Inside Slipstream’s brush with death

THE PHONE CALL CAME IN ON AUGUST 25, early in the morning. Jonathan Vaughters picked it up, listened for a few minutes, and was sure his team was dead.

Vaughters and Slipstream Sports, the management company behind Cannondale-Drapac Pro Cycling, had been on the sponsorship prowl for a year. They were already looking, really. Since 2010 the team endured two mergers and added or changed title sponsors five more times (Garmin, Garmin-Transitions, Garmin-Sharp, Garmin-Barracuda, Cannondale). Slipstream kept moving, grasping onto whatever funding it could find because cycling’s sponsorship model punishes idleness with death.

“We’re cockroaches in a nuclear apocalypse,” Vaughters says.

Despite the near-constant financial flux, never before August 25 had the team been so close to collapse. That fateful, early-morning call came from a sponsor the team had courted for months. At the eleventh hour, it pulled the plug. The deal was off. Vaughters has declined to name the company.

Slipstream suddenly needed $7 million to simply meet the UCI’s financial requirements for a WorldTour team. It had just weeks to find it.

ON SATURDAY, August 26, 24 hours later, Slipstream employees — riders and staff — received an email signed by Vaughters and the team’s longtime benefactor, Doug Ellis.

The email released all riders and staff from their 2018 contracts.

“Ninety-nine times out of 100, this is the end,” Vaughters says of the message. “That should have been the end.”

In fact, by the time the email went out, most of the team already knew of the disaster. In the hours after Vaughters received the first phone call, he told agents and some riders the bad news. Alex Howes, who has ridden with the program for over a decade, was drinking a late-season beer with a friend when his call came in. “It was somber,” Howes recalls. “He started the call with, ‘I’m calling you as a friend.’ I got off the phone and ordered another one.” Michael Rutherford and Robbie Hunter, both rider agents, say they found out shortly after Vaughters received the news. “The info given to us was that things were in dire straights,” Hunter says. “Every agent out there gets on the horn and it becomes a race against time. You know every other agent is doing the same thing.”

Cannondale-Drapac
Although they are rivals on the race course, fellow pro cycling teams empathize with Cannondale-Drapac’s plight. Photo: Iri Greco / BrakeThrough Media | www.brakethroughmedia.com (File).

According to sources within the team, the $7 million funding gap was mostly a function of the team’s existing sponsors, primarily Cannondale, decreasing their financial commitments. Vaughters had known of the funding shortfall all year. He told riders and staff in July that the team would go on thanks to a new sponsor. He signed a three-year deal with Rigoberto Urán based on a sponsor that itself had not yet signed the dotted line. Then the sponsor walked.

According to Vaughters, boardroom dynamics within the unnamed company broke the deal. Vaughters thought that he needed a majority vote of the potential sponsor’s board when in fact the final vote had to be unanimous. He felt blindsided by the bad news.

“I am no saint in this,” he says.

In response, Vaughters could have kept quiet. Team management was under no obligation to tell staff or riders, not until the UCI’s deadline more than a month later. In fact, many teams have kept similar news quiet — doomed projects like the Australian Pegasus team waited until the final moments to inform staff and riders in 2011. Vaughters did not. He made a rather risky decision to take the news public, to inform riders immediately and release them from their contracts. He knew that doing so meant he could lose his best riders to other teams, further decreasing the likelihood of finding a new sponsor.

“If you just keep rolling and keep searching and don’t let anyone out of their contracts, or even tell them, until September 30, that’s the best way to survive as a team,” Vaughters says. “But is that the best for the people, the riders and the staff? That’s what kept me up at night. Am I doing the best for the team or the riders and staff? Those things can be diametrically opposed.”

Rigoberto Uran at a Tour de France press conference. Photo: Tim De Waele | TDWsport.com

The decision likely led to the loss of more than one sought-after rider. “It did turn out to his disadvantage because he had a number of riders who got snatched up ASAP,” says Hunter, the agent. “If he had kept quiet and said nothing he could have said at the last second, ‘We don’t have anything.’ That would have saved a number of riders from going to other teams.”

The team had been in discussions with young American talent Neilson Powless, but those talks fell apart during the funding gap, according to Vaughters. Powless ended up at LottoNL-Jumbo. Classics star Dylan van Baarle moved to Sky during the gap as well. “That was probably a matter of three to four days,” Vaughters says. “If I had announced EF earlier we wouldn’t have lost him.”

Riders had every right to leave, of course. With all 2018 contracts nullified and no guarantee that the team would go on, agents scrambled and staff polished resumes. Meanwhile, Vaughters and Ellis and some of their high-powered friends — all the way up to former secretary of state John Kerry — stepped in to aid in the sponsor search. The team started a crowdfunding effort that eventually raised more than half a million dollars from nearly 4,700 individuals. It was an effort that would prove to be worth far more than the tangible dollar amount.

The team’s marquee rider, Urán, gave Vaughters two weeks to find the necessary cash. If Urán left, the team would be gone. Vaughters was sure of that. He had 14 days, starting August 26.

ON AUGUST 31, six days after the crisis erupted, Vaughters sent another mass email.

He signed off with a fingers-crossed emoji and his initials.

The good news was a percolating deal with EF Education First, an international education company. Three days prior, one of EF’s employees, a Slipstream fan, spotted the team’s crowdfunding efforts and reached out to Vaughters on LinkedIn. Should he send something up the chain? Vaughters said yes.

EF and Slipstream had a prior relationship. Vaughters and Slipstream President Matt Johnson had pitched EF in 2014, when the Tour de France went to London. That pitch had ultimately failed. This time the stakes were much higher.

Vaughters got a mystery phone call and picked it up. It was the company’s chairman, Philip Hult. The two talked for two hours.

“I walked him through everything,” Vaughters says. “By this point in time, I already thought we were dead, so there was no salesmanship going on. I was just like, ‘Listen, here’s the deal, we have another five days here.’ He said, ‘Fly to Boston tomorrow.’”

The negotiation was short. Vaughters says the crowdfunding helped his cause. He could point to fans that were financially invested in the team’s survival. Kerry made a call, too. That afternoon, Vaughters sent out the fingers-crossed emoji email.

John Kerry visited the Cannondale-Drapac team at the 2017 Tour. Photo: Tim De Waele | TDWsport.com

THE COLLAPSE, or potential collapse, of a professional cycling team pulls nearly 50 people into its dark embrace. There are the riders, of course. Most are well-paid; some are famous. They are likely to find other teams, though they may take a pay cut. But there’s also the bus driver, Andrea Bisogno, and the mechanics, Geoff Brown and Sam Elenes and James Griffin and Jorge Queiros. There are the soigneurs, Sophie Roullois and Alyssa Morahan and Gary Becket. There are press officers and chefs and directors and logistics managers. None have agents racing against time for them.

They do, though, have the benefit of longevity. A good mechanic will remain so; a professional athlete’s time at the top is finite. Earning potential can be quickly squandered. The result is that both riders and staff, even those highly loyal to Slipstream, were forced to begin looking elsewhere.

“Most of us were good to give him some time,” says Howes, one of the team’s original riders. He’s been with the program since it was a U23 development team. But even he had to start looking. “If there’s a hole in the boat, and you think you can fix the hole, you’re going to do what you can to help fix the hole,” he says. “But if there’s nothing you can do to fix the hole you’re going to find another boat.”

And then there’s Vaughters. In the end, he’s responsible for them all, their fates deeply intertwined. “I’m the captain of the ship,” he says, equally fond of a good boat metaphor. “If this thing goes under, the captain doesn’t get in a lifeboat. You get to go live at the bottom of the ocean with the Titanic.” There were times, he says, when the Titanic option felt preferable. “There were moments I wanted to die at the bottom. And it’s a very public thing, which makes it even worse. It affected friendships that I have. It affected my family. I was obsessed with making it live and hurting as few people as possible.”

Much of that stress seemed to be of Vaughters’s own creation. He’d been relying on some creative accounting — to put it kindly — for the last few years to effectively inflate the team’s budget beyond its actual means. Every team in the WorldTour has a bank guarantee with the UCI, so that if the team folds, salaries continue to be paid for about three months. Slipstream had been leaning on this guarantee, only funding itself through October of each year. If it didn’t find a sponsor by then, it would run out of money and the UCI would pay salaries through the end of the year.

“It allowed me to get guys like Rigo [Urán] and Sep [Vanmarcke] and Taylor Phinney,” Vaughters says. It also meant that the team was $3 million in the hole at the end of every season. Vaughters says this debt was not part of the $7 million he needed to keep the team alive, but it was debt that EF, or any new sponsor, would have to eventually pay down.

Though Vaughters had a savior for 2018 in hand, it had taken a great personal toll. And the one-year deal he initially worked out with EF didn’t solve his long-term shortfalls or the fact that he was finishing every year $3 million in debt. It didn’t prevent him from starting the search over next year, going through all of this again.

“I was looking at it and thinking, ‘F—k, this is the same issue,’” he says. “I don’t want to do this again. In fact, I refuse to do this. It’s ruined so many things in my life. I don’t want to do this. Emotionally, I couldn’t go through it all again.”

He decided to gamble. He returned to his new sponsor and told them he didn’t want their money, not for just one year. It was a longer deal or nothing.

“We took a huge risk,” he says. “Fortunately it turned out.”

Jonathan Vaughters. Photo: Caley Fretz | VeloNews.com

WITH FIVE DAYS LEFT in Uran’s two-week window, Vaughters returned to EF and told them just that. He could not and would not scramble again. He needed more than one year. EF agreed, on one condition: It had to take ownership of Slipstream.

EF sent staff to Boulder, Colorado to look into Slipstream’s books, go through them line by line. What they saw was a reflection of cycling’s persistent unpredictability. “They said, ‘Okay, we see this is really helter-skelter revenue. We get that’s really hard to deal with, and it totally distracts you from running the team,’” Vaughters says. “So since they want to have a really effective, winning team for the long-term, they agreed to do the three-year deal, or hell, even do a 10-year deal. But they needed to own the team, and not just sponsor the team.” By press time, EF already had final say in the team’s staffing decisions, according to Vaughters.

Turning down a one-year deal, saying ‘no’ to millions of dollars, was a risk. “It was crazy, actually,” Vaughters says. But it worked. Suddenly, this deal was unlike any other Vaughters had brokered. It was now an asset purchase from Ellis, who was the majority owner of Slipstream. Everything still had to be finalized before the UCI’s September 30 deadline.

On Saturday, September 7, two days before Urán’s deadline, Vaughters sent out another team-wide email at 7:53 p.m.

Vaughters says he sent it the moment he was sure, beyond any doubt, that the deal would happen. He’d already been burned once this summer, after all.

Two days later, September 9, the team made a formal announcement. It fed the story to select media (including this magazine) in advance and set an embargo, then delayed that embargo for 30 minutes as final details were ironed out. “Those stories ran within five minutes of the [Letter of Intent] actually being executed,” Vaughters says.

“Then we had obviously an incredibly tight timeline, the bank guarantee had to be rolled over to a new entity. It’s a hard deadline of September 30. There’s no second chance.”

There is a second chance, though. This team is second chances incarnate. Like cockroaches in a nuclear apocalypse, Slipstream survived, again.