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Analysis: Is the time right for teams to share TV revenue?

News leaked this week of Giro d'Italia organizer RCS Sport negotiating a groundbreaking revenue sharing deal, but what do the stakeholders think?

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HERNING, Denmark (VN) — When the news broke Tuesday that Giro d’Italia promoter RCS Sport was on the verge of reaching a revenue sharing agreement with cycling’s top teams, the revelation caught stakeholders on all sides of the table by surprise. Reactions ranged from cryptic allusions toward future announcements to direct calls for a new professional league.

The feelings of some of the major players may surprise you.

Race organizers like RCS Sport and Amaury Sport Organisation charge broadcasters for the right to air their races, including the Tour de France, Paris-Roubaix (both ASO) and starting Saturday in Herning, the Giro d’Italia (RCS Sport). Teams have pushed for a seat at the table in these negotiations in the past, but never came to an agreement, frequently because of an almost constant barrage of pressing, but ultimately less economically significant issues. Doping, two-way radios and talks of a new cycling league have occupied the airspace needed to make meaningful changes to the sport’s revenue model.

Organizers don’t often find the time to entertain the subject, either. In Spain, which is one of the countries hit hardest by the economic crisis, the organizers are simply trying to keep their races going and, if they’re lucky, televised. The Volta a Catalunya and Vuelta al País Vasco stage races both are on their knees to pay bills, let alone the teams that attend.

The situation is foreign to many American fans of other sports, because in the U.S., the major sports leagues guarantee revenue sharing amongst the teams and between the leagues and players. Pro football and basketball players’ unions take around 50 percent of the revenue generated by their respective leagues, for instance. But cycling is different, all the way down to the management structure and the fact that teams align more closely with the riders than the UCI (the league) on most issues. (In the NFL, for instance, the league office is a vehicle designed by team owners to manage the sport.)

On Tuesday, broke the story that Giro organizers were in advanced negotiations with the teams. American Jonathan Vaughters, former pro and currently the CEO and sports director of Garmin-Barracuda, has been a major force in the push for teams to receive a slice of the pie. The story quoted Vaughters as saying, “I’m very pleased with the negotiations with RCS and hope to have a deal that’s mutually beneficial at some time in the near future. I’ve been really happy with how RCS and Michele Acquarone has [sic] treated the teams. We’re really excited about the possibility of this partnership.”

As the president of the International Association of Professional Cycling teams (AIGCP), Vaughters told VeloNews Wednesday that he was in fact working with organizers to gain a percentage of television broadcast revenues. Vaughters would not talk specifics and said he was unable to comment until after June 14. The other major players, however, provided some surprising comments on the subject.

The Organizer

Michele Acquarone took over as Giro director last year. His approach to running the Tour of Italy and RCS Sport’s other races, including Tirreno-Adriatico and Milan-San Remo, is one of open-mindedness.

He told VeloNews that there’s time to talk about TV revenues in November and December, later in the year and not three days before the Italian grand tour opens here on Saturday. He added that he “didn’t expect to read this in the papers” so soon and that he has “no comment” on it at this moment.

Acquarone, however, did share more of his time. He said that contracts were already in place for this year and that if decisions regarding revenue sharing were made, they would go into effect in 2013 at the earliest. “In my eyes,” he added, “there’s still a lot to do.” For now, he said, “Calma, calma,” or, in other words, “have patience.”

“The teams are surprised by this and said they didn’t know that we’ve decided something. I said, ‘No, we’ve not decided anything,'” he said.

The Team

Shayne Bannan started Australia’s first top-level team over the last year. This season, the squad debuted as GreenEdge, but without a title sponsor. Only on Tuesday did he announce that they’d secured a backer and that the team would carry the new title of Orica-GreenEdge. The Aussie said that he’d welcome more money, but first wants organizers to be able to run top races where his team can show off the sponsors.

“Regarding TV rights, I’ve not received any documentation or any information. If it’s correct, then it’s to be applauded. They [RCS Sport] recognize the contributions the teams make and seemingly want to work with the teams to go forward,” he told VeloNews.

“I also understand the difficulties the organizers face in these economic times. It’s imperative that these races go ahead in high quality and get as much publicity globally as possible. If that means they have to spend extra money in advertising and television to keep going, then maybe in this point in time, that’s [my] preference.”

Bannan cut his teeth in track racing, but already knows the European road racing landscape. Asked if he’d be encouraged to bring his stars to races if a percentage of TV revenues were paid to his team, he explained that it would not make a difference.

“Out of respect for these big organizations, you send your best riders. You want your riders that can get results, because at the end of the day, that gives you publicity.”

He added that the revenue model works both ways in cycling, with the teams propping up smaller events, just as the historic events provide the sport’s top squads a stage on which to perform.

“The reality is there are not too many race organizers making profit out there. Where the teams can, they try to support the events and send good riders.” The teams, he said, want the publicity for sponsors and results to maintain their licenses.

The Rider

Italian Gianni Bugno was a top professional in the 1980s and 1990s. During his 14-year professional career, he won two world titles on the road and the overall at the 1990 Giro. He now spends his time flying helicopters, including Italian television’s bird for the Giro, and is president of the Association of Professional Cyclists (CPA), which operates as more a trade association than a union.

“It’s true, the teams would like to have part of the rights,” he told VeloNews, “but for sure, at the moment there’s nothing.”

Bugno explained that the best way forward was to create a separate cycling league from the UCI. Top team managers have been rumored to be involved in the planning of a “breakaway league” for more than a year. Bugno’s statement is one of the first on record from inside the sport to call for the creation of such a calendar.

“You need things to be different, a new league,” he said. “How things are now, you can’t do it.”

He agreed that if the organizers lack money, then races disappear. But Bugno believes that the big organizers, namely RCS Sport and ASO, do have money and could stand to share.

“Certainly, the money does exist,” he added. “How much, I don’t know. We need to understand and divide it up for everyone.”

Acquarone explained that in cycling one needs patience. Bugno agreed and added that cycling shouldn’t be compared to American football or baseball. He said, “That’s another sport and another continent.”

Bugno is correct. The major North American sports leagues were developed by team owners during the early-to-mid 20th century. Leagues like the NFL and NBA operate through collective bargaining agreements between the team owners and players. In cycling, on the other hand, teams and riders align together, with the UCI acting as the “league.” That all could change, at least in some part, if Bugno’s calls for a new league bear fruit.

It is only spring, however, and that fruit is seemingly a few months away yet. So, is the time right for teams to gain access to TV rights money? According to a number of stakeholders at the Giro, no, not really. But stay tuned…