Financial Fair Play

[Koronin]

That's an anti doping defence!

Without an actual positive that can be verified there is no reason to even believe there (sic) were doping.

Actually not returning a positive does not prove they are clean. It only proves they weren't caught.

 

[fmk_RoI]

That's quite a lenghty post @Libertine Seguros so please forgive me / correct me if a miss / misinterpret elements of it as I try to respond.

Let's begin with this question:

How many World Tour teams have grown organically from the lower ranks in recent years?

Let's look at all the existing WT teams, when they started, and what level they commenced at. For the sake of argument, let's take the year they rode their first Tour as the year they effectively hit the top rank. Imprecise as it is, it'll serve a purpose:

• Movistar: started 1980, rode first Tour 1983
• Jumbo: started 1984, rode first Tour 1984
• UAE: started 1989, rode first Tour 1989
• Astana: started either in 2006 and rode first Tour 2006, in 2007 and rode first Tour 2007, or 1989 and rode first Tour 1990 (personally I view Astana as a hostile takover of Saiz's licence – you, especially, can disagree)
• AG2R: started 1992, rode first Tour 1993
• Groupama: started 1997, rode first Tour 1997
• Deceuninck: started 2003, rode first Tour 2003
• EF: started 2003, rode first Tour 2008
• Sunweb: started 2005, rode first Tour 2009
• CCC: started 2007, rode first Tour 2010
• Dimension Data: started 2007, rode first Tour 2015
• Katusha: started 2009, rode first Tour 2009
• Bora: started 2010, rode ther first Tour 2014
• Ineos: started 2010, rode first Tour 2010
• Mitchelton: started 2011, rode first Tour 2012
• Trek: started 2011, rode first Tour 2011
• Lotto: started 2012, rode first Tour 2012
• Bahrain: started 2017, rode first Tour 2017

Bora, CCC, Dimension, EF, Movistar and Sunweb are really the only teams that have climbed the ladder, all the rest pretty much started with a bang. A third of current WT teams, then. Of the rest, most started fully loaded, would that be fair to say?

What about some of the teams we lost along the way?

• Milram: started 1999, rode first Tour 2004, collapsed 2010
• HTC: started 1989, rode first Tour 1992, collapsed 2011
• Saunier Duval: started 2004, rode first Tour 2005, collapsed 2011
• Cervélo: started 2009, rode first Tour 2009, merged 2011 with EF (Garmin)
• Radioshack: started 2010, rode first Tour 2010, merged 2012 with Trek (Leopard)
• Euskaltel: started 1994, rode first Tour 2001, collapsed 2013
• Vacansoleil: started 2009, rode first Tour 2011, collapsed 2013
• Liquigas: started 2005, rode first Tour 2005, merged 2015 with EF (Garmin)
• Tinkoff: started 1998, rode first Tour 2000, exited 2016
• IAM: started 2013, rode first Tour 2015, exited 2016

Again, it's about a third (a little over) climbing the ladder.

And the teams who've been WT but aren't any more:

• Cofidis: started 1996, rode first Tour 1997, since 2010 has been playing WT with a ProConti licence
• Total: started 2000, rode first Tour 2000, since 2010 has been playing WT with a ProConti licence

(I really should go back through all the other teams that rode the Tour but aren't named here but this is an internet forum, not a master's thesis. Plus, I'm being lazy.)

So, the question I would put to you is this: while growing organically from the lower ranks does matter (and I for one do put value on on), isn't it true that it's never been the only game in town, or even the main game?

 

[fmk_RoI]

For the most part though, a lot of the teams at the very top are stable because they are mostly split between two categories: springing out from national projects or nationally-funded projects (Sky/Ineos, Katyusha, Astana, Mitchelton-Scott for national projects, Bahrain and UAE for nationally-funded projects), or long-term traditional teams who have been there since before the ProTour began, often with sponsors who also predate that (Movistar, Lotto, Quick Step, Groupama-FDJ, Ag2r, Jumbo-Visma). Some of which (Movistar and Jumbo most notably) have become sort of national projects by default, with the loss of or moving out of their main top level rivals, or their being swept aside to make room for the newer projects.

This is a fair point but we also have to accept that, certainly since the advent of extra sportif sponsors in the 1950s and 1960s, cycling hasn't had a fixed funding model, it has a mixed funding model. It relies in part of rational economic decisions (sponsorship with a measurable ROI) but it has also relied extensively on passion projects: sugar daddies and the like playing bicycles. Today, sport in general is increasingly moving into a new phase of funding, that of soft power, which has largely been exerted through event promotion (London 2012) but is also trickling down to the way teams are owned and financed (PSG, as you already pointed out).

In addition to the points you identity to explain the current relative stability in the top tier of cycling, I think you also have to credit the World Tour as a concept, even if you disagree with the effect it may or may not be having on ProConti teams (I'll return to this later – don't take my may or may not as disagreement just yet). This has been a project dating back to the 1980s, Verbruggen bringing in the FICP points system and then the World Cup. That teams have a degree of certainty over their Tour participation (and the sport is Tour centric) has clearly helped, and this has been the case since the 1980s when ASO accepted the Tier I/Tier II structure (or was in Division 1 / Division 2? Whatever.). Yes, teams want more certainty (and JV wants a perpetual guarantee) but we must acknowledge the impact of what we've got even as they demand more.

WRT the World Tour, the credit I am giving it does not all go to the UCI. The present World Tour is a compromise. Since the Widow Amaury and Pat McQuaid kissed and made up ASO have had a strong hand on the tiller again. But the teams are also impacting it (look at the fact that we could have 18, 19, or 20 World Tour teams next year, which is down to the teams fighting against a promotion / relegation system).

Another factor to explain the current level of relative stability is tied in with the economy nationally and internationally. Nationally, the economy has screwed the sport in Spain and Italy, but that has opened the door to international entrants (Australia, South Africa) who otherwise may not have gained admission. Economically, it's been a bit of swings and roundabouts. The losses have hurt, I appreciate that, but there has been gains.

Finally, we have to acknowledge that we're in a period of relative quiet when it comes to doping, we've been scandal free for quite a while now. As we all remember, between 1998 and 2008 the sport was an absolute mess. From Festina, the cloud perpetually hanging over Armstrong, Cofidis, Puerto, Landis, the Telekom confessions, CERA, Rasmussen, it was hit after hit after hit. Today, that's not the case, and even the Russian trolls using TUEs as a Cold War weapon, and Shane Sutton using the Jiffy bag as a weapon, and WADA totally buggering up the science behind their salbutamol testing, even all this isn't really registering in the wider world. (And before the usual suspects start shouting at me, I said scandal free, not doping free – there's a world of difference between the two.)

If I had to rank things, I'd probably put the World Tour first, the Biological Passport second, the economy third, in order of contributions to current relative stability in the top tier.

 

[fmk_RoI]

The problem is that now the number of spots available for them is limited, there's little incentive to start a big, ambitious project at the ProContinental level, as used to happen not infrequently, while the global financial crisis and its impact on domestic cycling (especially in Italy and Spain) has strangled some of the benefit of riding at this level as the domestic calendars are not as strong, meaning you need a sponsor willing to drop the cash to afford a World Tour calendar to get any kind of exposure beyond breakaway status unless you can guarantee a major invite like, say, Cofidis; smaller, regional hobby sponsors cannot sustain a calendar that is more international, and that is now absolutely required because many national calendars have suffered so that any ambitious riders will quickly outgrow the level, unlike a decade ago when wildcard teams - even discounting Cervélo and BMC - provided genuine threats to win major races with the likes of di Luca, Petacchi, Mosquera, Garzelli, Rujano, Pozzato, Visconti, Voeckler, Carrara, Hoogerland, Pozzovivo, Guardini, de Waele, Tondó, Scarponi and Simoni.

Quite what the problem here is I cannot say. What I will say is that in the decade and more since JV kicked the economic debate into gear with his 10 Point Plan, very little attention has been given to Division II/Division III teams (Pro Conti / Conti), all the talk has been about Division I (World Tour). The Rapha Roadmap is really only about turning the World Tour into a series of calendar slots that can be sold off à la F1. The Outer Limits bros are just serving FUD-laced clickbait. None of the breakaway leagues cared a fig about the lower divisions. Even the recent UCI survey seemed to be geared solely toward top level men's road racing. So, really, the debate isn't happening. The problems are not being identified, not in a proper fashion. All we get is people blaming British Cycling for the loss Team Wiggins and One Pro, or suggesting that American cycling can be saved by turning it into competitive drum and bugle corps.

For the record, I ultimately want to see promotion / relegation, I want to see jeonardy in the top league and rewards for the lower levels. I want to see teams climbing the ladder. But I don't want to see any more Rick Delaneys or Gerard Vroomen's trying to play WT cycling on Pro Conti budgets. They are bad for the sport. Riders' careers can be ruined by them.

WRT Israel Cycling Academy. Yes, they are climbing the ladder. But isn't it true that they're not just a sugar daddy team (Sylvan Adams is involved, no?) but also one of those quasi-national teams? This is one of the problems we have with the debate: teams get to wear multiple labels.

 

[fmk_RoI]

Sky/Ineos may not create the level of antipathy that an internet forum may suggest (after all, contributors to an internet forum on the topic will always tend toward the more hardcore fans) but a predictable spectacle also serves as a limiter on the number of new fans drawn in, or drive some fans no longer attracted to the spectacle away. I was one of the people who walked away from Formula 1 during Schumacher's reign of terror, and there have been several years recently where I simply haven't bothered watching the Tour de France - any of it - because I'm simply not interested in watching it.

I more or less came to F1 in the Schumacher era because there was something about the guy I liked: he had a work ethic, I think, that for some reason resonated with me. I left after he went. Point here is that what attracts one fan can drive off another. It's always a balancing act and there's no quick and fast answers.

The UCI survey offered some very, very loaded questions about budgets and it seems clear at this stage that Stapleton (into whose lap this falls, I think) is looking to push something through. But that survey also offered lots of other loaded questions that impact upon our perception of spectacle, most notably concerning the use of radios.

I've already said I'm not really a fan of a cap (salary / budget) largely because I see it as window dressing (it's too easy to abuse and get away with abusing). But if that window dressing came with other measures that helped bring about spectacle, I'm probably not going to be up in arms about it.

One key point I want to make in closing here is something Daam Van Reeth offered in his cycling economics book. I disagree with him on many things (especially that bloody Rapha report he was involved with) but on this I think he nailed cycing's current problem, in particular the issues you are trying to introduce here with regard to Pro Conti level racing:

“cycling at the top level has become too global (and thus too expensive) for smaller local sponsors but, at the same time, is not global enough for big multinational companies.”

I don't think we can wind back the clock to a kinder, gentler time (it didn't exist) but nor do I want to see us marching blindly into a future that could cause more yet more problems. What the middle ground is, that's what I'm hoping to find out.

 

[stephenm]

I more or less came to F1 in the Schumacher era because there was something about the guy I liked: he had a work ethic, I think, that for some reason resonated with me. I left after he went. Point here is that what attracts one fan can drive off another. It's always a balancing act and there's no quick and fast answers.

The UCI survey offered some very, very loaded questions about budgets and it seems clear at this stage that Stapleton (into whose lap this falls, I think) is looking to push something through. But that survey also offered lots of other loaded questions that impact unpon our perceptions of spectacle, most notably concerning the use of radios.

I've already said I'm not really a fan of a cap (salary / budget) largely because I see it as window dressing (it's too easy to abuse and get away with abusing). But if that window dressing came with other measures that helped bring about spectacle, I'm probably not going to be up in arms about it.

One key point I want to make in closing here is something Daam Van Reeth offered in his cycling economics book. I disagree with him on many things (especially that bloody Rapha report he was involved with) but on this I think he nailed cycing's current problem, in particular the issues you are trying to introduce here with regard to Pro Conti level racing:

I don't think we can wind back the clock to a kinder, gentler time (it didn't exist) but nor do I want to see us marching blindly into a future that could cause more yet more problems. What the middle ground is, that's what I'm hoping to find out.

The last quote is bang on “cycling at the top level has become too global (and thus too expensive) for smaller local sponsors but, at the same time, is not global enough for big multinational companies.”

We are a small company and are in the unusual position of being able to leverage our position because we are a very international brand embedded deeply in cycling and can leverage e-commerce sales and digital marketing. When we can link with a team with a similar international bias and digital skills, that's a perfect storm. I can imagine a lot of small companies don't have the geographic reach to make a global sponsorship deal return well.

On big multinationals, I think more Ineos type teams can attract that type of sponsor. I would expect McClaren might be able to attract those types of sponsor. Question is can some of the mid-ranked teams change as well? I know not everyone here believes me, but Sky had a few global sponsors show interest. If teams can up their game, the money is potentially there.

But yes, cycling is the global sport with not enough scale. A village, but spread widely. Passionate fans still able to talk to team owners on Twitter, etc.

I just don't get salary caps and budget caps helping. The NFL is always shown as an example of how it can be done on caps. But let's keep it in context, it's a closed shop money printing machine for NFL owners. Salary caps there are relative and the earnings of key players have increased massively in recent years, cap or no cap.

 

[King Boonen]

...I know not everyone here believes me, but Sky had a few global sponsors show interest. If teams can up their game, the money is potentially there...

I don't see why you would lie about this. Do you think they would have been interest in other teams who had a similar business set up but not Sky's success?

 

[stephenm]

I don't see why you would lie about this. Do you think they would have been interest in other teams who had a similar business set up but not Sky's success?

Yes, I do. I can take our investment into the Ineos deal and give a really accurate ROI over the years as they developed their model. A big corporation would be able to look at a team now and project its model forward based on the investment, and therefore project the future ROI. No doubt at all. Hence some financial players coming in and buying mid-tier soccer teams, they can project the future return from their investment now.

 

[Koronin]

McClaren just proved at the Indy 500 they can't run an Indy Car team on their own. I really hope they aren't going to try to run a cycling team.

To driving fans away, there are other ways to do that as NASCAR has done extremely well since the mid 2000's. They rode a way of expansion away from their base and when those new fans got bored or for other reasons started leaving, the core fans were already fed up. This was done with rule change after rule change to try to compete with other sports including the total revamp of their points system to the now "stages" during a race to the short lived let's put everyone on the track at the same time to qualify on ovals. On road courses, sure it can work, but they proved that it doesn't work on ovals. Got bad enough that they finally went back to single car qualifying which the fans never complained about in the first place.

The Cap in the NFL helps keep small market teams competitive. Of course revenue sharing of their major TV network deals are also a part of that. Which is something else that cycling doesn't have. However, that's also not feasible as most races are barely bringing in enough revenue to survive.

 

[King Boonen]

...The Cap in the NFL helps keep small market teams competitive...

Again, I don't think this is true. The Year before the cap was introduced Green Bay won the Superbowl against Pittsburgh. Since it was introduced neither team has made it back. The year before that, it was teams from New Orleans and Indianapolis, the year before that, teams from Pittsburgh and Phoenix. None of these teams have returned to the Superbowl. In terms of metropolitan area size Green Bay is 158th out of 384, Pittsburgh is 27th, New Orleans is 46th, Indianapolis is 34th and Phoenix is 11th.

Conversely, following the introduction of a cap, teams from Boston (10th), New York (1st), Los Angeles (2nd), San Francisco (12th), Seattle (15th), Atlanta (9th), Denver (19th), Charlotte (23rd) and Baltimore (21st) have made it to the Superbowl.

So it's possible the cap has had a negative effect on the competitiveness of small market teams, and at best it's had no effect. Of course, this is one measure of competitiveness and only takes into account conference Champions. We could look at the divisions, but this gets much more noisy due to how teams are split and what games are played each year. As such, I think looking at Conference Champions is fair.

 

[stephenm]

McClaren just proved at the Indy 500 they can't run an Indy Car team on their own. I really hope they aren't going to try to run a cycling team.

To driving fans away, there are other ways to do that as NASCAR has done extremely well since the mid 2000's. They rode a way of expansion away from their base and when those new fans got bored or for other reasons started leaving, the core fans were already fed up. This was done with rule change after rule change to try to compete with other sports including the total revamp of their points system to the now "stages" during a race to the short lived let's put everyone on the track at the same time to qualify on ovals. On road courses, sure it can work, but they proved that it doesn't work on ovals. Got bad enough that they finally went back to single car qualifying which the fans never complained about in the first place.

The Cap in the NFL helps keep small market teams competitive. Of course revenue sharing of their major TV network deals are also a part of that. Which is something else that cycling doesn't have. However, that's also not feasible as most races are barely bringing in enough revenue to survive.

I've visited the McClaren cycling operation. Proven, experienced guy in Rod Ellingworth will be developing the team and very good riders already lined up. Professional commercial management behind the scenes. Huge resource in cash terms and access to things like engineering, aerodynamics and data management. The operation is very professional.

 

[fmk_RoI]

Moving off the topic of caps (salary / budget) but sticking with the American model.

Back in December 2010, a few months before Jonathan Vaughters first floated his 10 Point Plan (I keep saying it was a decade and more ago – it feels that long), the following appeared as an op-ed on Cyclingnews.com, spurred by rumours of the imminent collapse of the Geox team (neé Saunier Duval, home of Riccardo Riccò, Juan José Cobo, Leonardo Piepoli, among others). Vaughters was trying to make an argument in favour of issuing 10-year licences:

giving contractual participation provides guarantees to the teams and allows for them to cease the "hand to mouth" year-to-year fight for sponsor dollars. If a sponsor wants to be represented in Le Tour, for example, there are only so many options. This drives sponsorship to existing organizations and allows them to build long term and stable partnerships. This as opposed to new sponsors entering the sport with unproven or unstable organizations which can potentially damage current teams' and events' respective value by pirating riders and making the sport confusing to follow for fans (ie - who does he race for again?).

These limited slots, and their contractual rights to participate in top events, create value for the organizations holding the contracts. This value, in turn, allows raising money through sale of equity in said organizations, which hold the contracts for entry into the top events. The ability to sell equity would be the savior of many a team in lean times when sponsorship dollars are short. Both creating a limited and defined sponsorship market in cycling and creating value that allows different forms of fundraising outside of pure sponsorship would allow athletes and other employees of pro cycling teams to exist in a more stable and calm environment and keep them from making poor decisions in insecure and unstable moments (do I have a team next year??!). This in turn allows greater inroads to be made in anti-doping movements and culture changes, as people aren't fearful of their future quite so much.

In the second paragraph, Vaughters argued that such a 10-year franchise system would create an asset that teams could exploit in times of need: “The ability to sell equity would be the savior of many a team in lean times when sponsorship dollars are short.”

The idea of selling equity to pay day-to-day expenses seems rather like the New Economy thinking of the dot.com boom and beyond. It can be acceptable to potential shareholders if you're burning through cash à la Uber or Tesla in the hope of creating something massive that will ultimately repay all that debt, but if you're the corner shop trying to cover losses caused by a rival store opening across the road it's not very clever. Another problem with it is that the price of the equity would be falling each year as even a 10 year licence is a wasting asset, falling in value by ever increasing amounts. Hence the need for perpetual franchises and a closed league.

But selling equity is actually the way some sports survive. Look at this story that appeared on Bloomberg recently: NBA Considers Creating Investment Vehicle to Buy Stakes in Teams:

The price of an NBA team has been skyrocketing. The Brooklyn Nets, for instance, just sold at a record valuation of $2.3 billion.

That’s been a blessing and a curse for the league. When the NBA’s limited partners, or LPs [the holders of minority stakes in teams], want to sell their holdings, it can be hard to find interested parties -- especially since the stakes usually come with limited power. LPs have recently put holdings up for sale and pulled them back because they didn’t fetch the terms the owners wanted.

Forbes helped explain the problem:

The average value of an NBA team is $1.9 billion, up 13% over last year and three times the level of five years ago. This appreciation in values has created a “liquidity problem” in the sense that it is much more difficult to find buyers of small stakes–limited partners who would own perhaps 1% to 5% of the team and have no say in how the team is run.

In the NBA, the controlling owner must own at least 15% of the team. There is a limit of 25 partners, each of which must own at least 1%, though some teams have been grandfathered in when it comes to ownership rules.

Currently, we're generally told that cycling teams have no value. When the Discovery team ended, it just ended, Tailwind Sports got zip. Ditto when Oleg Tinkov and Michel Thétaz walked away from their teams. But, some teams are more canny than others. Pat Lefevere sold the majority of his team's management company to the Czech billionaire Zdeněk Bakala (70%) and Bakala's Dutch business partner, the telecoms millionaire Bessel Kok (10%). And, of course, Vaughters and Doug Ellis sold Slipstream Sports to EF Education First. Even with their current brevity (three years), World Tour licences are worth something.

It is, though, hard to imagine cycling teams reaching the valuation of NBA franchises and so suffering the same liquidity problems when it comes to selling equity.

 

[stephenm]

This discussion sent me back to my archive and find this blog post from a year ago -

Sponsorship In Pro Cycling

Sponsorship in pro cycling from the perspective of the sponsor. The challenges facing teams and sponsors. Can the model change?

stephenmoon.com

 

[fmk_RoI]

In case you haven't looked yourself, here are some bits from the UCI fan survey (the full PDF is available here) . Bear in mind here than even I think the questions were more than a little loaded. But then, you know what they say, don't you? Never ask a question you don't already know the answer to. Or the answer you want, at the least.

Anyway. Here goes.

Q: Which of the following, if any, do you believe reduce the attractivity of a cycle race?

39% of respondents said race budgets. That's less than two-fifths.

• 48% said ear pieces, 40% said power meters. Only 31% thought to blame the race route and 16% thought the size of teams was an issue. 29% thought team strategy was a problem.

When ranked, only 17% thought budgets were the top evil.

24% thought it was ear pieces were the biggest evil while 12% said power meters (that's a really nerdy arguement, isn't it? "Ear pieces are worst." "No, it's power meters!"). 13% thought it was race routes were the biggest problem reducing the attractivity of races. Only 8% said team strategy was the biggest problem.

Q: If professional road cycling was dominated by a few teams, which of the following statements would represent your opinion?

• 60% said it would be an issue in terms of budget equity
• 31% said it would be an issue in terms of uncertainity of the results.
• 20% said it would be an opportunity to encourage other teams to grow.
• 10% said it would be an opportunity to grow the global economy of cycling
• 8% said it would be an opportunity to grow the global audience of cycling
• 12% said they didn't know.

According to the report, fans think that the potential domination of a limited number of teams has an impact on the appeal and quality of road cycling:

• 71% said that having the best riders hired by a limited number of teams would affect the spectators’ enjoyment
• 62% said that having the best riders hired by a limited number of teams would affect the predictability of the results
• 76% think the difference in team budgets would have an impact on the appeal of road cycling

(It's worth remembering at this stage that fewer than two-fifths of respondents had said that team budgets actually reduces the attractivity of bike races.)

Conclusions (excerpt):
* Road cycling’s appeal could be improved, especially with regards to the domination of a few teams (budget and best riders in few teams), earpieces and power meters

Here's the key quote from the UCI press release about the results of the survey:

Fans believe that the appeal of road cycling lies first and foremost in the attitude of the riders and the characteristics of the events, although there are some aspects that reduce this appeal. The three aspects most commonly mentioned are earpieces (48%), the use of power meters by riders (40%) and the variations in budgets between teams (39%).

The potential domination by a small number of teams is viewed negatively by many fans, with 71% believing that the concentration of the best riders in a select band of teams has a negative impact on the quality of entertainment. Similarly, 76% believe that the difference in budget between teams can make races less interesting.

 

[fmk_RoI]

This discussion sent me back to my archive and find this blog post from a year ago -

Sponsorship In Pro Cycling

Sponsorship in pro cycling from the perspective of the sponsor. The challenges facing teams and sponsors. Can the model change?

stephenmoon.com

WRT the point you made in that post relating to engaging with sponsors - I see that the fan survey is being followed up through September and October with "consultation with key stakeholders." Did any sponsors get an invite, do you think?

 

[Fergoose]

The entertainment offered by cycling is under attack due to financial imbalance:

• Pretty much every active GC rider will be on the payroll of Lotto Jumbo or Ineos next season, certainly in terms of recent winners (due to Tom and Carapaz).
• many teams cant even muster a competitive GC rider, or even dream of doing so
• Ineos domestiques are of a comparable level to GC riders on other sides (Porte, Landa) and I imagine this will become the case for Lotto Jumbo if their budget continues to grow.
• many teams cant afford a competitive sprinter. Bora have Two great ones. Lotto Jumbo can win TDF stages with three different sprinters

It is relatively early days for the sport being completely perverted, like football. We will know that the end of days has arrived if teams start loaning out their talent to other teams.

Again, I don't think this is true. The Year before the cap was introduced Green Bay won the Superbowl against Pittsburgh. Since it was introduced neither team has made it back. The year before that, it was teams from New Orleans and Indianapolis, the year before that, teams from Pittsburgh and Phoenix. None of these teams have returned to the Superbowl. In terms of metropolitan area size Green Bay is 158th out of 384, Pittsburgh is 27th, New Orleans is 46th, Indianapolis is 34th and Phoenix is 11th.

Conversely, following the introduction of a cap, teams from Boston (10th), New York (1st), Los Angeles (2nd), San Francisco (12th), Seattle (15th), Atlanta (9th), Denver (19th), Charlotte (23rd) and Baltimore (21st) have made it to the Superbowl.

So it's possible the cap has had a negative effect on the competitiveness of small market teams, and at best it's had no effect. Of course, this is one measure of competitiveness and only takes into account conference Champions. We could look at the divisions, but this gets much more noisy due to how teams are split and what games are played each year. As such, I think looking at Conference Champions is fair.

Apologies if I have missed something in the discussion but I don't think this is a fair analysis. It ignores that the Patriots have an incredibly easy division with underperforming rivals (despite Jets and Dolphins having large markets) and that they have a once in a generation calibre head coach and gain AFC top seed more often than not with their eyes shut. So any analysis of the AFC Conference winners pretty much goes out the window because it is skewed so much by the Patriots (who have to rebuild massive swathes of their side every couple of years due to the cap). I'd argue Belichik would have a load of success even if he was heading a side in a smaller market (like Reid in Kansas, or in recent years the Panthers, Seahawks, Saints - all competently coached sides in the NFC that are dwarfed by far larger markets in their conferences and divisions). He is a master of marginal gains (spygate, deflategate etc).

The richest owners (Redskins, Cowboys etc) are desperate to erode the effect of the cap, which suggests it does aid those in smaller areas. Anyway, I find any argument that the Packers would have more success if there was no salary cap somewhat strange (the Packers are after all repeatedly division winners against the Chicago, Detroit and Minnesota markets across their two most recent decades of QBs)

 

[King Boonen]

You seem to have missed all the other teams in my analysis.

Seattle is 15th, Kansas City is 31st, Charlotte is already listed at 23rd and Louisiana is 46 a shout listed for pre-cap. Again, at best that makes it a little more even.

I’m not making any claims, I’m just listing the data. Minnesota is a very good example of a huge market team that haven’t even won a conference title since 1976 (?). That’s a long time before the cap came in.

 

[veganrob]

You seem to have missed all the other teams in my analysis.

Seattle is 15th, Kansas City is 31st, Charlotte is already listed at 23rd and Louisiana is 46 a shout listed for pre-cap. Again, at best that makes it a little more even.

I’m not making any claims, I’m just listing the data. Minnesota is a very good example of a huge market team that haven’t even won a conference title since 1976 (?). That’s a long time before the cap came in.

Minnesota is medium size market at best.

 

[King Boonen]

Minnesota is medium size market at best.

Minnesota is 16th, higher than Detroit, Tampa, Denver, Charlotte, Pittsburgh, Las Vegas, Cincinnati, Kansas, Cleveland, Indianapolis, Jacksonville, Baltimore, New Orleans and so on. They also don't share that market, or the rest of Minnesota, with any other NFL team. Huge is wrong, but I'd put them at the very top of the middle size if not in the top size of markets.

 

[veganrob]

Minnesota is 16th, higher than Detroit, Tampa, Denver, Charlotte, Pittsburgh, Las Vegas, Cincinnati, Kansas, Cleveland, Indianapolis, Jacksonville, Baltimore, New Orleans and so on. They also don't share that market, or the rest of Minnesota, with any other NFL team. Huge is wrong, but I'd put them at the very top of the middle size if not in the top size of markets.

In the USA, all of your examples are considered smaller markets

 

[PrimusPilus12]

This is a great thread, and thank you for the insight.
I think though that the lack of any real team revenue is what hurts the model, and an attempt to legislate financial conditions and creating a cap guru like the NFL would potentially dissuade investors. Too complicated, too much noise, too ambiguous, etc. Investors have other options.
The teams don't really earn anything.
There is no TV deal to ensure team profitability like in the other pro sports.
the WT is financially small money, because of those limitations
So, you sponsor a team with your financial bottom line, making it quite expensive or a hobby project of some potentially unsavoury types.

I like the 5/10 yr licence model and the ability to sell equity. The potential is there to also sell equity at a high, not just a low, so it could inject more money into the sport.

 

[fmk_RoI]

I think though that the lack of any real team revenue is what hurts the model

Where's the hurt? What is actually wrong with the model?

The teams don't really earn anything.

Again, you'll need to explain that. They earn their sponsorship revenue. They earn whatever additional revenue they can come up with.

There is no TV deal to ensure team profitability like in the other pro sports.

There are dozens of TV deals. And no teams are operating at a loss.

the WT is financially small money, because of those limitations

You see cause and effect, but is there really a correlation?

I like the 5/10 yr licence model and the ability to sell equity. The potential is there to also sell equity at a high, not just a low, so it could inject more money into the sport.

The selling equity model is not a good way of funding the sport. It is a fantastic way of rewarding team bosses. And of inviting in more of those "unsavoury types" many seem to object to (witness the world of soccer). At the moment, teams do have an asset they can sell: Pat Lefevere cashed most of his in, the estate of Andy Rhis cashed their's in, Jonathan Vaughters cashed his in, Igor Makarov appears to be about to cash his in: a World Tour licence is not without value. You just have to sell it at the right moment. A "low" market is never the right moment, you can really only do it in a "high" market (demand > supply)

 

[Koronin]

There is exactly zero TV revenue that teams get. All TV revenue goes to the race organizers and many of the races have to go hunt for that on their own. There aren't many package deals like other sports have. NFL has package deals with several networks and the revenue to shared with all the teams. NBA, MLB, NHL have national TV deals which are revenue is shared with all the teams. In each of these cases teams then can get local TV and radio deals that are excluse to the team. So please explain where the cycling teams are getting TV (or even radio) money from.

Again, the big thing most of these teams (for some unknown reason) are missing is merchandising. Quickstep is starting to figure it out with their line of "wolfpack" items including a few autographed items, but the other teams haven't seemed to even figure this part out. What even Quickstep is still missing is putting riders names/likenesses on merchandise and then giving the riders a portion of the proceeds of anything sold with their name/likeness on it. Merchandising, however, appears to be a very foreign concept to cycling.

 

[fmk_RoI]

I do wonder the worth of refuting comments like those made by @Koronin. I mean, are they listening or are they happier just parroting the FUD-laced talking points trotted out by Vaughters, Rapha and the Outer Limits bros?

Sod it, I'll try.

There is exactly zero TV revenue that teams get.

This is a favourite lie from those who insist that cycling's failing economic model is collapsing around us. Up to relatively recent times, teams had to pay to enter races like the Tour de France, and they had to pay to cover their accommodation throughout the race, shoddy and all as it often was. Today, the accommodation is much improved, the race organiser foots the bill, and the teams receive a UCI-mandated and AIGCP-agreed appearance fee for taking part in the race. They are paid to play. That appearance fee is not coming from loose change found down the back of the sofa. It is coming from the race organiser's revenues. Which include TV revenue. So, teams are getting a slice of the TV revenue.

Is that slice of the total revenue the teams are receiving fair? That's an entirely different question.

How likely is it that it can be increased substantially? Consider, for instance, the Giro d'Italia. Vaughters's recent book reminds us of the ground-breaking revenue-sharing deal he didn't put in place with RCS in 2012. The reality of the math behind that story paints a different picture. RCS were already sharing about 40% of revenue with teams, through the UCI-mandated and AIGCP-agreed appearance fees. At the time that amounted to about $60,000 per team. The deal RCS hoped to strike would have grown TV revenue by 50% over three years. Take out a calculator and you'll see that that amounts to another $15,000 per team in the short term (to bring the share of revenue up to 50%), growing to $50,000 over three years, if the anticipated growth in TV revenues materialised. So, at the end of three years, teams would have been receiving about $112,500 in appearance fees from the Giro.

That deal that didn't happen in 2012 with RCS did happen in 2016 with the Tour de Suisse and the Velon-affiliated teams. Has it been ground-breaking?

NFL has package deals with several networks and the revenue to shared with all the teams. NBA, MLB, NHL have national TV deals which are revenue is shared with all the teams.

World Triathlon Corp's TV revenue from races is shared with competitors how? The IAAF's TV revenue from the Diamond League is shared with competitors how? FINA's revenue from its World Championships is shared with competitors how?

In each of these cases teams then can get local TV and radio deals that are excluse to the team. So please explain where the cycling teams are getting TV (or even radio) money from.

A lot of people looking at cycling suffer from a kind of body dysmorphia. They imagine there is something wrong because they think cycling doesn't look like something else. Generally speaking, these people are comparing cycling with the wrong thing. Cycling is not like NFL. It is not like the EFL. It is not like F1. It is like cycling.

Again, the big thing most of these teams (for some unknown reason) are missing is merchandising.

One can only assume a lack of familiarity with the websites of the main teams when one hears that comment. Most teams sell branded tat. Sky, they had books published in 2012 and 2013, just like Garmin's 2012 Argyle Armada, or DQS's current Wolfpack book. Via Sky, we have some insight into the way revenue from replica jerseys works, with Rapha's Simon Mottram having told us that a percentage of revenue from every bit of Sky-branded tat sold by his company made its way back to the team during the period of their deal.

As has been mentioned earlier by @simonm there is a reluctance among some teams to appoint a dedicated commercial manager and so this revenue stream is not as fully exploited as it could be, even at the top level of the sport. Only four-and-a-half thousand fans ponied up money to aid Vaughters's team in its hour of need: with a savvy commercial manager and a proper CRM that number could have been greater.

But, the question you have to ask, is just how much greater? Rapha said that Sky was accounting for about 11% of its 2013 revenue, which works out at close to £3m in total for Sky-branded tat. The percentage of that working its way back to the team in royalties would obviously be substantially less than £3m.

What even Quickstep is still missing is putting riders names/likenesses on merchandise and then giving the riders a portion of the proceeds of anything sold with their name/likeness on it.

Again, this displays a lack of knowledge of the workings of the sport. Image rights are a major part of rider contracts. In fact, image rights are so major that they are most famous for the way they are used as a tax dodge.

I don't expect any of this to encourage @Koronin to stop trotting out the standard talking points and to start looking at what is actually happening in the sport. When you're trotting out lies like these you don't tend to listen to reasoned refutations of them.

 

[Koronin]

So how exactly are teams getting a share of TV revenue from races that has no TV coverage or just a local highlight package in which the station doing that is NOT paying to do it?
Also this appearance fee is coming from the overall amount the organizers need to ORGANIZE the race in the first place which INCLUDES all the sponsors they have for that particular race. This has NOT changed how races are organized, just INCREASED the amount that the organizer needs to put on a race in the first place.

No Fing S*^& cycling isn't the NFL. It needs a DIFFERENT way to bring in revenue. It's closer to auto racing, which oh by the way, teams there also do NOT get a share of the TV contracts. Or is that a fact you are somehow missing as well?


Again cycling teams are WAY behind on merchandising. By the way I AM familiar with the teams' website and their merchandising is very HIGHLY lacking to mostly non existent.

Thanks for sharing literally NOTHING that disproves a single thing I actually said. I'm not entirely sure you actually read what I said in the first place. So keep going with your NON answer and not adding anything at all to the conversation.