How Velon is vying to boost the value and stability of pro cycling
When it was launched on November 25th the Velon company declared that it had three goals, with perhaps the most important of those being a stated desire to create a new and better economic future for the sport.
Somewhat inevitably, this was met with calls for clarification of how precisely that might work.
How much would be achieved for each team? Who would pay? How would Velon be able to convince ASO and the other race organisers to agree to hand over a share of television revenue which they had hitherto monopolised?
Furthermore, even if ASO and others did agree to that, how would each team’s share of that revenue possibly make a significant dent in what are already very high budget requirements?
Almost two months on the company has had a chance to build plans and relationships. It is now in a position to give a better insight into how a new revenue stream might be built.
Velon’s CEO Graham Bartlett – formerly of UEFA, Nike and other major sports brands – spoke exclusively to CyclingTips in recent days and gave further details of what is planned and how it may potentially gel together to transform the sport.
“We have been swamped with opportunities”
Consisting of 11 WorldTour squads, namely BMC Racing Team, Etixx-Quick Step, Lampre-Merida, Lotto Soudal, Orica GreenEDGE, Cannondale-Garmin, Giant-Alpecin, Team Lotto NL-Jumbo, Team Sky, Tinkoff-Saxo and Trek Factory Racing, Velon represents all bar six of the WorldTour teams.
The line-up gives it significant clout as a stakeholder in world cycling, while its unity contrasts with the fragmented relationships and the rivalries that previously existed amongst some teams in the sport.
When it was established it listed its two other goals as developing a more exciting and logically-structured sport, and also using new technology to try to give a riders-eye view to the fans.
Bartlett revealed that the latter remains a major focus and that detailed negotiations had been carried out with the organisers of the Santos Tour Down Under to introduce phase one of the project. While that ultimately didn’t happen, he said that efforts are ongoing to bring about changes to the WorldTour as soon as possible.
“It has been a very busy time. As you know, we launched on Nov 25, so we are about eight weeks old now, effectively, and it has been absolutely jam-packed,” he told CyclingTips.
“We have literally been swamped with opportunities, ideas, good conversations, good discussions. It has been a really, really busy time.
“There are some really exciting things going on in the sport and Velon is very much benefiting from that. It has not been difficult to start conversations, that’s for sure, or indeed carry on lots of conversations that we are still having.”
Bartlett said those talks included speaking to the Tour Down Under organisers plus the host broadcaster Globecast. “We had some really good conversations with them,” he said, describing them as “really good people” and also very professional.
“Unfortunately we just didn’t have enough some time to put some things in place in the race that would have been at a different level to what we had done before,” he said. “Those conversations have been parked for the future and those relationships banked. We are definitely going to be up there and running very hard with those guys the next time around.”
So what’s planned?
Bartlett didn’t provide specific details of what would have been in place had those talks not ran out of time. However he gave an outline of what Velon was aiming to achieve; this is an expanded version of what might have been in place in Australia.
“What we are trying to do now is not just about cameras on bikes,” he explained. “We are talking with race organisers about stitching together the whole technology package. That covers everything from tracking to video to data to lots of different aspects. It is a pretty multi-faceted problem which covers hardware, transmission, graphics, and more.”
While some limited footage from cameras was shown from certain races last year, the new plan is a significant expansion on that. In addition to images from riders’ bikes, further data would also be shared and transmitted, giving a deeper insight into the peloton and the racing therein.
Bartlett said that conversations are ongoing with various technology companies and also with organisers. While he was reluctant to put a specific date on when the package might be seen on television screens, saying that he had a schedule in mind but didn’t want to make it public in case any delays occurred, the impression he gives is that some solid progress has been made.
“We have got some really good conversations going with some fantastic technology companies. I am very excited about that. We have seen some really good conversations with race organisers. We are getting very close to being able to pull things together and say ‘right, here is how it fits between Velon, race organisers and IT partners,’” he said.
“Whatever we do next, I can assure you that it will be one part of solving the bigger solution. It won’t be a little standalone piece. It will be a step in the road to putting everything in place that everyone wants to see in terms of technology.
“I am very confident that we are going to have some good things to show this season, and that it will be a step change [for the sport].”
Previously it was felt that race organisers would regard Velon with suspicion due to the presumption that the teams wanted a chunk of their television revenues. In contrast, Bartlett said that talks have been productive and positive.
“What I have been really encouraged by is the depth of the conversations that we have been able to have with ASO, RCS, Flanders Classics, and a lot of other organisers as well – including the Tour Down Under, although that came a little early – and how open and constructive they have been.”
Aiming for synergy, not rivalry
So, the big question – what is Velon’s approach, and how has it led to interest from those organisers rather than an urge to simply protect their slice of the pie?
Bartlett stresses that the important thing is to consider it a synergistic approach. He said that a race organiser Velon had been in discussions with has described the concept as a ‘one plus one equals three’; in other words, that there is a recognition that the benefit should be bigger than if either side tried to bring about a new revenue stream on its own.
“No-one has ever joined up those rights and those packages in a clever way in the past,” he said. “So, if I am a sponsor or a technology partner, I want to be able to tell the story of the race with the teams. I also want to be able to talk about the race, which is from the race organiser. That should upscale the revenue stream potential for the money that is flowing into the sport, because for the first time you join two halves of the equation together.”
The essence of what he is saying is that what is being worked upon is something completely new, drawing from technology and team access to change how the sport is viewed. Namely, supplying extra images and data and insight that will add to the types of traditional coverage which have previously been screened.
“What we expect to see is a real good new product, a different way of looking at things which is more attractive and more valuable for those who want to invest in the sport,” he said.
In other words, not chasing after a slice of the existing TV deals. “We don’t want to have a fight with people about taking from them what they feel they own,” he underlined. “What we have got to do is actually work with people who say, ‘look, we are bringing this, you are bringing that, how do we work it together for both our advantage?’ That is in essence the business discussion Velon is having with everybody.
“That is why we are having a very good conversation with ASO. As you would expect, those guys are fantastically professional. They know the sport extremely well, they are doing a brilliant job in promoting their events and bringing partners to those events. And in a similar way we are talking to RCS and some of the other organisers as well, as those guys have got systems in place that we want to join up with, and they also want what we bring as well. That has never happened before.
“Everybody is looking at this saying, ‘listen, we can make some fantastic synergies here, and generate more profit as a result.’ So that is the essence of how the revenue stream switches on.”
The big question: who pays?
What’s important to be clear upon is how this would be funded. Bartlett said that while some talks have been had with the race organisers about them potentially buying into what the teams are offering, that he doesn’t see this as the most productive approach. “That is not how we are envisioning it,” he said.
“What we are looking for is a true partnership where both sides, the organisers and the Velon teams, put the position together and offer it as a joint offering, rather than hawking our position around the market saying, ‘you need to buy it off us, you sell it.’ That is a bit too short-term and that is not a true partnership construction.
“If we make it something that everybody wants to take, then yes, we could go to a sponsor model, you can go to a broadcast licence model. The difficulty with the broadcast deals they are already in place. You have got broadcast deals in most of the major races, they have been there for a very long time. It is a difficult thing in any sports business to say to somebody ‘I am going to offer you something extra in addition to what you have got and I want you to pay more for it.’
“That is a harder sell that saying, ‘actually, I have got something new that nobody has had before. Do you want to take that?’”
“It might take the broadcasters a bit of time to switch on to what we can offer but we certainly think they will be excited about. But the sponsorship opportunity is fantastic because the first people through this door to take a joint Velon and organiser package will be able to shape the marketing opportunity that has never been in the sport before.”
One avenue that Bartlett says might work strongly is for a sponsor, or sponsors, to be able to buy the rights to the extra data and on-bike coverage being provided to broadcasters. In other words, Company X could pay to have its brand associated with the on-screen graphics which would appear during broadcasts.
Providing that model works, it would mean that Company X would profit from what is essentially prominent branding during high-audience events. This could be more beneficial than brief slots during ad breaks. And, depending on what that company agrees to pay, it might mean that broadcasters have minimal additional costs – or, perhaps even no costs – despite having a wealth of extra data, peloton insight and on-bike camera action being supplied to them.
As for the teams and race organisers, the model would mean that the former doesn’t have to cut into the existing TV rights deals of the latter. Instead, both sides in the synergistic relationship would share the additional revenue generated. Thus, the win-win potential Bartlett speaks about.
Time will tell how things play out and if and when agreements are reached. He initially sees the new images and data being added to delayed broadcast; for example, evening highlights programmes. However with ongoing advances in technology, Bartlett believes it may not be long before the package becomes part of live coverage.
Speaking to him, he seems convinced that things are on the right track with many of the stakeholders, ASO and UCI included. He’s also upbeat about what is being offered and why it should be of value.
“It is a great opportunity for companies, especially those in the IT space. A lot of times when you buy sponsorship product – and I have been fortunate enough to sell a few in my time – it is a very fixed model. It is billboards around a pitch, or something else along those lines. ‘Here is the package, buy it or you don’t.’ That is not the position here. We are creating something completely new and that is a fantastic piece of flexibility for a new partner to come in and say, ‘this is what we want it to look like.’”
“There are lots of different ways of doing it, lots of different new areas you could create. You could create applications, you could create second screens, you could create a broadcast feed, you could create sponsor opportunities. There are many different ways you could take this new joint product to market and, in doing so, benefit both sides.”