The former UCI chief has wide-ranging recommendations for growing the business side of professional cycling
Editor’s note: Hein Verbruggen recently initiated a dialogue with VeloNews contributor Steve Maxwell and his TheOuterLine.com partner Joe Harris to express his opinions regarding their Roadmap to Repair Pro Cycling report. Verbruggen agreed to a detailed discussion on the business of pro cycling and an excerpt of that conversation appears below. Read the full interview.
Hein Verbruggen presided over professional cycling for most of the past 30 years, first as president of the FICP starting in the mid-1980s, then as president of the UCI from 1991 through 2005. Verbruggen ruled the sport with what many viewed as an iron fist, and he was often a lightning rod for controversy. However, the fact is that he oversaw pro cycling during a long period of increasing visibility and international growth. And despite the accusations of his detractors, no individual has had more international executive experience in cycling. Our interest in talking with Verbruggen was not to revisit the polarizing allegations surrounding Lance Armstrong, the alleged doping cover-ups, or his more recent skirmish with Jonathan Vaughters and the teams association, the AIGCP.
Keeping in mind the historians’ notion that “those who forget the past are condemned to repeat it,” we asked Verbruggen to comment on three general areas: the commercial structure of the sport, governance issues, and how to solve the doping problem. During a series of long conversations, he offered his perspectives on the current situation in pro cycling and how to grow the sport in the future. And in the course of this, he provided detail and insights about his clashes with Tour de France owner ASO, the effect of specialized doctors coming into the sport at the time of the expanding doping culture in the 1980s, the general lack of trained business professionals throughout cycling, a new model for future race ownership and organization, and some innovative ideas about controlling doping in the future.
TheOuterLine.com: First, let’s talk about the current situation in pro cycling, and the commercial and economic issues facing the sport. How would you summarize today’s situation in cycling?
Hein Verbruggen: Well, first of all, I would say that the overall situation in pro cycling is much more complex than in any other sport that I know of. And from my position as President of SportAccord (the international sporting federations association) I know them all pretty well. After being involved with cycling for over 30 years, I believe that there are four main issues which pro cycling faces — challenges which have always been problems for the sport. Allow me to describe each of these challenges.
The first challenge is the traditional commercial structure of the sport, in which there are effectively three players — the race organizers, who are often also the race owners, the teams, and the athletes. These are the key business players in the sport, and the problem is that there is really no organizing structure amongst and between them. Each group has a competing interest to make sure that pro cycling is successful, but none of them really have a meaningful governing body. Yes, there is the loose affiliation of the race organizers,the AIOCC, but it doesn’t really do anything. The ASO holds almost all the real power in this association.
The same situation is true for the teams and the riders. There is the AIGCP to represent the team owners, and there is the CPA to represent the riders, but neither of these groups has much real authority or decision-making power either. The lack of any common goals or a common vision of the future from these three parties means that change has come very slowly, if at all. And remember, the UCI is really outside of this three-party economic circuit — the UCI is really only a commercial player in the world championships.
The second problem is that pro cycling generates only pretty low turnover — that is, low overall revenues. Because we cannot charge admission for tickets to the race, we don’t have the same way to generate revenues that most other sports have, and hence there is not as much revenue to go around. Race organizers want to keep the revenues that they can generate, and they have no incentive to pay the teams to show up for the big races. The teams only have their sponsorship dollars, so they have to go wherever the races will allow them to compete; they have to agree to the organizers’ conditions just to keep racing and keep their sponsorship arrangements going. Even when a team participates in an important classics race like Paris-Roubaix, and even here they get only a couple thousand euros to show up. And finally, the riders simply sign contracts with the teams for their salary; the prize money is negligible. In summary, there is not the potential for much revenue, and most of the revenue that can be generated tends to stay with the organizers/race owners.
The third problem — and this is a big problem — is that there is no television rights bundling. This is for sure the one place where there could be more money made. All of the broadcast rights are individually packaged for almost each race. There is something like 700 different race television contracts! All of the big broadcasters are laughing their heads off at how immature cycling is. If you look at almost any other global sport, the television rights are bundled, so that the broadcasters must create logical programming which takes into account all of the key races in the contract package. If this model could be instituted in pro cycling, it could greatly benefit each race organizer, all the teams, and the riders. But the only organizer with any real power to negotiate television rights, the ASO, uses its strong position as leverage to get better air time and more money just for the Tour and for their other ASO events. The fact that there is no solidarity between the other race owners/organizers has allowed ASO to consolidate its power, and focus only on its own races, in terms of television revenue.
And that leads me straight into pro cycling’s fourth challenge: the overwhelming dominance of ASO in the sport. ASO is not really interested in cooperating with their perceived competitors, and unfortunately this blocks the development and growth of the sport’s overall potential. Let’s face it, the organizers essentially control this sport and of that, the ASO probably controls over 70 percent of the total TV revenues. They don’t seem to want to build a bigger “pie,” and they seem even more unwilling to share their revenues with the teams. They will not accept the logic of owning maybe 50 percent of a much larger market, rather than 70 percent of this smaller market — they don’t seem to be interested in helping to grow the overall television market. The ASO seems to be happy with their current revenues and profits, and they have no incentive to grow the global sport. Even the other major race organizer in the sport, RCS Sport (owner of the Giro d’Italia and several other major Italian races) has in the past offered to bundle their races together with ASO for a commission, but the ASO turned them down. I was there when this happened.
Ultimately, for pro cycling to grow, we have to increase the visibility and revenue, and there is really only one significant way to do that: start to bundle the TV rights. And for this to happen, the UCI and ASO must eventually work together to adopt a new model. We have to be realistic, but we will eventually have to use the strengths of the Tour de France as leverage. The UCI needs to say to ASO, “This is your obligation to cycling.” ASO will eventually have to do that, because without a healthy sport, there are no races. Let’s remember, it is also, to a large extent, the riders and the teams which make the Tour what it is.
TOL: Give us a little more detail on how the TV rights can be “bundled” and what advantages that would provide.
HV: This is a very important issue, and is really a central part of reforming and growing pro cycling. The television rights for this proposed “World Racing Series” of cycling, or whatever we shall call it, have to be bundled into one large package. If the different major players in pro cycling could become better coordinated with each other, so that all of the key races were packaged together as one big television “series” and contract, it would provide much more leverage for the sport, and it could start to generate a lot more revenue. In turn, those greater revenues can then be used in various ways to grow the sport. This is the single most important change. I am worried that none of the other desired changes will be realized, unless we are able to realize the increased revenues and the potential opportunities that stronger TV rights can create.
A unified television rights model benefits the entire sport, not just specific races. Without this change, pro cycling cannot get exposure throughout the year to a global audience, and it cannot create a true “World Racing Series” that allows new races to be added, while continuing the popularity of the classical races. I think this could grow the overall revenues by as much as 100 percent, or maybe more.
TOL: What changes do you think need to be made to the current race organization and ownership model?
HV: This is the other very important part of the solution — our current race organization model needs to change. You have to remember that professional bike racing was originally built around the organizers’ objectives; cycling races weren’t started purely for the sake of organizing a sports event. Many of the major classical races were started by newspapers, from L’Equipe to Gazzetta dello Sport to Het Nieuwsblad — and their objectives were mostly advertising and newspaper revenues.
Many people may disagree, but I don’t believe that races in general should be owned and organized by the same company. Today, most of the big races are owned and organized by the same companies, but as I mentioned earlier, we must find a way for more new races to enter the sport — new host cities and new countries. Hence, in order to be successful, we must move to a model where the sport has more pure organizers, and start to eliminate the current ownership model. Think of the organizer as the agent who puts on and manages the race, but the “owner” should be the investors in the region or the city itself which itself hosts the race. In short, we need to move away from the model of having owners who also organize the race, because this tends to profit only one side, and limits reinvestment back into the sport.
We must respect the existing race owners/organizers of the major events, but in the future we should gradually move towards this type of model, where new races are licensed to new host cities or host countries. The UCI would be responsible to issue a four-year license to a new city or region, or hopefully a series of such licenses as new races were created in new parts of the world. And gradually we would change the system.
By the way, there is another reason why this is a difficult change to make today. In the case of many major races, the organizer is not only the owner of the race, but is also the owner of the primary newspaper covering the race. What does this mean? It means is that if you want to make any significant changes in the sport — such as changing the calendar, adding new races, or changing the TV rights and so on — you immediately have L’Equipe or some other newspaper coming out against you. Today’s key owners have little incentive to change the model. Particularly in the case of the Tour de France, this tends to place the UCI and the ASO directly against each other when it comes to making major changes.