How does a cycling team make money?

[QuadGod]

How exactly does a cycling team, say at the Pro Continental level, make money?

Revenue = sponsorship...anything else?

Expense offsets from sponsors = rider apparel, bikes, wheels etc.

Expenses = rider salaries & bonuses, staff salaries, director salaries, travel, vehicle leases, etc.

Profit = ?

I understand teams don't get any share of the winnings or appearance fees either.

Not sure by how much profit could be in it (which is why I'm asking if anyone knows/can guess). Doesn't seem like a very attractive place to put capital. Team owners do it just for the love of the sport?

 

[BroDeal]

They don't make money. There is no profit. The people involved get their salary.

With the Pro Tour I would think one of the original teams could sell their management company along with the Pro Tour license it holds; but since the Pro Tour license has to be periodically renewed, it probably is not worth much.

 

[pmcg76]

How exactly does a cycling team, say at the Pro Continental level, make money?

Revenue = sponsorship...anything else?

Expense offsets from sponsors = rider apparel, bikes, wheels etc.

Expenses = rider salaries & bonuses, staff salaries, director salaries, travel, vehicle leases, etc.

Profit = ?

I understand teams don't get any share of the winnings or appearance fees either.

Not sure by how much profit could be in it (which is why I'm asking if anyone knows/can guess). Doesn't seem like a very attractive place to put capital. Team owners do it just for the love of the sport?

Cycling teams have never been about making money. Its simple, a company wants to promote its product, it can do this by many marketing routes but there is always a cost. For example a company could sponsor a big Soccer team so this would cost a lot of money to get a name on a shirt.

For medium sized company, cycling is very often a more cost-effective marketing route than other methods. So a company puts in say $10million annually, there may be extra money from bike sponsors, component suppliers kit suppliesr, sub-sponsors etc. This is then used to get the best team available, obviously the higher the budget, the better the team in effect.

Sponsors calculate their success on the coverage they receive whilst sponsoring a team. There is no money making unless somebody is on the take. Teams that run into financial trouble are due to the sponsoring company having problems like Astana last season or Le Groupment years ago.

 

[TRDean]

Just curious...I wonder how much money team gear sales bring in? I know it does not cover the entire cost or anything...but take Quick Step...how much revenue is generated by selling their gear??

 

[BikeCentric]

The team will make a small amount of money from race prize winnings but in the net aggregate a cycling team is just one big marketing expense. The sponsors are paying for the team as advertising; it is not an investment that seeks to make money at all rather it is booked by the sponsors as pure marketing expense.

 

[Anonymous]

to put it in persepective.. BskyB are paying about £10m a year for the cycling team, they paid £300m for the rights to premier league football.

 

[ImmaculateKadence]

The team will make a small amount of money from race prize winnings but in the net aggregate a cycling team is just one big marketing expense. The sponsors are paying for the team as advertising; it is not an investment that seeks to make money at all rather it is booked by the sponsors as pure marketing expense.

Which is why you don't see many teams sticking around for more than a few years. At least not without being forced to change sponsorship. Garmin-Transitions for example started out as Subaru, then TIAA Cref, theny they became Slipstream powered by Chipotle, then Garmin powered by H3O, you get the idea.

 

[BeachBum]

Like everybody else is saying, I don't think there is any 'profit' to running a cycling team. However, I don't think cycling isn't any different from any other kind of racing, be it on motorcyles, boats or autos. I doubt if any F1 and/or NASCAR teams make a profit, all they generate is exposure for their sponsors. Of course, everybody gets paid a salary, and people like Riis and Levefre must have some leeway depending on how they can juggle the other expenses.

TV revenue, if any, goes to the race organizers, right? Again, other types of racing work the same way.

There might not be enough material for a book, but an in depth look at how a team's sponsorship money is allocated to all the various expenses over the course of a year would certainly make for an interesting read.

 

[BroDeal]

I doubt if any F1 and/or NASCAR teams make a profit, all they generate is exposure for their sponsors.

Ron Dennis made a pretty penny selling part of McLaren.

 

[TheNJDevil]

A few NASCAR teams make great profit providing cars and technology to other teams.

 

[BroDeal]

A few NASCAR teams make great profit providing cars and technology to other teams.

I guess doctors Ferrari, Fuentes, etc. are the cycling equivalent.

It seems like only a few--very few--race organizers are the ones who make money from cycling.

 

[knewcleardaze]

There are many pro sports that make a tidy sum. These numbers can be astronomical. Here's a quick glimpse http://www.crainsdetroit.com/article/20090412/FREE/904109954#

As to pro cycling teams, I was always under the impression that potential sponsors would determine their advertising/marketing budget for the next year/couple of years. Weigh this against other marketing schemes and determine the most bang for their buck.

Here in the U.S.,most major league sports including NASCAR, receive great sums via revenue sharing from television, radio and cable television rights.

If your team is not making a profit, you either sell it to someone who feels they can do a better job, or the league will buy your team and find a suitable buyer or simply convince another city to build you a new venue with tax payer dollars. At the moment, I believe I heard something about the NBA is operating in the red at the present time. However, come playoff time, this will change.

 

[knewcleardaze]

Like everybody else is saying, I don't think there is any 'profit' to running a cycling team. boats or autos. I doubt if any F1 and/or NASCAR teams make a profit, all they However, I don't think cycling isn't any different from any other kind of racing, be it on motorcyles, bgenerate is exposure for their sponsors. Of course, everybody gets paid a salary, and people like Riis and Levefre must have some leeway depending on how they can juggle the other expenses.

TV revenue, if any, goes to the race organizers, right? Again, other types of racing work the same way.

There might not be enough material for a book, but an in depth look at how a team's sponsorship money is allocated to all the various expenses over the course of a year would certainly make for an interesting read.

Believe me, they are making money. They are not doing this for free for our entertainment.

 

[Race Radio]

Teams don't make money, owners do. Riis, Lefevre, and Johann all put a nice piece of cash in their pocket every year. Stapleton made a ton of cash from Telekom.

 

[53 x 11]

Why on earth should a team make money? It has no shareholders, sure the owners need some money but they pocket a nice salary

 

[unsheath]

Just curious...I wonder how much money team gear sales bring in? I know it does not cover the entire cost or anything...but take Quick Step...how much revenue is generated by selling their gear??

No idea about the exact dollar amount but kit sales revenue split is determined by the commercial agreement between the kit manufacturer and team. I'd speculate that a brand like Pearl Izumi would be paying Garmin 10-15% of their wholesale sales income on all Garmin lines. Its effectively a license merchandise agreement.

Surely a commercial or sponsorship manager or two would be lurking in CN that could enlighten us further.

 

[BroDeal]

No idea about the exact dollar amount but kit sales revenue split is determined by the commercial agreement between the kit manufacturer and team. I'd speculate that a brand like Pearl Izumi would be paying Garmin 10-15% of their wholesale sales income on all Garmin lines. Its effectively a license merchandise agreement.

Dang. That does not seem like much money could be made. Sales volume would have to be very large to make significant money.

Rock Racing probably had the right idea: High priced kits. Sold online. Frequent special editions. Made by Rock.

 

[craig1985]

So how did JV do it with Slipstream before Garmin took over? Didn't he have one rich bloke donating/pumping in cash into the team?

 

[Bustedknuckle]

How exactly does a cycling team, say at the Pro Continental level, make money?

Revenue = sponsorship...anything else?

Expense offsets from sponsors = rider apparel, bikes, wheels etc.

Expenses = rider salaries & bonuses, staff salaries, director salaries, travel, vehicle leases, etc.

Profit = ?

I understand teams don't get any share of the winnings or appearance fees either.

Not sure by how much profit could be in it (which is why I'm asking if anyone knows/can guess). Doesn't seem like a very attractive place to put capital. Team owners do it just for the love of the sport?

Sponsorship of a pro team is a form of advertising. The team makes no money, they are supplied $ and product and in return are traveling billboards for their sponsors. Winnings are team assets, distributed to all riders most commonly, in the rider's hands, not the 'team' management. A 'prem' if you will, added benefit but none goes to the managers.