This article appeared this week in my Sports, Business & the Law column in the Chicago Daily Law Bulletin. Here is the link to the article on the CDLB website. A subscription is required, but a free trial subscription is available.
The Tour de France is so very French. It’s a fantastic spectacle of top-tier athletic competition combined with beautiful French scenery. In quintessential French style, the riders will race past families picnicking roadside with baguettes and cheese, as older men with glasses of burgundy toast them from nearby tavern steps. At least once a year, the race peloton will be stopped temporarily mid-race for French laborers striking in the road, passing trains, or cows crossing the road looking for better pasture. Currently rolling along the southern part of France, this year’s Tour is now a little more than halfway through its 2,100-mile journey to the Paris finale on July 26th. Twelve million spectators will line the race route this year, and 3 billion more will watch on television in over 188 countries on 121 channels.
The Tour is fantastic. But it’s still very flawed. Doping and financial problems still dominate even a quick Google search for the race. Now, three years past the U.S. Anti-Doping Agency (USADA), its Reasoned Decision, and Lance Armstrong’s lifetime ban, doping and cheating questions still persist within the race. The owners of the twenty-two teams in this year’s edition continually complain about television revenue sharing with the Tour organizers and threaten boycotts of future races.
The Tour de France is a great business model for a few but a terrible business model for most. The problems in cycling are not new. They have surrounded the sport since I began working for a Tour de France team in 1994 (and one reason I left for law school a few years later). A broad overview of cycling’s problems could be summarized as follows:
The first and foremost thing people should know about the Tour de France is that it was not created to make money. The race was first organized in 1903 as a marketing gimmick to increase sales for the newspaper L’Auto. The race has no ticket revenue or other traditional revenue streams like other sports.Sponsorships and television rights were only added later.
The second thing to remember is that the race is a French race. The French can have unique laws (one says that the Tour must forever be free on television) and unique regulations (one requires the Tour organizers to pay a fee to use the public roads). These types of nuances within the French business environment can thwart the interest of potential business investors.
The Tour de France is the biggest moneymaker in cycling. Many other races on the race calendar actually lose money. This means virtually all of the revenue in the sport is tied up in one race. The owner of the Tour, keeps virtually all of the profit for itself, using some of it to offset losses in its other races. As a result, there is not necessarily the revenue to distribute down to the teams and riders.
The business model of professional cycling teams is flawed. Certain team owners, including Oleg Tinkoff of the Tinkoff-Saxo team, have been very vocal about the need to change this. However, even if the Tour de France race organizers were to share television revenue with the teams, critics believe that this revenue would flow to increase rider salaries and would not shore up the teams’ financial stability.
Anti-doping and cheating enforcement have limitations. The anti-doping agencies such as USADA have been effective in reinjecting credibility by cleaning up the sport. However, they still are hampered by advancements by the cheaters. For every improved test, the cheaters still seek ways to avoid detection. Newer drugs also regularly appear in cycling for which testing protocols need to be developed. The demand for doping products will persist for as long as cycling remains on shaky financial ground. If winning is the difference between receiving one of the few rider contracts or not, riders will continue to seek ways to ensure a win.
With this as background, one could say c’est la vie in classic French fashion and embrace the sport with all its flaws. The better alternative would be to overhaul cycling’s business model, including amending any laws and regulations that unnecessarily impede improvement. With a 3.5 billion person audience, the teams should investigate untapped revenue streams, the main one being product and merchandise licensing and promotion. A renovation of the sport’s business model, together with a coordinated global public relations and marketing campaign, might be the best thing to preserve those quintessential French aspects of the Tour that make it so special.