Tour de France 2020

Inside Cycling with John Wilcockson: Armstrong had little effect on Tour profits

ASO revenues and profits, 2002-2009 The economic impact of Lance Armstrong’s return to the Tour de France in 2009 after a three-year absence has been seriously misstated. VeloNews has obtained the annual financial returns of Tour owner Amaury Sport Organisation going back several years, and these show…

ASO revenues chart
ASO revenues and profits, 2002-2009

The economic impact of Lance Armstrong’s return to the Tour de France in 2009 after a three-year absence has been seriously misstated. VeloNews has obtained the annual financial returns of Tour owner Amaury Sport Organisation going back several years, and these show that a news story generated by the Bloomberg news agency last week under the headline, “Lance Armstrong’s Comeback Helped Add $32 million to Tour Owner Income” does not jibe with the facts.

Neither Bloomberg nor the web sites that picked up the story recognized that the increase in ASO’s 2009 revenues was not due to the seven-time winner’s comeback to the Tour but to the return of ASO’s other major sports property, the Dakar motor rally. That prestigious multi-day off-road adventure race for cars, motorcycles and trucks was not held in 2008 because of terrorist threats on its traditional course through the Sahara Desert to the Dakar, the capital of Senegal.

Correlation, not causation

The Dakar’s 2008 cancellation, partly offset by a resultant insurance payment, resulted in ASO’s income dropping by $56.4 million — from a record of $227.2 million (154.4 million euros) in 2007 to $170.8 million (121.2 million euros) in 2008. The partial $37.3 million recovery last year to $208.1 million (145.2 million euros) was almost entirely due to the restoration of the Dakar Rally, which was held in the South American countries of Argentina and Chile to avoid potential terrorist activity in West Africa.

As a result, ASO reported that “after a difficult 2008, marked by the cancellation of the Dakar, the 2009 year allowed ASO’s profitability to be restored.” The company added that because of “the sharp increase in organizational costs, which were only partially compensated by the financial support from the countries traversed, the profitability of the Dakar … decreased.”

As for the Tour de France, ASO reported that “on the financial level, the profitability of the 2009 Tour was satisfying, with its budgetary goals slightly exceeded.” In explaining the approximate 10-percent increase in the Tour’s television audience, the company noted that there were no doping scandals “for the first time in a long while” and “the Armstrong-Contador duel certainly didn’t detract” from its popular success.

That was only the second time that ASO mentioned the Texan in its past five financial reports. The other was in 2005, when it noted: “If the suspense didn’t last long with the crushing domination of Lance Armstrong, winner for the seventh consecutive time, the Tour de France confirmed its status as a major sporting event.”

Added proof that Armstrong’s participation at the Tour had little effect on ASO income is contained within its year-to-year financial returns (see chart). Although total revenues for the privately held French company steadily increased during Armstrong’s Tour-winning seasons, first exceeding $100 million in 2002 and reaching $160 million by 2005, they continued to rise after his retirement.

In 2006, the year that winner Floyd Landis was later disqualified for a positive drug test, ASO’s annual income climbed by more than $30 million to $192.3 million (145.8 million euros). In its annual report, ASO wrote: “If this edition confirmed the good financial health of the Tour de France, with another increase in operating profit, the positive control of Floyd Landis … again tarnished cycling’s image.”

And in 2007, when Albert Contador inherited the yellow jersey after race leader Michael Rasmussen was excluded, another $35 million was added to ASO revenues, reaching $227.2 million. Much of this was due to “a substantial increase” in the operating profit of the Dakar Rally, but the Tour also saw its profitability increase to a new record “despite a succession of (doping) scandals.”

As for the third year that Armstrong was absent, ASO reported that the “profitability of the 2008 Tour, close to the record of the 2007 edition, remained a satisfaction.” But, that was the year of the Dakar cancellation, for which “ASO assumed all the consequences, reimbursing all its clients (competitors, sponsors and broadcasters) and honoring … its contractual obligations with its suppliers.”

Besides owning the Dakar Rally and the Tour, ASO is the longtime promoter of the Paris Marathon, the French Open of golf, and a host of cycling events. The annual financial reports show that only some of those bike races are financially viable, while Tour revenues prop up the others.

For instance, in 2005, ASO said that “the operating revenue of the Critérium International and Paris-Roubaix increased considerably … while Paris-Nice, the Flèche Wallonne, Liège-Bastogne-Liège, the Tour de l’Avenir and the Tour du Faso (in Africa) all suffered from the stagnant advertising market.”

The following year, the story was: “The other events saw declining receipts, except the Tour of Qatar and L’Étape du Tour (a mass-participation event).” And in 2007 ASO said that these other races “saw a marked reduction in gross profits (with the notable exception of the Tour of Qatar) … accentuated by increased operating costs (ProTour surcharges essentially).”

As for the past two years, ASO reported that the other races were “still suffering from the morose advertising market” in 2008, while last year “a policy of cost-cutting” allowed the company to combat the poor economy.

From a close read of the financial reports, it’s clear that the poor global economy has barely affected the financial strength of the Tour de France, which remains the crown jewel of ASO and its parent corporation, Groupe Amaury, which owns two leading French newspapers, L’Équipe and Le Parisien/Aujourd’hui. And, if ASO finances continue on the same path as they did in the past decade, the Tour’s strength is unlikely to be affected by the future absence of Lance Armstrong.