The cost of winning

Mar 16, 2009
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Any thoughts on this?

The cost of winning

Written by: Dan Empfield
Date: Mon Jun 15 2009
Just under a year ago the CSC professional cycling team—riding high with a Tour victory and years of stellar performances—entered into a de facto auction for its bike sponsor. In its hunt for money the team changed title from CSC to Saxo Bank - IT Factory. The IT Factory co-sponsorship (in fact the entire IT Factory company) would melt away as that firm’s managing director, Stein Bagger, was arrested and accused of engineering a Ponzi scheme.

The IT Factory sponsorship (entered into at the tail end of Bagger's fraudulent run); and the unprecedented sums required to be the team's new bike sponsor (reported to me by those directly involved in the negotiations); suggested to me that the posture of Bjarne Riis Cycling, owner of the Danish team, tilted toward money at the expense of due diligence and endemic technology partnerships. What has been the result of Riis Cycling's decisions, both on Cervelo, and the other involved parties?

I often accuse Gerard Vroomen, Cervelo’s president and co-founder, of spectacular good luck. Cervelo assembled a TT bike for Tyler Hamilton, riding for then-Look-sponsored CSC, and he ignored it. Laurent Jalabert picked up the discard and said, “Hmm, interesting, and my size! I’ll ride it.” Jalabert commenced to prologue the P3 to a virtual dead heat lead in the Tour de France prologue. Has to be luck. Right? And it’s only been gravy and "good luck" since.
Every time Vroomen, or his company, or his sponsored team, exits a relationship, that bad omen turns out to be a blessing in disguise. Hamilton quits the team and, as soon as he puts enough distance between himself and CSC to keep Cervelo safe from the shrapnel, he gets busted for drugs.

Enter Ivan Basso: Stellar TT results in a perfect position on a perfectly fitted P3 and then, busted. Basso was still with the team, still a Cervelo rider, at the commencement of his drug problems, but somehow this seemed not to spill over and onto the Cervelo headbadge.

And the victories kept coming. Zabriskie was a Cervelo sensation in time trials. He leaves for Slipsteam, no matter, then it’s Cancellara in the time trials. And Sastre wins the Tour aboard a Cervelo in 2008.

I don’t blame the rest of the bike world for having Cervelo envy. Specialized has endeavored hard to bag that maillot jaune in Paris. Reminiscent of Shimano trying to pull the yellow off Campagnolo's back all through the 80s and early 90s, here’s Specialized, doing everything “right.” Where’s the cosmic justice?
Several bike companies were involved in the Team Saxo Bank sweepstakes, and I don’t want to embarrass anyone, I’ll just say that the sums I heard from several teams involved in the bidding were astounding. Certainly much more than a company the size of Cervelo can afford. In Specialized, Riis found a match: Riis wanted money, Specialized wanted palmares (so much so that Specialized sponsors 2 of the 16 Pro Tour Teams (Saxo Bank and Quickstep) as well as one Continental Pro team (ISD).

Indeed, were Cervelo to have bought itself back into its Saxo Bank bike sponsorship, it could’ve formed its own, smaller, Continental Pro team for that money. Obviously, that idea was not lost on Cervelo and its management.

The non-endemic sponsor money has dried up in the wake of cycling’s drug scandals and a ruinous economy. The teams have taken to squeezing the product sponsors. Read our interview with Oval Concepts’ Morgan Nicol for an insider’s take on this (there's a link at this OpEd's terminus). As existing contracts expire, the money it takes today to bike-sponsor a top cycling team has tripled, quadrupled, or quintupled over just the last three or four years.

I’m writing now in reference to two notables: the Cervelo Test Team is not one of the 16 Pro Tour Teams. It is a Continental Pro Team, one rung down in the food chain. Nevertheless, it is the top professional cycling team in the world as of this writing—besting year-to-date all the Pro Tour Teams—based on its performance so far in 2009. (This, prior to the Dauphine Libere.)
Second, this week the UCI threatens to release a list of up to 50 drug-tainted riders against whom they've built (what they claim is) a defensible case, some of whom have biological passports that show abnormal results. If the UCI is true to its word and doesn't wimp out (no certainty) teams will be forced to deal with this list. Sponsors—especially the non-endemics—aren’t likely sit still for tainted athletes wearing kits with their names ablazoned.

Nobody knows whose names will be associated with non-conforming biological passports. But this is known: Trek with Astana, Scott with Columbia-Highroad, Cannondale with Liquigas, Giant with Rabobank, and Specialized with its three teams, will all await the list. If and when that list contains companies' sponsored riders, they have limited power to act. They can only hope that the management of these teams doesn't bring embarrassment to their bike brands. While none of these companies can predict which of its sponsored riders will cheat, Cervelo alone has the power to respond to its athletes' bad acts directly.

This lack of control over bike makers' marketing investments didn't used to be a big deal. In today's doping environment, with this much money being asked of bike sponsors, it is. To misquote Churchill: Never was so much spent by so many to so few [Pro Tour teams]. Bike companies are going to rethink spending so much money for the right to provide bikes to be ridden by athletes on teams owned and managed by many of whom came out of the drug tainted era of the 1990s.
This'll be (I predict) the high water mark for money bike makers pay for teams they don't own. It’s hard to imagine large bike companies continuing to put that much money at risk year after year; sums that represent a huge portion of their promotional and marketing costs; sweating out the wait for the possible bad news of the tainted team rider; wondering whether the millions upon millions spent annually, just for the bike sponsorship—per each of the best Pro Tour teams—will go all for naught or, worse, will conspire to hurt a company’s image.

No, for that sort of money Trek, Cannondale, Specialized, Giant, Scott, and maybe even Felt, will want their names on the jersey, first and largest (or if they're named behind a title sponsor it'll be their title sponsor, of a team they own). They'll want control of the doctors, directeurs sportif, coaches, riders, drivers, masseurs. They'll want what Cervelo has.
While Cervelo rides out its non-standard investment, Specialized appears cycling's George Steinbrenner. Maybe Specialized' gambit will pan out. Maybe one of the Schlecks will get Specialized its yellow. But isn't it nerve wracking watching star athletes (like Tom Boonen) who ride Specialized bikes get repeatedly busted for recreational drug usage? And wondering whether one of its high dollar prospects is going to be named as the carrier of a non-conforming biological passport? And knowing that you're not in control of the disposition of these cases?

Wouldn't it be better to stop buying into sponsorships of teams at their top? Rather to build, from the bottom up, a team that needs your technology? (Rather than one who tells you it needs your technology but, in fact, mostly needs your money?) In the mid-1990s Cofidis cut an athlete from its roster. That athlete couldn't find a mount. Trek made an investment. It sponsored that athlete and his team—something Trek helped build from the bottom up—and rode that investment to 7 Tour jerseys.

I'm guessing Scott, Trek, Cannondale and Giant are all closely watching the Cervelo experiment. I hope Specialized is as well. Since the non-endemic money is drying up anyway, how much better would it be for all these brands to build their own teams, not simply with their cash but with their expertise. Riis Cycling's bike company auction appears a short-term success—for Riis. In the longer term, Cervelo's reaction to the auction may represent the sustainable model.
 
Mar 10, 2009
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Interesting read!

As far as I see it, the following argument is somewhat made (but I could be wrong as I just skimmed it):

"FACT" 1) Teams want money
"FACT" 2) Bike manufacturers want prizes and exposure
"FACT" 3) Manufacturers (outsiders) provide money, Teams (insiders) make decisions
_______________________

HYPOTHESIS 4) If manufacturers build teams of their own, control will be better

ASSUMPTION 5) Control will be better, because manufacturers have no interest in bad publicity
ASSUMPTION 6) Control will be better, because there is more direct leverage
ASSUMPTION 7) Manufacturers are outsiders, hence have no links to doping

I think the argument hinges on some pretty thin assumptions.

Why would 5 apply? Although manufacturers don't want bad publicity, they also want wins. This could well be a driving force behind the use/cover up and condoning of doping.

Why would 6 apply? Now sponsors don't want bad publicity, and teams know it. Does this 'unwritten and indirect' approach maybe not have the same effect? Katyusha already announced that they would quit if another bad apple would surface. But then again, they are not a cycling brand and less tied up with the sport as, say, Specialized. So there is actually a convergence of interests between manufacturers and the sport of cycling. Can one really live without another?

Why would 7 apply? Are people in the biking industry really outsiders? Isn't it an old boy's network, where mechanics, (ex)-riders and entrepreneurs sit together to sell a product?

Reversing 4) we would get "control will not be better (read: equal or worse), if manufacturers don't build teams themselves" which makes it seem as if only manufacturers can find a way out of the doping mess cycling is in. I think it requires more of a concerted effort of multiple parties involved, amongst others, perhaps the manufacturers.

Lastly, how many manufacturers teams in the past have been able to really 'control' what was going on in teams, especially when you know that riders keep it to themselves or go at it alone?
 
just a couple of thoughts:

1-) Bjarne Riis = Greedy Cheap Crook
2-) Are U representing Cervelo at all? :D I own two & they truly deserved the impeccable reputation that they carry around the world. :)
 
Mar 18, 2009
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I read that when it was originally published. The use of the word endemic annoyed the hell out of me. The bit about getting rid of doping was hopeful stupidity. Would anyone want Garmin and their results as a bike factory team? At some point a team needs results, and the people will look the other way to allow the riders to get them.

A whole peloton of bike makers teams sounds similar to the way F1 has gone with most teams associated with a large car manufacturer. I would not say it has been a win there. I also do not think it would be financially healthy over the long term. The bike industry has a history of bankruptcies and buyouts. It does not look like an industry where spending $10M a year for a team is easy. By contrast, large companies in larger industries often have advertising budgets that make $10M just a drop in the bucket.
 

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