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Editor’s note: This column was written by Steve Maxwell and Joe Harris, who run The Outer Line website.
Chinese sports and entertainment giant Dalian Wanda Group telegraphed its intent to disrupt the status quo of the endurance athletics industry when it purchased World Triathlon Corporation, owners of the Ironman brand, for $650 million, last August.
Six months earlier, in February 2015, Dalian Wanda purchased Infront Sports & Media, a sports marketing company based in Switzerland, for approximately $1.2 billion.
In November, the two companies were merged into Wanda Sports Holding, the newly formed sports division at Dalian Wanda. Philippe Blatter, nephew of scandal-plagued FIFA boss Sepp Blatter, was named head of Wanda Sports.
In turn, Ironman’s recent purchase of the Lagardère Sports’ endurance division, which includes races in three continents and eight countries, expanded the Group’s reach into cycling, further connecting it with the affluent demographic which dominates endurance sports, while also bolstering its global race production and broadcast capabilities.
The rumor of a few weeks ago, that RCS Sport would be purchased, proved unfounded, but the debate it stirred is underscored by Wanda Sports’ latest move: What would happen to ASO if it had to compete against a better funded, more agile, and more globally-minded race organizer?
From pro cycling’s standpoint, the most important component of the Lagardère acquisition package is the Hamburg Cyclassics, a UCI WorldTour race formerly known as the Vattenfall Cyclassics, and the company’s exclusive partnership with the UCI to produce the Velothon cycling event series.
The “Velothon Majors,” sanctioned by the UCI, provide a professional race-style cyclosportif experience for the cycling community in key urban markets. While similar in format to gran fondos, the Velothon events are always followed by a UCI pro race just hours later.
Lagardère Sports markets these races as “everyman” cycling events, and its cyclosportifs attract as many as 14,000 recreational cyclists (up to 20,000 in Hamburg), all of whom pay to ride the professionally supported course.
Sportifs are nothing new to cycling, but Lagardère Sports has been more successful than most at merging fan participation and race viewing into a sustainable revenue base — something which has historically eluded pro cycling.
They run as many as six Velothons per year, although only three are currently confirmed for 2016. These events nearly always sell out, often months in advance, plus the participants stick around to watch the pros race.
And in contrast to ASO’s l’Etape du Tour — a well-attended event but still a minor sidelight to the Tour de France — Lagardère focuses on the sportif as a primary revenue driver.
In this way, Lagardère’s cycling events have leveraged Ironman’s model. Revenues to support the business are driven by converting fans into active participants in the event and its brand — not just passive viewership and “eyeballs” on watching sponsorship logos.
This type of interaction builds a deeper connection to the sport, which in turn leads to more valuable activation of the sponsor’s marketing plans.
Wanda Sports’ acquisition of Lagardère is only a foot in the door — one WorldTour event and three sportifs pales in comparison to ASO’s numerous stage races and l’Etape du Tour — but it may be a harbinger for what the company would like to do in the future.
ASO doesn’t currently have a serious competitor, and the broader entry of a firm like Wanda Sports could instantly put ASO on its back foot; Dalian Wanda founder and CEO Wang Jianlin is reportedly worth $30 billion.
With this first anchor point in the WorldTour, Wanda Sports can experiment with applying best practices from both Lagardère’s and Ironman’s portfolios — ideas which have not really been tried in pro cycling to date.
Hamburg is a perfect testing ground, particularly because of the race’s traditionally high spectator numbers. And with the experience of Ironman’s CEO Andrew Messick — he ran the Amgen Tour of California at AEG Sports from 2007-011 — Wanda Sports might be able to really plot a new course in terms of reducing cycling’s dysfunctional dependency on the traditional sponsorship model. They seem to have an appetite; Messick was quoted in press reports saying that the firm is hungry for additional acquisitions.
A sidelight irony of Wanda’s latest move is that Arnaud Lagardère, the seller, was a significant minority holder of ASO until the family bought back his share a few years ago. While the circumstances of his exit from ASO’s board are part verifiable fact and part hearsay, his approach to the sport and the success of his events portfolio may indicate where he and the Amaury family differed.
As cycling’s current leadership stumbles about trying to apply band-aid fixes to keep the sport struggling along, Ironman has shown how to build a sustainable revenue foundation.
Pro cycling needs more of this kind of new thinking to shake up the system; as we suggested a couple of months ago, the opportunity for an outsider to come into the sport and completely change the modus operandi and power structure continues to grow.
As it gathers momentum, Wanda Sports may help to create and implement a new revenue-generating model in this historically unstable sport, and thereby impact the way pro cycling is run in the future.