The benefactor model: Why some teams are ‘more stable’ than others right now
With no revenue coming in from race starts and few opportunities to provide value for cash-strapped sponsors, bike racing teams are in dire straits amid the coronavirus pandemic. Behind the scenes, many of the people that run those teams are facing difficult choices as budgets near collapse. Several teams have already made dramatic cuts. Some seem to be on the brink of disappearing entirely.
As the co-owner of WorldTour squad Israel Start-Up Nation, Sylvan Adams is one of the handful of people navigating the uncharted waters of operating a bike racing team in a time without bike racing.
The Canadian-born businessman, who now lives in Tel Aviv, offered his perspective on the crisis facing cycling right now in an interview with CyclingTips this week. Adams sees financial difficulties ahead for a sport that was never flush with cash to begin with—but explained that his team, at least, finds itself in a somewhat unique circumstances.
“I think that my situation is actually in many ways much more stable than many of the other teams that are relying on commercial sponsors whose interests would be impacted by this corona situation,” said Adams, who provides funding for the team with a mission of promoting cycling in Israel and Israel’s image abroad.
Unlike, for instance, the CCC team, whose sponsor is facing dramatic budget shortfalls, Israel Start-Up Nation relies more squarely on money that ultimately comes from Adams himself. That gives his team some protection from the financial woes that have left companies like Polish footwear brand CCC reeling. For teams funded more by enthusiastic benefactors than commercial partners, things can actually be more stable in moments of crisis—assuming those benefactors remain committed to the project and d0 not suddenly decide to leave the sport behind (a la Oleg Tinkov).
Adams made a point to reaffirm his commitment in his conversation with CyclingTips, refuting a rumor mentioned earlier this week by The Secret Pro that “the guy bankrolling Israel Start-Up Nation has got cold feet.”
“He never asked me anything,” Adams said in reference to The Secret Pro. “I don’t know him, he never spoke to me, and nobody could possibly know this information other than going to the horse’s mouth, and, well, I’m the horse, and my feet are pretty warm.”
Adams said that the widespread hiatus has not made him rethink his overarching objectives, objectives that he characterizes as both “philanthropic” and “longterm.” He pointed out that he is busy planning for 2021 already. As of yet, none of his current plans have involved cutting salaries the way that several of Israel Start-Up Nation’s fellow WorldTour outfits have.
“I’ve read about things that have actually happened, about the various teams that have cut their budgets and imposed salary concessions on riders and staff,” Adams said. “I note for you that we are not one of those teams. Nobody’s written anything about us and nobody could write anything about us because we have not taken any moves in those regards. For a guy with cold feet you’d think that would be the first thing that he would do.”
That’s not to say that Adams is not in a tough spot amid the global racing hiatus. His team does have sponsors and its budget is not limitless. His riders and staff have colleagues across the peloton who have seen their wages reduced or cut altogether. With the future of the 2020 season still very much unclear as lockdowns drag on and the coronavirus pandemic continues to wreak havoc around the world, Adams sees financial implications down the road for the sport as a whole.
“Some of the sponsors will not be around altogether, and those that remain are going to be less flush. And we may have the disappearance of a team or two, which will lead to more riders being available for a fewer number of teams,” said Adams, who noted that he communicates with leaders from several other squads, keeping tabs of the pulse of the peloton.
“In the short or medium term, I think there are going to be some changes,” he said. “There will be compression of team budgets, reflected in rider salaries and staff salaries.”
For Adams, the struggles that road cycling is facing at the moment highlight its unusual position among international sports.
“We have a very funny sport in that the team’s don’t share in TV revenue,” he said. “We have no paid attendance. We have no fans that we can sell tickets to. We derive all of our financing from sponsorships, which for most teams [in other sports], if you take the New York Yankees, they sell sponsorships too, and that’s like a miscellaneous revenue item on their income statement.
“The race organizers keep to themselves the TV revenue, and there is no gate. This COVID [situation] might cause by necessity – and as I say I’m a little bit different from most teams in that it’s a philanthropic decision to invest in this team – but I could see the model changing because if sponsorship is not as plentiful, what are we going to do?”
That said, Adams was quick to point out that there have, in the past, been pushes for change in the cycling model that have ultimately led to nothing. It is too early to say whether change will actually come to the sport amid this crisis, or whether it will settle back into its ways when all is said and done. And for his part, Adams says he won’t be the one “on the barricades” pushing for a revolution in the cycling model. In Adams’s view, any dramatic changes must come “from the people who have been involved in the sport for many years who know the sport much, much better than I inside and out.”
For now, Adams must keep his operation running as smoothly as possible while trying to find ways to provide the team’s partners with some value.
It helps that his team has a strong social media footprint, with more Facebook followers than any other WorldTour team except Ineos (yes, really!). In recent weeks, Israel Start-Up Nation has been hosting Zwift rides, providing sponsorship visibility while also working towards a good cause; for each participant, the team is donating one medical mask to healthcare personnel. As of Friday, the initiative has already put several thousand masks in transit to hospitals in New York and Canada, with many thousands more expected to go to Israel from the team’s next event.
Ultimately, getting back to racing bikes remains the goal. 2020 was supposed to be the year that saw the first ever appearance of an Israeli team at the Tour de France—that was the prime objective when the team took over the WorldTour license of the Katusha-Alpecin team.
Whether that actually happens this season remains to be seen, and if it happens next season, no one can really know what the cycling landscape will look like. Just the same, Adams remains committed to the goal, and hopes his colleagues at other teams around the peloton will be on sound footing by the time that happens, the way he expects his own team to be regardless.
“We were looking forward, and we are looking forward still, to riding in our first Tour de France. That’s a big deal for us. But if that gets deferred to 2021, well, it doesn’t harm us in a permanent, material way,” he said.
“We are newbies to the WorldTour, happy to be there and to have this opportunity to be there. I’m hoping that the sport evolves in the right way and that he sport is not too financially damaged.”