Sweat equity: Behind Trek’s decision to own a cyclocross World Cup event
With the Waterloo UCI Cyclocross World Cup, Trek Bicycle bought an event that most brands would have only rented. Contributor Ryan Newill traveled to Wisconsin to explore what the American bicycle brand puts into the event, and what they get out of it.
To rent or to buy?
For cycling companies looking for representation at the races, the answer has long been to rent through sponsorship. Write the check, send the logos, implement the coordinated marketing plan, and let someone else wrangle athletes and equipment and permits while you stay focused on making and selling bikes, components, or clothes. When that lease expires, re-up or move on, no strings attached. What’s not to like?
Over the last several years, however, Trek Bicycle has bucked that mindset and taken direct ownership of several big-ticket assets.
In 2014, the Wisconsin-based bike brand bought the World Tour license of the teetering RadioShack team from Leopard SA, bringing the team in house and handing control to manager Luca Guercilena, who now runs Trek-Segafredo as a Trek business unit complete with goals, measures, and annual performance reviews.
Last December, the UCI accepted the company’s bid to hold a round of the UCI Cyclocross World Cup at its Wisconsin headquarters, kicking off a nine-month frenzy of activity that culminated in the Waterloo World Cup on September 24. Built on the foundation of the existing Trek CX Cup race, it brought the cyclocross world to the company’s backyard for three days of amateur races, a UCI C2 race, and the second round of the 2017-2018 Telenet UCI Cyclocross World Cup series.
But why bother? For less money and far, far less effort, any number of top-flight international races would likely have lined their fences with Trek banners, set up a catered VIP tent for the brand’s invited guests, and delivered gate receipts and TV ratings as proof of value.
Like a homebuyer, though, Trek is hoping that by owning the race, it will create equity over time, building the kind of long-term value that it couldn’t realize by paying rent to a landlord.
“When you sponsor something, you sort of do that with an understanding that there will be a limit to what you can do and what you want to do,” said Eric Bjorling, Trek Brand Manager and a member of the core team handling the race. “You can suggest things, and you can have a lot of influence, but at the end of the day you don’t own it. It’s not yours. It’s somebody else’s that you’re just putting your logo on.”
Trek learned that lesson through a long string of pro team sponsorships, from its time with the U.S. Postal Service and Discovery Channel squads through Astana, Leopard-Trek, and RadioShack.
“We got all the visibility you’d think you’d get out of sponsoring a pro team, but we never got the activation, the dealer visits, the fan-based activation. And they weren’t people we had a say in hiring,” said Trek CFO Chad Brown.
That idea of having a say, having more control to shape the final product in its own image and getting more in return, drove Trek’s decision to buy its own World Tour license. It also underpinned the idea of putting on its own World Cup event, despite the expense and double duty it would mean for staff.
“We’re not afraid of owning these things, because we like having the control, we like ultimately being accountable for that big an investment,” Brown said. “Can you imagine making an investment this big, and not having any say over how the dollars were spent? No way.”
In keeping with that ethos, the World Cup race — from course development to marketing, graphic design, promotion, and execution — has been almost entirely the product of Trek’s in-house team, from C-suite execs like Brown to athlete liaisons to marketing teams and factory staff.
While the company had most of the skills needed to put together a UCI cyclocross race, it lacked experience in putting together a World Cup event, which comes with a very specific set of demands. With control over the hiring, the first thing Trek did was reach out to Brook Watts, who first brought the UCI Cyclocross World Cup to the United States at his CrossVegas race in 2015.
To the veteran organizer, the sense of ownership was apparent.
“You go into those meetings, and it’s very much a ‘we.’ This is our event. How are we doing? You have all these people within the organization that have ownership, and with that ownership comes a great amount of pride for these different areas of responsibility and different departments,” Watts said. “It’s a different relationship in terms of getting the needed information and assets, whether it’s a logo or whatever. All of those things are so much easier.”
Access and equality over income
While major European ‘cross races incorporate ticket sales into their revenue streams, accessibility was a priority for Trek, which emphasized attendance and engagement at the venue over revenue. There were no tickets, no gates, and no parking fees. Nor were there VIP packages with cordoned-off tents and champagne brunches.
Instead, the company developed an app that provided racers and fans with schedules, maps, nearby hotels, and bike shops. It also set up free onsite Wi-Fi, providing access to the app in spite of Waterloo’s iffy mobile coverage. Microbrews from Milwaukee’s Lakefront Brewery were $4 across the board.
For those who couldn’t make the trip to Wisconsin, Trek bought the rights to the livestream and provided it for free to domestic audiences, a process the company was already familiar with after streaming Belgium’s DVV Verzekeringen Trofee Series in the United States last season, also at no cost to the viewer.
The biggest egalitarian chord the race struck wasn’t for fans, but for the athletes. For the first time in the World Cup series, the elite women’s field received prize payouts equal to the elite men, place for place. The UCI requires World Cup events to pay out €39,500 ($46,617) over 40 places for the men, but only €10,400 ($12,276) over 20 places for the women. But come Sunday evening, winners Mathieu van der Poel and Sanne Cant both stood holding giant, matching checks for $5,258.
“Most of us had no idea there was that big a discrepancy in equal pay. It was just sort of an eyebrow raiser,” Brown said, recalling the team pitching World Cup status to Trek CEO John Burke. When they reached the topic of payouts, there was little discussion. “We’re walking through [the imbalance] and John says, ‘Well, you need to fix that.’ So that sort of added $35,000 to the budget on day one.”
The decision was widely celebrated in U.S. ‘cross, which trends more egalitarian than its European cousins. In the old world, the decision to pay both fields equally—a total of over $93,000—did not play as well. Fear of a precedent weighed heavily.
“It goes up through the ranks of even the institutional folks in the sport, and that’s strange to us, because the people we do business with and the areas we’re involved in, equal pay, or equal opportunities, is not a thing you ever really have to talk about,” Brown said. “It’s not something you really have to debate in the things we normally do. So, it’s been interesting to hear the areas from which we’ve gotten pushback on that. A lot of people were just like, ‘Don’t. Don’t, don’t, don’t do that.’ But that’s never stopped us. We’re a privately held, family-owned company, and we can honestly do what we want.”
— Amanda Nauman (@_amanda_panda_) September 26, 2017
Pushback on prize money wasn’t the only obstacle that cropped up.
Though it didn’t come as a surprise, Trek’s Bontrager brand could not be promoted course-side due to overlap with series sponsor Shimano in the wheel and shoe sectors. Other restrictions the series places on local organizers’ sponsorships — like those for broadband services (Telenet) and asbestos removal (ABP) — were less problematic.
Trek also experienced the downside of event ownership: when things go wrong, it’s up to you to fix it or take the blame.
When the live feed showing the elite men’s road world championships on the jumbotron cut to an empty finish line shot at 4km to go, the assembled Waterloo crowd cursed the UCI and the production crew in Bergen, Norway. An hour later, when the livestream of the elite women’s race in Waterloo went down two laps into the event, the Trek crew knew exactly who was being cursed in cyclocross households across the country. Down below the course’s monster off-camber sections, inside Trek headquarters, the company’s IT department scrambled to restore access. Within a half a lap, the stream was back up. Crisis averted.
Outside, though, Trek was facing another potential crisis. On an early fall Wisconsin weekend that should have checked in at the 65 to 70 degree mark, temperatures soared well into the 90s (about 34°C) with bright sun and oppressive humidity. Heat illness became a serious concern. Eyeing the weather in the days before, Trek had already rush ordered several 125-gallon bottle-filling tanks to keep riders topped off. As the heat hit full force, employees hit area suppliers for 4,500 pounds of ice and cleared a local Costco out of bottled water. At the finish of every race, race volunteers and EMS workers handed out water and ice-water soaked towels from the vendor that supplies Trek’s employee locker room.
While Brown had to apologize to the vendor selling bottled water, and several people were treated for heat-related symptoms, the race averted serious problems.
Cycling diehards turned up despite the heat, but the high temperatures likely affected turnout from locals who would have turned out simply for the happening. While Trek had originally hoped for around 10,000 visitors over the weekend, the heat tempered expectations, shifting the focus to ensuring those who came out enjoyed the experience.
“We haven’t had anyone come up and be angry about anything,” Brown said. “When you have 5,000 people on a 90-degree day in Wisconsin in September, you’re going to have somebody upset, and we haven’t had anyone walk up to the complaint table.”
The lighter crowds were noticeable to Europeans used to playing packed houses, but so was another difference from the larger European crowds.
“It was again a hard race, I think the courses are really great here. The spectators are not as big as I expected,” van der Poel said, adding, “They are always cheering for every rider, and that’s something the European fans can learn from.”
Return on Investment
All of that free access, the livestream, the amenities, the Wi-Fi and the towels and the water and ice all added costs to an already expensive undertaking; that’s not to mention Trek’s sponsorship of the Telenet-Fidea team. Cyclocross has grown, but it remains a niche within a niche. If the end goal for Trek is to sell more cyclocross bikes, how many bikes would it need to move to pay for all of this?
“In terms of a true ROI, sometimes you do things because it’s the right thing to do and because it would be fun. This squarely falls into that category,” said Brown, the man in charge of the company’s balance sheet.
Just because it’s fun doesn’t mean Trek isn’t expecting — or getting — a return on the World Cup, and its investment in a wholly-owned, branded experience might provide better value than gate receipts or a course-side banner in Namur or Koksijde, venues so distinctive that the title sponsor can blend into the background.
The decision to equalize women’s and men’s payouts garnered coverage in the cycling media, but also in mainstream media, which reaches new bike buyers. It also spread like wildfire on social media. No matter the motive behind equal prize money — moral, commercial, or a bit of both — it effectively made Trek brand advocates of the entire women’s peloton, regardless of what bike brand they ride.
The race also gave the company time to build connections with sponsored athletes, including its flagship Telenet-Fidea program, women’s star Katie Compton, and a host of regional amateur programs. Brand ambassadors Sven Nys and Jens Voigt were also on hand to work the crowd, racing in open, costume-heavy “Legends” races on Thursday and Saturday evenings, respectively.
The company wanted to roll out the welcome mat for its athletes, ranging from finding a tent for Bontrager-sponsored Jens Adams to use at the two U.S. World Cups to full service-course treatment for Telenet-Fidea.
“They’ve taken over our classroom where we teach our certified service groups how to work on bikes, so all 20 of their bikes and all 50 of their wheels are mixed into that space. We offer them lunch every day, and they go through the Trek café and have lunch every day after their ride,” said Scott Daubert, Trek’s Race Shop Manager.
“I think they’re pretty at ease here. We hook them up with the Wi-Fi password, so I see them walking around the building sending videos to their friends or they’re live chatting or whatever they’re doing.”
Building the course and the race is also a major component of a long-term effort to build a strong internal cyclocross culture, one that Trek hopes will lead to a deeper understanding of the discipline that will ultimately manifest itself in better products. It is the same strategy the company employed a decade earlier, when it leased land near its headquarters and hired experts to build a trail system with the idea of gaining a deeper, more personal understanding of mountain biking. They bought the land housing the mountain-bike trails a few years later.
“We realized that we needed to change the way the company views mountain biking, that we needed to become a more culturally diverse company. It couldn’t just be road bikes all the time,” said Bjorling. “We hired professional trail builders to come in and build us world-class trails, because we felt like we needed to give employees a place to ride that would help the culture. Just as that trail system has created a huge mountain-bike passion and culture within Trek, the ‘cross course has done the same.”
Though some of those stated goals — strengthening athlete relations, building a ‘cross culture, and throwing a good party — don’t lend themselves to hard numbers, plenty of other aspects of the race do. In the coming weeks, Trek’s marketing department will be crunching metrics to see how its investment is faring.
With no gate receipts to count, they’ll turn to indirect measures of attendance, including an overhead drone shot taken just after the women’s elite race as the men’s race readied for staging.
“We’ll also take a look at beer sales, see how that went,” said Bjorling. “In my days in minor league baseball, you always went to the beer sales first to determine how your night went.”
Viewership outside the bounds of Waterloo will be easier to chart. Livestream traffic peaked at 15,000 viewers, a number Bjorling feels may have suffered due to technical glitches early on. App downloads topped out at 1,500, and the company is analyzing detailed usage data to improve the app in the future. Trek will also scrutinize social media impact, as well as anecdotal response that drifts in via email, mail, and phone.
Perhaps most importantly, the company will look at overseas viewership from networks that aired the race outside the United States. Pre-race, global audience was estimated at 10 million viewers in 100 countries.
“Europe is a big center of growth for us right now. [The race] is getting our brand and our home, getting a little bit of the Madison area, Waterloo, that exposure,” said Bjorling. “We’ll take a look at what Sporza, what Eurosport, what all of the channels did, and that’s going to be a big deciding factor to how it went.”
The UCI, which controls television broadcasts for the series, does not release those numbers until the end of the season. So while it is not yet clear how many people watched it, we know what those who did watch it saw: two hours of cyclocross, set against a backdrop of Trek-logoed fencing, fiberglass cows painted by Trek’s custom paint shop, and a barn-themed flyover, with Trek athletes near the head of the races and the company headquarters and miles of Wisconsin farmland in the background.
So how much did the down payment on Trek’s World Cup ‘cross presence cost? That’s information a private, family-run company like Trek isn’t obligated to disclose. Those familiar with the World Cup series put the cost of an average series race near the mid-six figures.
“You know, it ain’t free,” Bjorling said at the tail end of the weekend, overlooking the finish line where Mathieu van der Poel had just taken a domineering, wire-to-wire win. “To be honest with you, right now it would take us a little longer to even total the bills. We know there’s going to be a few more rolling in still, but overall I think we’re going to feel great about it.”
Trek did recoup some expenses through outside sponsors, most prominently Segafredo-Zanetti. It’s WorldTour cosponsor stepped in as both coffee vendor and name sponsor of the run-up.
After the big push to pull off the four-day event, a Monday morning post-mortem was held to capture all the thoughts and lessons learned while they were still fresh. But there’s also an acceptance that, like bills for the weekend, the sweat equity generated over the nine months from bid acceptance through race day will take time to roll in.
One thing is already clear: as one of the cycling industry’s behemoths, Trek is uniquely positioned to combine the duties of race sponsor and owner. It’s a role few companies from outside the sport would have an interest in, and few inside the industry have the resources to pull off. Even if the model proves successful, it might not be broadly replicable.
“Maybe that’s just so distinctly American, or so distinctly Midwestern, and therefore distinctly Trek, that we may not see a trend emerging, or see others follow,” said Watts. “They have their own way of doing things, and that’s a positive thing. What’s ahead for this sport? All of the challenges it faces, it could certainly use some more security, some more anchors, like Trek who are involved in various aspects of the sport.”
Part of what drove the progression from regional race to World Cup, employees say, is CEO John Burke reviewing the growing Trek CX Cup each year and asking, “What’s next? How do we take it up a notch?”
With sponsorship of one of the world’s biggest cross teams, the preeminent U.S. women’s rider, a bevy of amateur and development riders, and a World Cup race, what could be next? How does Trek take it up a notch from there?
“I’d love to say that someday this course will host a world championship,” Bjorling says. “I think that’s not… I don’t think that’s crazy to say. I’d love to do that, but we’ll see what happens.”
About the author
Ryan Newill got into cycling during the mountain-bike boom, and things just sort of got out of hand from there. He’s written about road racing, mountain biking, track cycling, and cyclocross on both sides of the Atlantic since 1999. He lives in Alexandria, Virginia.