed extensively here in the last couple of pages.

They seem to rely on the premise that you have a stable team structure with an abundance of potential sponsors. This isn't the case in cycling.

I don't really think that's a fair summation of the general experience across multiple sports. Salary/spending caps are used to promote stability (usually in sports susceptible to debt-driven expansion).

I think salary caps will likely just drive out larger potential sponsors.

I don't really believe this. One of the purposes of spending/salary caps is to slow down inflation at the high end of a league while allowing the middle/bottom to catch up. So a potential sponsor replacing, say, AG2R who currently spend circa €17m, is hardly likely to be stymied by a cap that has to be set in the current range of Skineos's budget (€43m).

For the record, my opposition to the cap is based on the following:

• few who advocate it understand it, they're just repeating something they heard/read somewhere else;
• none who advocate it can explain how a sport ill-equiped to police pay-to-play breaches of minimum salary rules can be expected to cope with the creative accounting techniques used to circumvent spending rules in other sports;
• I doubt if any who advocate a cap have even considered the CPA's response.

 

[King Boonen]

It's been discussed extensively here in the last couple of pages.

I don't really think that's a fair summation of the general experience across multiple sports. Salary/spending caps are used to promote stability (usually in sports susceptible to debt-driven expansion).

Are they? The sports I've seen them used in (and the variety of cap types used can muddy the waters) don't seem any more stable than comparable sports that don't use them. Stability seems to be more down to other factors, such as size of fan base and number of teams supported by it.

I don't really believe this. One of the purposes of spending/salary caps is to slow down inflation at the high end of a league while allowing the middle/bottom to catch up. So a potential sponsor replacing, say, AG2R who currently spend circa €17m, is hardly likely to be stymied by a cap that has to be set in the current range of Skineos's budget (€43m).

This is tied to my last point. If sponsorship return is tied to success I would think that, in a sport that struggles to draw sponsors, you run the risk of chasing them away rather than pulling them in. Interesting to note that, for SIS at least, @stephenm says that return isn't really tied to success.