Getting Rational in Crazytown

Every week, it seems like there’s bad news on the pro team sponsorship front, a steady drumbeat that began with the announcement in August that team Highroad/HTC was unable to land a sponsor. In their wake, Leopard-Trek, the hot new team of 2010 merged with Team RadioShack. Then Team Geox, fresh of their surprise Vuelta victory lost their title sponsor. Garmin-Cervélo apparently secured and then lost a French co-sponsor, BigMat, which may or may not take a leading role on the French team FdJ. There are rumblings that Saxo Bank-Sungard (about to be Saxo Bank) isn’t on sound financial footing, but there have always been rumblings about Bjarne Riis’ formations. And Euskaltel-Euskadi, a reliable formation if there ever was one, is allegedly on shaky ground after next season.

It can be depressing. But we’re going about it as the cycling fans, like the cyclists, we are. We’re worried about doping; we think it might be the state of the world economy. Rational responses, and concerns I share. But I can’t help but feeling that we’re sane people in the psychiatric ward. There’s comfort in feeling right in crazytown, but it probably isn’t the way to success.

I see this most strongly when looking at how we beat ourselves up over doping. And how we let the world beat cycling up over doping. I have no doubt that doping is a problem in cycling. I want to get rid of the dopers, and I’m sure I’m not alone in this. At the same time, I am certain that doping is a problem across the entire spectrum of sports, and cycling is doing more to root out doping than other sports. Yet when doping in sport comes up, cycling seems to get more attention than other sports, which work mightily to sweep their doping problems under their rugs. Look at how pro baseball tipped off their players when testing was first initiated. Look at how professional football barely gave a penalty for doping, and is now backing away from their pledge to test for human growth hormone. And this is before anyone discusses what seems to be common use of cortisone in pro football, something that is supposed to be strictly limited in cycling. The notorious Dr. Fuentes of Operacion Puerto fame claims he worked with football (soccer) and tennis players, yet nothing has been heard of that.

Look at sponsors in other sports. It’s easy to see that businesses have no trouble backing tainted athletes. Tiger Woods wrecked his carefully-cultivated public persona on his own, yet most of his sponsors stood by him. Accenture didn’t, but Rolex came on board. There has been no exodus of advertisers from The Super Bowl broadcast over drug use in football. Mark McGwire, the St. Louis Cardinals slugger was caught with steroids by a reporter in his big home run chase in 1998 (the reporter who noticed it in his locker): McGwire denied it, admitted it, and is still popular and employed by the team he “disgraced.” I don’t think sponsors care about perfect actors, but a patina of cleanliness and plausible deniability.

Doping isn’t a real issue. Nor is the world economy. There’s high unemployment, but corporate profits are at record levels. Products always need to be marketed. There’s a oft-repeated story told by marketers about how going in to The Great Depression, cereal manufacturers Kellogg’s and Post were about even in market share. Post decided to cut back on marketing, while Kellogg’s increased their marketing budget. At the end of the depression, Kellogg’s was the dominant player, a position they’ve held ever since.

Companies need to advertise their goods and services. Sometimes it’s something new; sometimes it’s reminding the public of something that’s already around. Some products always have a need to be marketed. Cars, banking, insurance, telecommunications, beverages, and lotteries are some of the evergreen advertisers. Massive companies with huge operating expenses and big advertising budgets. HTC, a mobile phone company, the most recent sponsor of Highroad, doubled their profits from $20 billion to $40 billion between 2010 and 2011. Whether or not this was a result of Highroad’s success is never discussed. Their advertising budget in the United States alone was $50 million per quarter, or $200 million dollars a year, starting in 2009. It’s easy to imagine their worldwide advertising budget was over a billion dollars annually. And that would make a $10 million dollar budget, probably much more than what Highroad received, for strong ProTour team is less than 1% of HTC’s advertising budget.

Highroad’s owner, Bob Stapleton claims that his team offered an amazing Return On Investment (ROI). HTC either disagreed or didn’t care. This plays against a core belief for the cycling fan: that their demographic is valuable. Let’s assume that Highroad had impressive data that showed investing in the team yielded an incredible ROI. It wasn’t enough.

American tifosi look at the growing popularity of the Tour de France in the U.S, with daily reports in major newspapers, dominating cable TV presence, and then add in the fact that the Tour is the most-watched sporting event in the world, eclipsed only by the quadrennial events of the Olympics and soccer’s World Cup, and figure that there must be advertising gold to be made out of camera time at the Tour. Mix that in with the growth of cycling both for commuting and recreation. It seems to herald a consumer who is tech savvy, spends on her health, and has plenty of disposable income.

For better or worse, perception plays a big part in determining value. Almost a decade ago, the ABC television network was poised to bring Late Night with David Letterman to their channel, which would have meant canceling Nightline. Funny thing was, Nightline had more viewers, but they were seen as less important than the Letterman viewers. And Nightline viewers made more money. They were deemed less important because they were older. Cycling could be suffering from a similar problem. Maybe cycling eyeballs aren’t important enough. Frustratingly, they will remain probably not important enough until they are.

But the reason our eyeballs might not be important enough is that ProTour-level racing has grown to cost sponsors something. It’s not nothing, but it’s not big money like a Formula One team (probably over $100 million) or an ad buy at the Super Bowl ($3 million every 30 seconds). This could put sponsoring a ProTour team out of reach for a passionate company chief, who might have sway in terms of how his company’s marketing budget is used, but not to the tune of several million dollars. At the same time, $10 million might be too small for the biggest companies to consider, as the impact might be hard to see, and consequently measure, as making a difference.

This could be why at least half the ProTeam organizations seems to have angel investors backing them. It also could be why many Pro Continental outfits have their jerseys littered NASCAR-style with small sponsors, many of whom get a benefit out of sponsorship, but the benefit is tied up with seeing themselves as good citizens or promoting their passion. These sponsors like the ROI, but it probably isn’t what drew them to get involved, nor is it what’s keeping them involved.

And this is the big place where being the rational person in the psych ward cannot only be counter-productive but self-defeating. We’re providing data that proves investing in a cycling team is a smart business decision. It makes us feel good that we can prove the value of bike racing. But in so doing, we’re giving out a means for potential sponsors to not only turn us down, but dismiss us. We’re telling potential sponsors we’re good for them, like we’re telling them to eat vegetables when they want to be sold on the idea that it’s a juicy steak.

While I’m sure there’s data demonstrating to potential sponsors of big time sport in the U.S. the value of sponsoring commercials during baseball games and the benefits of having a company name next to the scoreboard or any number of proposals involving businesses putting money into sports, I doubt the data is what sells the companies on putting their dollars behind a sport. I bet they’re sold on the passion, and yes, they have the data.

They way we’ve dealt with this reminds me of how cyclists advocate for cycling in the U.S. It makes sense on an environmental level, on a health level, on an economic level, and most cyclists are happy about that. Then a non-cyclist points out that a person riding a bike might get sweaty and the discussion is over.

We’ve tried rational. Rational doesn’t seem to be working. Maybe it’s time to roll out crazy, an attractive crazy, and start focusing on that.

Image: John Pierce, Photosport International

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14 comments

  1. Alex

    Good points to consider. Curious as to why a shot of McQuaid is used to illustrate this story. We know he is mayor and chief jackass of Crazytown, but his tie-in to this piece? I think that would be grist for a follow on, no?

    1. Padraig

      McQuaid professes to speak on behalf of the sport as a whole, but I don’t think he understands the challenges the sport faces, so as I see it, he’s ground zero in Crazytown.

  2. Ben

    I don’t think McQuaid cares a bit as long as he has power over issues like race radios & bike designs & weights. Sadly his lack of action to attract & retain sponsors will be detrimental to his own stakes in the fire… No?
    Great thinking/writing here that really shed new light on why sponsors come and go.

  3. Jim

    Most large companies use surveys to define market demographics. If you walk up to 100 US citizens, how many could actually name a pro cyclist whose name doesn’t rhyme with prance?
    I know that has nothing to do with the world population at large but let’s face it, the US is a great big target audience for those who sell stuff.

  4. Souleur

    brilliantly put together, you just articulate the thoughts that roule around in my mind as i think and consider these issues.

    I agree, we are all the rational people in the cukoo’s nest. Nurse Ratchet being McQuaid or corporate business bean counters.

    I have spent the last decade spewing just what you mention, those who have money, looking for investments, who have relationships and partners look at me with a polished smile, a nod of the head and your exactly right, we may as well be talking about peanut butter and jelly sandwiches for lunch. We all agree, right?

    McQuaid may indeed be part of the issue, but larger than that is that of sponsorships. Its a killer that you point out the ROI is there, and they don’t care, evidence here is meaningless; and therefore we are meaningless as a cycling community. Kinda like my conversations w/versus in the past when they gloss over coverage of cycling or worse yet ESPN when they trash talk us and don’t even apologize.

    So, I agree, perhaps a healthy dose of ‘yes we can’, and a healthy dose of limitless thinking in lieu of the tragic constraints that are applied to us is appropriate for this age. Perhaps a listing of friends, those who are us, and a total and absolute solidarity in preferences is in order. In our minds, we are cool, they think so in the sulci of their mind, so lets act it. Listen, people already ask us constantly ‘your what?’..a cyclist? and act like were half baked but really they are interested because they look twice. So I suppose a healthy dose of irreverence to those in these circles, a turn of the head with pause and yawn, and a slap on the butt in a quick response then isn’t necessarily a bad thing…you’ll really get’m if we show off our cleaned guns (legs) as they gasp in disbelief and hide the childrens eyes.

    please, no more espresso, I’ve had enough this manana

  5. CAT4Fodder

    Padraig:
    I think you alluded and briefly dealt with what I see as the biggest issue with the financing of teams right now. Eyeballs alone is why most “Big” corporate sponsors from non-traditional companies sponsor a team. HTC was not trying to endear themselves to cycling fans, or associate themselves with cycling per se. They just wanted exposure, and at the time they funded the Company, the growth of HTC was not yet clear, and cycling was a lower cost way to get lots and lots of eyeballs.

    However, HTC is now such a big player, and with no real ties to the sport (either by its corporate managers or most of its employees or customers), they decided to seek eyeballs elsewhere.

    So this leads to the question: “Okay, so what kind of company has an interest in being “associated” with cycling?”

    This here is the problem for the sport. Those companies are large in number, but small in actual marketing dollars. They are either directly associated with the bike industry or their main operations are conducted in the few countries where cycling is considered a major sport (Belgium, France, Italy, Netherland, Spain, Denmark).

    Unfortunately, budgets for Pro-Tour level teams rose to such exorbitant levels, that you needed the former sponsor type or an Angel investor, willing to essentially take a loss for a chance to “own” part of their passion.

    I think pro cycling is going to have to go through a hard, rough and depressing “deflationary” period over the next decade before it right-sizes itself. This will mean, many pro-cyclists will earn much, much less to race, and no longer will the star cyclists be crashing their Lamborghini’s whilst intoxicated, but settle for crashing their mid-size SUV’s while intoxicated. It means likely much less money at the lower professional ranks as well, the point where the American domestic scene will likely revert back to where many pro’s have to hold second jobs, and race less to compete. It is what it is folks. It is a sport which, due to its reliance on sponsorship/marketing dollars alone is going through the same issues media has gone through over the last decade. As there are more and more avenue through which to target consumers, this spreads the pool of dollars thinner, and makes it more difficult to make a living off of ad dollars alone.

  6. CAT4Fodder

    The great news however is this….we can all still go ride on any given afternoon, take our worries in real life and put them aside, and stay healthier than our counterparts whose enthusiasm for their sports consist of getting fat on a couch.

    I do not need pro cycling to continue my love for this sport, and neither should anyone else.

  7. Randy Lovelace

    Absolutely brilliant! You nailed it. Now let’s roll out crazy! It’s about passion and the only time I’ve seen this done was in a versus commercial at the end of te your in 09. Let’s bottle that and ship it to all sponsors and for that matter all cyclists.

  8. Randy Lovelace

    Here is the commercial. It was at the end of the 2009 Tour. It’s advertising versus and all the sports they cover, but simply do this sort of thing with all cycling clips and you have a story to tell. Padraig, you tapped into what is behind all things interesting and it’s a story. Sure we can talk facts and figures, but that’s not what people want. They want story. And in the day of carbon, garmins, and power meter (and I have those too) roadies have forgotten that there is a compelling story and not just boring nber crunching.

    http://www.youtube.com/watch?v=LccxeBMLibY&feature=youtube_gdata_player

  9. redcliffs

    For what it’s worth (and I don’t think it’s worth much in the context of a very interesting essay), a comparison of Tiger Woods’ sponsors immediately after the scandal broke (http://www.time.com/time/nation/article/0,8599,1948181,00.html) and now (http://web.tigerwoods.com/sponsors/sponsors) shows that while he kept EA Sports, Upper Deck and Nike, and gained a number of new sponsors (including Rolex), he lost not only Accenture, but also Gatorade, Tag Heuer, Gillette and AT&T, the last of which was the longtime sponsor of his golf tournament. The takeaway from Tiger for me is not that businesses have an easy time backing tainted athletes — some do, some don’t, it appears — but that the taint doesn’t really stick for long in the public imagination (thus new sponsors coming on board).

  10. Doug P

    Sponsors like to be “associated” with positive messages, and cycling’s incredibly drawn-out doping dramas are just the opposite. For example, the Contador debacle is in its (?) year now!?! Pro cycling can’t seem to stop shooting itself in the foot. Whatever one thinks about doping, negative press over a span of years is exactly what cycling does not need. I don’t see the Tiger Woods story as relevant, because the UCI et al weren’t there to keep that pot stirred for YEARS!! The essence of justice is swiftness, just what pro cycling’s processes are lacking.

  11. jaas

    1) Garmin-Cervelo will not continue past this year
    2) I will fail once again to get a Cat 2 upgrade
    3) “Butterfly” by Crazytown will be played somewhere and get stuck in the head of some reader of this blog

  12. Moneyfire

    So I think part of the craziness aspect of cycling sponsorship is the search for a finite (ROI) justification for a less concrete decision making process. For better or worse cycling does not offer the same sort of perceived prestige that many other sports offer. For the uber wealthy owning a cycling team doesn’t offer the status that owning a major sports team does. For corporations cycling does not offer the status symbol of box seats where sponsors can take in all of the action and wow their corporate peers.
    Part of this lack of prestige is no doubt partially related to the travails of doping and the handwringing the sport has subsequently gone through. However I think an equal part of it has to do with the growth of cycling and the extent to which it is inclusive. There are no country clubs that allow a mediocre cyclist to keep their “handicap” hidden from the proletariat view; quite the opposite those wealthy cyclists are more often derided for spending on bikes when they should be riding them. The tifosi quite often get the best seat in the house. I’m not saying these dynamics are necessarily bad (box seats on the muur van geraardsbergen? no thanks.) but when you are trying to woo luxury brands (see: sponsors in F1, golf, etc) you need to sell that sizzle and exclusivity, especially perceived exclusivity, is essential to that dynamic.

  13. Mary Topping

    This is a fantastic discussion, with so many valid comments that illustrate there’s (unless others see one) no easy solution. It’s hard to believe there is anything to add to it, but here goes. At the 2012 Team Garmin-Cervélo presentation, a Garmin exec spoke and said they have met all of their goals in signing on as a sponsor of the team, one being expansion into Europe; cycling computer sales in Europe are now the company’s fastest growing business segment. What struck me most was he said they have accomplished their objectives every year since 2008. This seems worth understanding.

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