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March 24, 2011
NEWS & RACING BROUGHT TO YOU BY CHAPTER2 BIKES
The other day I read that major professional cycling teams are in discussion to form a break-away league away from the UCI. When I read this news I gave my brother-in-law a ring. Dr. David Legg,(Associate Professor of Sports Management at Mount Royal University) knows this kind of stuff inside out and we had a good chat about the pros and cons of a new league forming in cycling and how it might look.
I love talking to Dave (Dr. Legg to you folks) about the business model of cycling because it brings to light all the archaic ways of how cycling is run (those are my words, not his). While other sports progress and flourish, cycling’s top athletes are paid next to nothing in comparison and the fans follow text updates and watch dodgy internet streams broadcast in Flemish to get the coverage of the majority of races. Is anybody winning here? It’s pathetic, but I still love it. It’s all part of the charm. Thank you to the SBS team for doing more than anyone else to bring coverage to Australia.
First of all, the UCI is a governing body. They make the rules and most of the commercial aspects of the sport are dealt with by individual race organisers and teams. Everyone basically reports to the UCI. I cannot find an official org chart, but at a high level the basic organisation of road cycling looks something like this:
The UCI is the IOC recognised body for cycling. In the grand scheme of things, road cycling is not a big Olympic sport. Association with the IOC only makes sense for sports that are heavily influenced by the Olympics. In road cycling there are bigger prizes to be won than Olympic medals.
A new Professional league for cycling would take the UCI and IOC out of the picture. In other sports, typically the defecting teams would report to a professional association where there are franchises. It could look something like this:
The key to getting momentum behind a new professional cycling league would be the Tour de France (owned and operated by the ASO). If the ASO decided to go with this new league it has the potential to create a domino effect where other organising committees follow.
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements with regards to working conditions. In a Professional League System, the athletes and franchise owners have the power of collective bargaining. In the current system, everyone is autonomously and non-collectively negotiating on issues related to doping, safety issues, rules on technology, etc. A good example of this is the drama playing out between the UCI and the teams with the issue of race radios. Will this be the straw that broke the camel’s back?
The NFL (American Football) covers their costs each season before they’ve sold a single ticket. How do they do this? By selling broadcasting rights. The NFL is able to negotiate huge amounts of television revenue where all the teams get an slice of the pie. This money trickles all the way down to the players. Do the UCI’s sponsorship dollars make it to athletes (i.e. Tissot, Santini, Skoda, Shimano)? I don’t know for certain, but I’m sure it can be argued that it does in some shape or form.
Organisations such as the ASO probably wouldn’t benefit much from collective negotating power because they’re going to get sponsors anyway. However, the smaller races such as the Tour Down Under would benefit because the bargaining power of a Professional League could negotiate bigger deals and more coverage with sponsors. For example, the league could negotiate a sponsor to sign-on with the TdF and they can also offer the TdU, the Herald Sun Tour, race X and race Y. This could also be leveraged to get television broadcasters to not only show the TdF, but other events as well with continuity of those sponsors. This creates the possibility of growing a larger market for cycling that’s not only covered in July, but something that is covered year-round to a global audience. This could help generate interest from massive multi-national companies and bring aboard sponsorships that ensure longer term financial commitments. A company could be guaranteed coverage from multiple races where they don’t have to negotiate sponsorship with five different race organisating committees. They would only need to deal with one entity – the Professional League. This is exactly what the IOC does and they get an exorbitant about of money for it.
It is unlikely that the ASO would give up the rights to the TdF in order to become a carrot to attract sponsors for smaller events and to enable broadcasters to show more cycling, but this is the advantage of collective negotiating. What we see right now is that different events are very much in competition with each other. Theoretically the rising tide lifts all boats and all of cycling would benefit if it could generate some scale. It wouldn’t happen overnight and it wouldn’t be simple.
Cycling is a very old sport steeped in tradition. One of the major challenges in all of this is getting the race organisers to agree and work together. For example, some guy who has spent his entire career working his way up the ladder in the ASO and is now on the board for the TdF is not going to readily give up his power and position to let some new Pro League supersede him in the decision making.
The easiest way to see everyone working together is for somebody to come along and buy everyone else. The ASO would probably be in the best position to do this. If they just came along and bought all the other events, problem solved. Was the reason for rumours that Lance Armstrong was looking to buy the ASO?
One thing that is often a drawback of professional leagues is that they do not often care about developing the sport at the grass roots level. Most North American professional leagues don’t do much for the development of the sport (that I’m aware of). The UCI is very much involved in the development of cycling from a broad perspective. Sometimes professional leagues are interested in grass roots development from a public relations perspective. This might be all that’s all that’s required. The AFL has Aus Kick which seems to work very well. They are involved with footie development which benefits them commercially. It builds interest in the sport, helps with ticket sales, merchandise, and gives them with a large pool of potential players. I’m not overly familiar with Aus Kick, but by all accounts it sounds like it works very well.
If a new pro cycling league could convince the athletes that this will be better for them from a financial or career perspective, they’d be crazy not to go along with it. A professionally run league with a commercially driven model with franchises have often proven to be successful and profitable. Athletes are often much better off in this type of system and so is the television coverage for the fans. Professional Leagues aren’t without their problems, but the way professional cycling is currently run I can see a lot of upside with this structure.
There are lots of possibilities with what might happen and it will be interesting to watch the developments.