Passing Lance: Rethinking Cycling’s Route Forward

July 15, 2014

This article appeared today in the Chicago Daily Law Bulletin in my Sports, Business & the Law column.  Here is the link to the article on the CDLB website.  A subscription is required, but a free trial subscription is available.

 

 

In 2012, almost a decade of Tour de France results were erased from history, and no official winner currently exists for the race from 1999-2005.  Since the October 2012 release of the Reasoned Decision by the U.S. Anti-Doping Agency (USADA), the public has directed its discontent almost entirely at Lance Armstrong.  Solely blaming Lance for cycling’s problems, however, is misguided and fails to address the sport’s deeper, fundamental problems. 

 

The sport’s labor issues, poor leadership, weak television contracts, and broken business model have historically been the reasons for the win-at-all-costs attitude and related doping scandals.  This poor state of affairs puts pressure on riders and teams, who then make short-sighted choices, including doping.  To save itself from irrelevancy, cycling needs a real leader that can bring change.

 

A 100-Year-Old Problem

For the last 100 years, cycling’s business model has been based almost entirely on sponsorships.  This worked for the first 75 years.  However, the success of Greg LeMond and Lance Armstrong brought new American-style demands, including higher salaries, advanced equipment, and better rider accommodations.  These demands required higher team budgets.  With team budgets now averaging $20 million Euros, relying on sponsorships for revenue no longer works.  

 

Broken Business Model

Sponsorships alone cannot sustain the current sport.  Jonathan Vaughters, the Garmin-Sharp Team manager, said in a recent VeloNews interview that “No one is looking at the big picture of the sport. Cycling grew up organically over 100 years, but what worked before doesn’t work anymore.”  The broken model was apparent when the world’s #1 team abruptly folded in 2011 after failing to find a new title sponsor. 

 

It is a tricky proposition because cycling does not have ticket revenue.  Fans line the road to watch races, and no one particularly wants this to change.  Scott Mercier, a former U.S. Postal Service Team rider who decided to retire from the sport in 1997 rather than begin doping, agrees, saying “it is important to maintain the historical roots of having it be a spectator sport, particularly on public roads.”

 

Cycling at a Crossroads: the NBA and IOC Examples

Professional cycling is at a crossroads.  In 2013, the sport’s international governing body, the Union Cycliste Internationale (UCI), ousted the long-serving leadership, calling for new direction.  Historical examples exist that cycling can follow.  During the early 1980’s, both the National Basketball Association (NBA) and the International Olympic Committee (IOC) had similar problems. 

 

The NBA suffered from labor issues, drug use, financial instability, and fan apathy.  It took the leadership of David Stern as the NBA’s Commissioner to change the business of basketball.  The IOC also had financial problems because it was overly dependent on U.S. television for revenue.  When Juan Antonio Samaranch took over as President of the IOC in 1980, he improved global sponsorships, TV contracts, and finances, and the IOC soon became more stable. 

 

The NBA and the IOC understood that a strong, centralized governing body could utilize its image and brand better than individual teams and nations could.  The resulting sponsor, television, and license agreements led to greater revenue and stability.  Cycling has certain differences with the NBA and IOC, but centralized leadership, with improved branding and stronger contracts, is a good example to follow. 

 

Centralized Governance Goals

Historically, strong centralized leadership has not existed in cycling.  A strong governing body could pull the various fragments of the sport together to address these critical points: 

 

  • Codify the Teams.  Somewhat unbelievably, there is no set number of teams and no particular criteria for team ownership.  Licenses are granted based on race results.  Instituting permanent licenses and ownership criteria would allow for franchise-like growth.

     

  • Organize the Race Calendar.  The season is long with many scheduling conflicts between races.  This negatively impacts television coverage. 

     

  • Share the Revenue.  Teams and riders must be able to share in the sport’s television, internet, and licensing revenue.  99.5% of cycling’s fans watch races on television, rather than in person.

     

  • Cap Salaries.  A salary cap would make team budgets stable and predictable.  Once implemented, the NBA benefitted greatly from its salary cap. 

     

  • Develop the Long-Term Fan Base. Children who play sports usually become fans of those sports when older.  The UCI needs to follow the NBA, get youth involved in the sport, and rebuild its fan base to avoid suffering a "lost generation" of fans from the doping scandals.

 

Whether Brian Cookson, the new UCI president, can lead the sport remains to be seen.  He has called for changes, but others have questioned whether the culture of impropriety will continue in the sport.

 

Strong Riders Union - a Collective Bargaining Agreement

The real victims of cycling’s dysfunction are the riders.  They ride in virtually any condition, with no race revenue, no pensions or medical protections, and no long-term contracts.  Mercier notes that the “riders are the pawns in this” and that they need a strong union with “100% of teams on board.”  A strong union would have the leverage to boycott races and to negotiate a collective bargaining agreement (CBA).  A riders’ union currently exists, but it has not been effective.  A CBA would address salary caps, rules for trades, rules for signing young riders, revenue sharing, the race calendar, and increased team accountability for doping.

 

Often fragmented by language, cultural, and economic barriers, the riders need a strong union.  Recent rumors mention that a group of teams - referred to as ‘Project Avignon’ - are advocating for change, but their progress has not been confirmed.  Ironically, the one person with the influence and force of personality to organize the riders into a strong union might just be Lance Armstrong, who currently is serving a life ban from the sport. 

 

Cycling’s Route Forward

Professional cycling is at a crossroads.  It benefitted greatly from the spectacular talents of Lance Armstrong and other riders that advanced the sport to a new level on the global stage.  The critical question now is whether the UCI has the leadership necessary to improve the business of cycling to support this spectacular advancement.

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