Targeting the Market, Finding the Champions, Part I

Tom Schuler, foreground, second from right, at a reunion with his 7-Eleven teammates

Tom Schuler on Team Sponsorship

Tom Schuler has been part of two of the most successful cycling teams of the modern era. He raced for the 7-Eleven team from its inception to its end (1981-1990); started as an amateur and turned pro with the team in 1985, racing the ’85 Giro d’Italia and winning the ’81 National criterium championship and ’87 USPRO road championship along the way. After retiring from competition, he first went to work as an assistant director at the Motorola team before going out on his own. He managed the Saturn Professional Cycling Team with his company Team Sports, from 1994-2003. 7-Eleven was arguably the first outside corporate sponsor to embrace American cycling in what we think of as the modern era. The Saturn team showed both a depth, with a dominating domestic men’s team and dominating international women’s team, and an integrated marketing approach that hadn’t been seen in cycling before or since. If you went to a race where a Saturn member was racing, chances are, representatives from a local Saturn dealership were also present.

Team Sports has also managed several other cycling teams including: Advantage Benefits/Bissell, Colavita, Quarq, TargetTraining, Team Type 1, Volvo/Cannondale. The company began by managing an inline skating team. They currently are managing the Timex Multi-Sport team, now in it’s 12^th season, the Zoot Ultra Team, now in it’s sixth season. Team Sports also promotes events, including road racing, mountain biking, cross-country skiing, Xterras, and is the promoter behind the 2012 National Cyclocross Championships in Madison, Wisconsin.

Thanks to his experience, he’s in a great position to discuss the hows and whys of team sponsorship, which is why we sat down with him to better understand his experience and ask him about the current state of sponsorship in bike racing.

 

JP: Why, in your opinion, do pro cycling teams exist?

TS: Why does bicycle racing exist? The bicycle is a wonderful vehicle and people will always go faster and race each other. There’s both an individual winner, but the team supports that individual. It’s also drafting and help. Teams lend themselves well to sponsorship. The team isn’t called Alberto Contador, but Saxo Bank. You can brand a group of athletes a team and give them a name.

JP: Do sponsors lead with business or love?

TS: We’re going to talk about patrons of the sport, and sponsors. There are always patrons of the sport, people get emotional and they support that. Major league sports have patrons, like George Steinbrenner, but the people would do it regardless of business metrics. Certainly Fred Mengoni comes to mind in the US. I don’t know the patrons in Europe that well. There are patrons that have a brand and promote that brand by using something they’re passionate about. We have corporate teams like Saturn that need to show and justify their return on investment.

 

SATURN

JP: Did you initiate the sponsorship program with Saturn?

TS: The start of Saturn started at their agency, Hal Riney Partners, in 1990. They later got absorbed by bigger and bigger agencies. He (Riney) was the voice behind Bartles and Jaymes, among other things. But he was primarily a creative guy. He was Saturn’s initial agency in 1989. They needed an activity that was doable for a new company. They looked at a lot of activities and landed on cycling. It was both youth and family, both male and female, it was affordable, and from their estimation, there wasn’t any auto company that staked a claim on cycling. Being from San Francisco, they hooked up with Warren Gibson. He ran it the first two years. He reported to Hal Riney and Saturn and switched it back to their agency in Detroit, Carlson Marketing Group. They’re a huge group based in Minneapolis, but has a Detroit division.

So, Warren ran into some problems with budgets and the typical thing there. So they looked for a different person to run it. And that’s how I ended up with it.

Simultaneously, were talking to Volvo about the new sport of mountain biking.  Two car companies launching. It was a busy time for us. (For the Saturn team) We reported to Saturn and the Carlson Group.

 

JP: How did you come up with what the team did?

TS: They wanted the team to reflect their customers, their target audience. So, both who they are and who they want to be. Their metrics showed that cycling related to their customer base. It was split pretty evenly between male and female. That’s rare with a car company at that time. They figured cycling was practiced by women and men.

 

JP: So is this was why you had a strong women’s team?

TS: There was a men’s team for the first two years. They said there was no reason we shouldn’t have a women’s team. We got a women’s team going last minute with three athletes. Jeanne Golay, Julie Young, and Jessica Grieco. Eventually we became the world’s number one women’s team.

It was a great value to have the women’s team; it cost very little.

We always presented the men’s and women’s team as equals, as one team. They don’t get any less budget, any less treatment. We presented them as we presented the men’s team.

Saturn presented themselves about the customer experience. So they wanted to be different. So they wanted one price, they were retailers not dealers. The atmosphere should be welcoming and more comfortable for women.

JP: How did you go about doing metrics?

TS: They used at least a couple of measurements. IEG, International Events Group, were commissioned to look at it. They’re engaged by clients to measure the results of sponsorship. About halfway through, they looked to determine ROI. They were investing in events as well as the team. The team was their main property in cycling. They determined that their best ROI was the team and they decided in the last few years to do it even better.

(Eventually) They wanted to hire an expert in cycling to work at Carlson as a contractor, so they hired Michael Aisner (promoter of the Coors Classic—JP). So they hired him to come up with all sorts of activation strategies, making targeted PR, placed many stories in national publications. So we were racing the same, but we were activating at a much higher level for those last few years.

JP: Did he increase ROI?

TS: Absolutely. It showed robust returns. Me coming up with the metrics myself isn’t fair.

JP: Can you share the numbers?

TS: I don’t know, but it was a multiple of their investment, and it was good to keep us going for many years. When it came time to renew, it had to make sense.

 

JP: Why did they pull the plug, was it not working anymore?

TS: One of the basic tenets of sponsorship, you’ve addressed the audience for a long time, they know you, so you move on to another group. So they moved on to marathoning.

 

JP: So success can cost you?

TS: The decision makers were told “everyone in cycling knows you” so address another group, like runners, and make sure they know Saturn.

 

JP: Was the Volvo sponsorship run with the same kind of vision and support?

TS: Probably not as sophisticated for marketing and activitation. They liked the involvement with Cannondale, they liked the image it produced. It was a high-end car with a high end bike. Activation-wise, they used a number of agencies, but not the same. Metrics-wise was both North American and then Europe. After the team took off in the US, the Europe side decided that it was a way to reach younger customers. And Europe was initially cold on it. They eventually took it over.

 

JP: How did these programs compare to the Saturn program in terms of what the sponsor wanted and what you gave them? 

TS: I think by far Saturn was the most sophisticated in terms of spending on activitation and success at determining return on investment. The Colavita men’s team is now Jamis-Sutter Home, and the women’s team will get sponsorship money but not management from Colavita. TargetTraining, Rick (Spear) was a good patron of the sport. Team Type 1 always had to work for a sponsor and provide ROI. Phil Southerland is not a patron, but a manager, his sponsorship has to have a marketing return. Advantage Benefits/Endeavor/Bissell. Mark Bissell has been a patron, but does work it into their marketing mix. The Quarq team was supposed to be a marking platform for Quarq shoes. The job of the team of promoting sales should always be there, but sometimes the measuring stick is not always used the same way to connect to end sales. Connecting to sales is something sponsors all try to do at various levels.

Image: Alex Steida, Photosport International

The Shack: A New Chapter in Sponsorship

The entry of Radio Shack into the world of professional cycling is an unusual and historic move for cycling sponsorship in America. They are hardly the first American company to sponsor a European-focused cycling team. But they are certainly the first to view the value of sponsorship strictly through its impact on an American audience.

Many of the companies that sponsor cycling teams are wholly unfamiliar to non-European audiences. Quick Step makes laminate flooring. Lampre makes pre-coated steels. Rabobank is a Dutch banking company whose cycling team gained recognition before the bank expanded into the United States. Caisse d’Epargne is a French bank. Liquigas makes gas-operated barbecues, space heaters, generators and more.

Each of these companies faces stiff competition in the market in Europe; anything they can do to raise awareness or improve the company’s image is considered helpful. Historically, many company owners have been rabid cycling fans who sponsored teams for reasons more emotional than rational. Mapei’s Giorgio Squinzi was famous for his devotion to the team that bore his company’s name.

People wonder why more American companies don’t sponsor cycling teams. In many instances, such advertising is hardly necessary. Coca-Cola is easily the best selling soft drink in Europe. Microsoft? What else do computers run on in Europe?

When the 7-Eleven cycling team went to Europe, the Southland Corporation, which owned the chain of convenience stores, had zero European interests. The marketing payoff for the team’s European campaign could only be realized with cyclists and at races back home.

When the U.S. Postal Service Cycling Team was announced, one of the team’s stated goals was to increase recognition and exposure for its international mail services. Certainly its greatest success came at home with American consumers, but the USPS team could at least claim to have international recognition among its goals.

Discovery Channel may be an American company, but with 1.5 billion subscribers watching more than 100 networks in 170 countries worldwide, its interests were anything but provincial. One of its largest challenges was making sure that its many networks, such as Animal Planet, were associated with the parent company.

Radio Shack, or “The Shack,” as they plan to be known going forward, is the first American company without significant international interests to sponsor a cycling team whose primary racing schedule and strategic goals are international in nature.

It’s an odd marriage. An American company is going abroad to market its business to Americans via an international collection of bike racers racing mostly in Europe.

Come again?

Radio Shack has some 4,400 retail locations. Roughly 200 of them—less than 5 percent—are located in Mexico; the rest are located in the United States, populating strip malls in markets of half a million or more residents.

Lance Armstrong and the cycling team aren’t going this alone; he and they are but one part of a large advertising effort. Radio Shack has devoted $200 million to the re-branding effort, and 10 percent of that—an estimated $20 million—will go to owners Capital Sports and Entertainment, giving it the biggest budget ever for a cycling team.

What sort of exposure will the Shack get for the investment? They can reasonably expect plenty of coverage in the cycling media, on Versus and Universal Sports; that’s not a lot of eyeballs. Further, coverage on the French network 23 means nothing.

The scenario would be laughable was it not for one simple factor: the Lance Factor. Everywhere he goes he makes news. He doesn’t even have to win the Tour de France to be the event’s biggest personality, biggest news generator. Hate him if you want, but, objectively, cycling has never had a personality who generated headlines in so many countries. You could multiply Eddy Merckx by Bernard Hinault and I don’t think we’d hit the media impact Armstrong has.

Bike companies, particularly those that have sponsored Armstrong’s teams, noticed a bump in sales with each of Armstrong’s successive Tour de France wins. The bump became known as “The Lance Effect.” Even companies like Cannondale (with no relationship to the athlete or team) would record a rise in sales as Armstrong’s success brought a rising tide for the bike industry.

But can Armstrong save a chain that is believed by most analysts to be on the skids? Radio Shack was once the clubhouse for electronics geeks; its survival depends on it developing a mainstream clientele to purchase its mainstreamed product line. Stories on the name change to the Shack have focused on how difficult recovery will be considering the competition it faces from chains like Best Buy and now Wal-Mart, which is growing its range of electronics offerings.

Somewhere, someone has a Venn diagram showing the crossover between electronics geeks and cyclists. I’m sure those two sets have a lot of crossover.

History has proven that cyclists will throw support to companies that sponsor cycling. That John Tesh found a market for his Tour de France soundtrack and the U.S. Postal Service sold out every product commemorating the cycling team is proof enough that skinny guys with hairless legs will shop at the Shack. The sort of recovery the Shack needs is greater than American cycling fans can provide, though. The gambit then (and this sponsorship smells like a hail-Mary pass) is whether Lance Armstrong can be the multiplier to channel America’s inner geek into a strip mall shack.

The success—or failure—of the Shack over the next five years is likely to determine how likely American corporations with largely American interests are to enter bicycle racing sponsorship. A Chapter 11 filing would kill any chance of sponsorship from a company without significant European interests. If the Shack succeeds with its turnaround—and if they succeed, they will be the turnaround of the decade—cycling will see some copycat dollars from companies that equate two wheels with success.

Image: John Pierce, Photosport International