Author Topic: Where's all the money gone?  (Read 2003 times)

quixoticgeek

  • Mostly Harmless
Where's all the money gone?
« on: December 12, 2018, 07:29:39 am »

Note: I'm a complete novice when it comes to following pro cycling.

Today Sky announced they are withdrawing sponsorship of what is currently Team Sky. We've had a number of both mens and women's teams have their sponsors pull out at varying degrees of notice. Wiggle High5 have given up this year, the Drops team has had to go to crowd funding for support.

Has this sort of thing happened before in the sport, or is this a symptom of a new wider problem with pro cycling?

J
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Jaded

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Re: Where's all the money gone?
« Reply #1 on: December 12, 2018, 07:46:47 am »
I’m guessing they could look for a sponsor from the pharmaceutical sector?
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Karla

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Re: Where's all the money gone?
« Reply #2 on: December 12, 2018, 08:02:53 am »
I wouldn't want to still be sponsoring Team Sky if I were Sky.  They've had their run, they've got all the publicity they can grim it and now all the extra coverage they're getting is negative stuff from the Froome/Wiggins drugs cases.

Pedal Castro

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Re: Where's all the money gone?
« Reply #3 on: December 12, 2018, 08:36:43 am »

Note: I'm a complete novice when it comes to following pro cycling.

Today Sky announced they are withdrawing sponsorship of what is currently Team Sky. We've had a number of both mens and women's teams have their sponsors pull out at varying degrees of notice. Wiggle High5 have given up this year, the Drops team has had to go to crowd funding for support.

Has this sort of thing happened before in the sport, or is this a symptom of a new wider problem with pro cycling?

J

Happens all the time. Companies sponsor pro teams as advertising billboards. Once they have achieved their marketing aims they switch to another promotion avenue. In times of recession many companies rein back their marketing spend and lots of cycling teams fold at the same time.

Re: Where's all the money gone?
« Reply #4 on: December 12, 2018, 08:52:47 am »
Mid 80s seemed like a good time, but budgets were smaller.   Televised criteriums - anyone remember the Kelloggs series ?

I remember teams collapsing mid season when the budget didn't turn up - think Le Groupement and Linda McCartney.

I think a team with the budget requirement of Team Sky will struggle to find the necessary investment.   That's a lot of salaries and costs to cover.

Re: Where's all the money gone?
« Reply #5 on: December 12, 2018, 10:19:31 am »
It's not part of a megatrend: there are specific reasons.  The Sky cycling sponsorship was a personal project of James Murdoch.  Sky has now been acquired by Comcast so Murdoch is no longer in a position to continue it.

Sky got a lot of awareness from it, but it cost them a lot of money.  The new owners presumably reviewed it and decided it wasn't good value when judged purely on commercial terms vs other things that could go in their marketing budget.  This was always likely to happen after the Comcast acquisition went through a couple of months ago.

Re: Where's all the money gone?
« Reply #6 on: December 12, 2018, 10:58:08 am »
The sponsorship of pro cycling teams tends to go in cycles.  Sponsors tend to sign up for 3 or 4 years, get their exposure, decide that they have achieved their aims and that continuing to pour money in isn't going to get them much extra and pull out. It's only the lottery people (FdJ, Lotto in Belgium and Holland) that have had really long term sponsorships. Last year CannondaleDrapac nearly went to the wall because a new sponsor pulled out (until EF Education First came in and bought them). Even QuickStep struggled to get a co-sponsor last year, so winning isn't a panacea.
Usually, teams tend to bounce from sponsor to sponsor, and retain similar characteristics (eg you can draw the lineage of QuickStep back to when they became Mapei-GB (and Lefevre came on board) in 1995, with a series of different names, but they have always been classics focussed). However, Sky have a massive budget, from one main sponsor. They are going to find it very difficult to get a similar level of funding from a different sponsor, so even if they get a new sponsor, they may have to cut back on the expensive riders that they employ. That might mean that they are less likely to win the grand tours, thus reducing the value they offer to a sponsor.
I can't help wondering what that means for people like Egan Bernal, who signed a 5 year contract with Sky a couple of months ago.  Also, would G have stayed, if he knew that the team might be significantly weaker in 2020?

Jaded

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  • Formerly known as Jaded
Re: Where's all the money gone?
« Reply #7 on: December 12, 2018, 11:02:13 am »
Sponsorship is also about brand values and exposure.

Toxicity can be, well, toxic.
If you don't like your democracy, vote against it.

Re: Where's all the money gone?
« Reply #8 on: December 13, 2018, 09:40:54 pm »
Banks, insurance companies and loan sharks appear to be common and relatively stable sources of funding (probably a bit unkind calling Cofidis loan sharks, I think they are linked to a bank but not sure which one). Telecoms companies seem to be turned towards football or motorsport. Cofidis would appear to be France's Sky - but upholding the french tradition of winning their national tour. Perhaps the time is coming for a motor manufacturer with ecological ambitions to get in the game (without the motor in the team issue frames  ;D )

Edit: I have just spotted the error. Of course that should be not winning their national tour  :facepalm:

Re: Where's all the money gone?
« Reply #9 on: December 14, 2018, 11:05:44 am »
Well you could argue that is McLarens intention with Bahrain, many of the super car manufacturers seem quite keen on out-ecoing each other. You can't get many team bikes on a McLaren though :)

Jaguar and then Ford paid Sky good money to use them as team cars with branding on the cycle kit. Skoda have issued all of the TDF official vehicles for many years as well as a high profile TV ad campaign pointing out this fact so there is decent crossover.

Perhaps one day we'll see fleets of electric cars following the tours and the riders won't spend their lives inhaling diesel fumes
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FifeingEejit

  • Not Small
Re: Where's all the money gone?
« Reply #10 on: December 14, 2018, 11:48:33 am »
Look at football shirt sponsors now
https://www.scoreandchange.com/overview-of-the-2018-2019-premier-league-sponsors/

9 of the 20 are sponsored by Gambling firms
4 of them are sponsored by Financial Services which is another form of Gambling.

It used to be Alcohol that sponsored football, but that got banned.
Gambling sponsorship likely to be banned soon too

Also look at the impact the end of tobacco Sponsorship has had on Motorsport.
McLaren and Williams and other garage teams have been wiped out in favour of the motor manufacturers (who use their own money)

Re: Where's all the money gone?
« Reply #11 on: December 14, 2018, 01:05:06 pm »
Look at football shirt sponsors now
https://www.scoreandchange.com/overview-of-the-2018-2019-premier-league-sponsors/

9 of the 20 are sponsored by Gambling firms
4 of them are sponsored by Financial Services which is another form of Gambling.


IG Group (Financial services and spread betting) was a minor sponsor of Sky for a couple of seasons, but presumably it didn't reach their demographic.
We are making a New World (Paul Nash, 1918)

Re: Where's all the money gone?
« Reply #12 on: December 17, 2018, 09:30:57 am »
4 of them are sponsored by Financial Services which is another form of Gambling.
Not sure you could say American Express, AIA, or Standard Chartered provide a form of gambling (obv I agree about FxPro ;) ). And HSBC now sponsor British Cycling.

The interesting thing about football is the way that they have crazy "official coffee partner in Singapore" type sponsorships.
I think football is the anomaly though - cricket, rugby, pretty much all other team sports are struggling to get enough sponsorship.

mattc

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Re: Where's all the money gone?
« Reply #13 on: December 17, 2018, 10:26:40 am »
Budgets have increased continuously over the decades (quick google suggests £3m was a lot in the 80s - anyone got better figures?).

So is it a bucket with a hole in? Do teams have to keep spending all they can get, so there will always be a "sponsorship crisis", with riders always struggling for jobs, and very little job security for staff and riders alike?

The financial structure of the sport is quite different from most other mainstream sports; teams don't get TV revenue, they don't own stadiums, etc. Does it need to change?
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Re: Where's all the money gone?
« Reply #14 on: December 17, 2018, 10:43:37 am »
Rallying is monetised with spectators paying to enter stages, and various areas with grandstands. Perhaps a similar model can be adopted for cycling?
We are making a New World (Paul Nash, 1918)

Re: Where's all the money gone?
« Reply #15 on: December 17, 2018, 01:06:47 pm »
Part of that is to do with spectator safety. If you know how many people are in the fanzone and they are all safely marshalled behind red and white tape then you stand a reduced chance of them being on the road when the cars come through.

Some will say it will sanitise the sport and it's soul is in letting the fans be part of the action but watching Alpe D'Huez last summer on the TV and the behaviour of the fans, maybe it would kill two birds with one stone.
Duct tape is magic and should be worshipped

Re: Where's all the money gone?
« Reply #16 on: December 19, 2018, 05:16:23 pm »

McLaren and Williams and other garage teams have been wiped out in favour of the motor manufacturers (who use their own money)

McLaren, especially, had more to do with incompetence than sponsorship.

Re: Where's all the money gone?
« Reply #17 on: December 23, 2018, 12:37:19 pm »
Rallying is monetised with spectators paying to enter stages, and various areas with grandstands. Perhaps a similar model can be adopted for cycling?

Does any of that income get back to the teams or is it all for the rally organisers and FIM (is it FIM for rallies, I am out of touch)?

Re: Where's all the money gone?
« Reply #18 on: December 23, 2018, 12:45:32 pm »
Rallying is monetised with spectators paying to enter stages, and various areas with grandstands. Perhaps a similar model can be adopted for cycling?

Does any of that income get back to the teams or is it all for the rally organisers and FIM (is it FIM for rallies, I am out of touch)?
FIM? What's that then?

ElyDave

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Re: Where's all the money gone?
« Reply #19 on: December 29, 2018, 06:46:21 pm »
Might be FIA?

Federation Internationale de Autosport?
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Re: Where's all the money gone?
« Reply #20 on: January 01, 2019, 11:48:27 pm »
It is FIA. FIM do motorcycle events

In the U.K. though its MSA (now rebranded as Motorsports U.K.). Entry for spectators varies by the terms of the event. My club organises the Corbeau stages rally which runs near Clacton in Essex. We pay a permit to the MSA who in turn allow us to run the event. We need the local councils and communities on board so they expect us to provide for visitors and hope they spend their money in the local community in pubs restaurants and hotels etc.

The law now states we have to provide safe spectator areas and all spectators have to be inside those. We use a private security company to assist but the areas are marshalled and run by the local rotary club and they then take all of the proceeds for passing onto their supported charities in our case. Other events will differ.

So, no the money doesn't directly go into the sport but permit fees paid directly to the MSA are set accordingly to a particular type of event.
Duct tape is magic and should be worshipped