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Looking ahead: An interview with USA Cycling chief Gerard Bisceglia

December 21, 2002Gerard Bisceglia has been at the helm of USA Cycling since July 2002, when he took over as Chief Executive Officer of the struggling organization. Over the next few issues of the print edition of VeloNews we hope to examine the issues and challenges facing Bisceglia and USA Cycling in 2003. In this interview, the CEO discusses some of these challenges, which include a declining NORBA membership, strained relations with some regional road racing organizations, and a failed attempt to merge USA Cycling’s BMX association, the NBL, with the ABA. On the bright side, Bisceglia

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This interview appears in VeloNews issue No.1

December 21, 2002Gerard Bisceglia has been at the helm of USA Cycling since July 2002, when he took over as Chief Executive Officer of the struggling organization. Over the next few issues of the print edition of VeloNews we hope to examine the issues and challenges facing Bisceglia and USA Cycling in 2003. In this interview, the CEO discusses some of these challenges, which include a declining NORBA membership, strained relations with some regional road racing organizations, and a failed attempt to merge USA Cycling’s BMX association, the NBL, with the ABA.

On the bright side, Bisceglia notes that USCF membership is experiencing growth for the first time in five years, and his goodwill tour of the country has resulted in bringing back some of the independent racing organizations that had left USA Cycling.

We begin our series of reports on USA Cycling with this interview between Bisceglia and VeloNews news editor Charles Pelkey.

VeloNews: Well, it’s been a while since our first interview – on the day you arrived in the job – and I believe the first thing I asked then was whether you knew what you were getting into. So, now that you’ve been doing this for a while, you can probably answer that a little better. Did you know what you were getting yourself into when you took the job?

Gerard Bisceglia: No. No, I did not.

The whole thing is much more complex than I had anticipated. That complexity is related to the interaction of all the different disciplines – even when it comes down to individual affiliate organizations. It’s been an education these past few months.

You have road with in the USCF, for example, but within that you have track and cyclo-cross and… all of which face different issues and then you add in mountain bikes and BMX. They are all different in terms of the audiences they serve and in terms of the way they operate.

The USCF, for example, is very, very much a rider-based organization. The NORBA side is a little bit different, because it’s not as much of a community in the sense of membership, organizations, and clubs. It’s a more loosely-knit community … it’s harder to get my arms around that and we’ve been focusing our efforts there on promoters, because the sport seems much more driven by promoters and promoters’ instincts. So our task there is to work to serve the promoters so that we can get more races, more racing days and opportunities in a safer environment.

And the BMX side, operates almost completely separately, it operates out of Ohio. In a sense I oversee that one the way a CEO would oversee a subsidiary. I get involved in it only to see that it is run properly. That is a subsidiary that is run much more like a business than a membership organization.

VN: And it is a subsidiary that you just recently tried to spin off.

GB: Yes. That is correct.

VN: Was that a good move?

GB: A good move to sell it off?

VN: Or even to examine the option. You really caught a lot of the NBL folks by surprise.

GB: The consideration on my part was to try and streamline the organization and to be more conscious of members’ needs. My feeling on NBL was that it was the one element of cycling in the U.S. where there is a major competitive aspect to the governance side with another organization called the ABA. I felt as a membership organization that such a competitive business model may not be what we should be doing and that we should focus our efforts on serving all of the cycling community.

VN: But you later concluded that a sale to the NBL wasn’t such a good idea.

GB: Yeah, now that I know more about it, it became clear that it was in everyone’s best interest not to move forward on that. Like I said, it’s been an education.

VN: Going back a bit. In terms of knowing what you were getting yourself into, my question really is about the financial side of the picture. When you took this job, did you have a real understanding of the financial health (or lack thereof) of the organization?

GB: It’s getting better. By that I mean that we are a membership organization and we will be able to begin to address our financial issues as we increase our membership base, because we get all of the efficiencies that are created by a larger number.

VN: No, no… I mean when you took the job, did you have a realistic picture of the financial health of USA Cycling or is it worse than you thought?

GB: Oh no and that’s why I jumped straight to the membership side of the question. Actually, the financial picture isn’t as bad as I thought, but it was trends that that really concerned me: The chronic reduction in membership, primarily on the NORBA side, but also on the USCF side of the picture.

In fact, I have to say that the USCF will have its first increase in membership in about five years. That’s the first time we’ve had an up and I expect that trend to continue through 2003. We are up around four percent for the year – 26,000 versus about 25,000.

VN: Like you said, on the NORBA side the drop has been huge over the past five years. Superficially, you’d think the sport of mountain-bike racing was tanking, but that’s not the case. Grassroots mountain-bike racing is actually pretty healthy. It’s just that fewer and fewer of them are joining NORBA. It’s down, what, 60 percent?

GB: Sixty-percent from its high. Yes and think there is an awful lot that contributes to that. Not in any particular order of impact, let me run through those.

One of them is the one-day license. The one-day license really came about to give people the chance to try out the sport, but once we expanded the one-day license to include all comers, it’s easy for a person to come out and buy two or three one-day licenses and never actually become a formal member.

Now it used to be that members of one affiliate could get a discount when they bought a license in another organization. So, when a USCF member bought a NORBA license he or she could do so at half price. That stopped and the numbers declined. We are going to reinstate that practice for 2003. That should encourage USCF members who want to race a little mountain-bike, too, to get a full license, rather than a series of one-days.

I also think the service that we were providing didn’t warrant the costs of those services. Our members and promoters are looking for service and we need to improve the level of service we have been providing promoters.

Finally, the insurance is a big issue. A lot of promoters have gone out to secure insurance at a much lower cost than we have been providing it. It also has to be said that our level of coverage was much greater than what they were buying, too, though. The liability and medical coverage and everything that goes with that are much smaller, but there is a significant cost associated with what we offered and the promoters have been going elsewhere.

So, we’re trying to address all of those issues… and we expect to see a big change in 2003.

VN: On the insurance side, I’ve noticed that your numbers show a significantly higher per-rider, per-day cost for insurance on the NORBA side. Your cost is about six bucks per rider and you’re charging $3.50 to promoters. It’s around $2.00 on the road side. Why the disparity?

GB: It’s all based on the numbers generated by the insurance companies’ actuarial numbers and I believe a lot of that is driven by the downhill. I’ve never really separated the numbers, but I’ve heard that the downhill riders are just about four times as expensive as a cross-country rider.

VN: My life insurance company gives me a discount because I don’t smoke. How fair is it to spread that risk around so that a relatively low-risk event like the cross-country has to carry the burden for a significantly smaller, but higher-risk, segment of the sport?

GB: We are going to be doing a complete reexamination of our insurance package, so that we can put the whole thing out to bid. If the numbers show that a downhill rider really does carry a significantly higher risk, we’re not going to ask the cross-country side to continue to subsidize that.

VN: On the road side, you mention that you’re getting an increase, but last time we had a major American superstar – when Greg LeMond began winning the Tour in 1986 – we saw a significant jump in sponsorship and membership of the USCF… especially in the junior ranks. Yet, we really haven’t seen similar jumps this time around as Lance Armstrong has run up four Tour wins in a row. What’s different now? And what are planning to do when Armstrong eventually retires and the mainstream U.S. media won’t be paying as much attention to the sport any more?

GB: I really don’t know what they did when Greg won, so I can’t comment, really. Sean?

Sean Petty: There were spikes in membership, but some of that had to do with big events here in the U.S., too. The Coors, then Tour de Trump and DuPont… On the sponsorship side, it was a heck of a lot cheaper back then to field a team, too, so it was easier for a company like 7-Elelven, where Gerard and I both were at the time, to get involved. I mean even at its peak, we had a 23-member team for $3 million. Even a smaller squad than that would require a minimum of $7million if it were to shoot for Division I.

GB: In terms of participation, we are all competing against a much bigger set of choices for kids these days. There are so many other opportunities for kids to express themselves out there. You don’t just need to look at cycling. Look at the problems faced by Major League Baseball and the NBA.

That said, we have a terrific opportunity. If you have a look at the complete picture of cycling in this country – including the groups that are not USA Cycling affiliated – the numbers are there and it’s growing. Our job is to generate more enthusiasm and, most importantly, to focus on the juniors. One of my big concerns now is seeing just how much this sport is being driven by the master’s category. We really need to work on bringing more young people into cycling.

VN: As far as those organizations that are not affiliated with USA Cycling. You have made some progress in recent weeks. You just managed to bring Northern California back and it appears that you have reconsidered the whole regional rep’ concept – the program that many say started the split in the first place.

GB: First and foremost was to open the line of dialogue. I have tried to visit with as many of these groups as I can and tell them that ‘we are not at war with you.’ Our first priority – as is theirs – is the health of cycling in this country.

Sure, we’d like to see a unified cycling community in this country, but it’s incumbent upon us to produce a product and services that makes that decision self-evident. I spent an excellent evening with Mike Murray (of the Oregon Bicycle Racing Association) and it became clear that we have to produce a better product before we can get promoters and state organizations like his back. He asked why he should rejoin and, frankly, I had no answer for him.

VN: As I recall, you spent that evening with Mike before you met with the NCNCA. So, while agreeing with Mike that you couldn’t offer him an acceptable deal, you were able to sell that same package to California. Why?

GB: Right off the bat, Mike and Candi are dealing with a smaller area. I went there to see what they are doing and they are doing a great job. They are immersed in cycling. The track is vibrant, the promoters are happy on the mountain-bike side and things are clicking along nicely. They have little incentive to change. It’s important to remember that very few of their riders have dual licenses and their license fee is considerably lower than ours and most of their racing takes place inside of Oregon.

California is a different case. The vast majority of their riders were also carrying a USCF license. First and foremost the NCNCA move was made to benefit the riders. For them, the cost of racing to individual racers has been cut. The riders benefit.

For the promoters, we were able to bring them an insurance package that was competitive with what they were offering and still providing the coverage they were looking for. They just felt that what we had to offer worked for them.

The Murrays on the other hand had other factors at play. I have every intention of continuing the dialogue and hopefully some day we’ll be able to offer a package that they like. The bottom line is that we are all talking now.

VN: You continue to meet with members and directors of other breakaway groups. What kind of progress are you making?

GB: I just met with Beth Estes here in Colorado. I got an education, not only in Colorado cycling, but on the history of USA Cycling in general. Certainly, she’s been involved for many years and it was a good opportunity to get a new perspective on things.

I wanted to meet her and find out why Colorado wasn’t part of USA Cycling.

VN: How much of that split has to do with the sense of abandonment long-time district reps felt when they were just fired and replaced with regional reps in 1999?

GB: Yes, that’s a good word for it: abandonment. You know that the one word that comes up in connection with cycling is ‘passion.’ Well, passion comes out in two forms and when something like that happens – when a whole group of dedicated individuals are summarily dismissed – an awful lot of passion welled up.

We did not do a very good job on damage control. From what I’ve learned, we didn’t do a very good job of informing people of what or why things were happening. I mean these people were doing good work for little or no compensation so, yeah, I think that was a major contributing factor to the cracks that appeared in the organization.

VN: A few weeks ago, you made an interesting point about the financials at USA Cycling, saying that for a long time you guys touted yourselves a $12 million to $15million-per-year organization, but in fact have been a $6 million dollar organization all along. Why the difference?

GB: You know, coming from a business background, if you want to inflate sales, it’s easy to do that. I just don’t see the purpose in that.

An example for us, is that we have a sponsorship relationship with a large sponsor, in that we act as an agent in creating events. Well, over 90 percent of that goes right out the door to those events, so that’s not really revenue for us, is it?

Second, the NBL is a business that runs out of Ohio. That business generates about $3.5 million in revenues and those revenues go to support that business. So, when you look at the membership and the services provided to those members, we have to concede that half of the dollars that come in here go right back out again. Add to that, insurance, where we see a huge tab at the beginning of the year for insurance, it doesn’t really leave us with a lot of what politicians like to call ‘discretionary income.’ So much of it is spoken for.

We get a lot of USOC money that comes in with stings attached – money that we’ve asked for, but has to be designated for elite athletes.

When I talk about USCF and NORBA, I am talking about the money that is available to support the members of those organizations and that bottom line isn’t nearly as grand as some people may have liked it to seem. Maybe there is a benefit to being perceived as a large organization, generating $12 million dollars, but I haven’t seen that. When members hear about those kind of monies and are paying your $40 or $50 a year in license fees, the first question to come to mind is “well, what are you doing for me, then?”

One, we have to do more for them and, two, we have to make the community understand that every dime that we take in goes right back out to support cycling.

VN: Given finite resources, how do you prioritize the differing responsibilities? How do you rank things like membership and elite athletic programs and promotion?

GB: In my book, two things come first and I refuse to separate or rank them: members and athletes.

We do have a charter here and a significant amount of the money that comes in to USA Cycling comes in to support elite athletes. Part of our responsibility is to hold our flag up high and develop the best and most competitive international teams possible. So Steve Johnson and the people in athletics get a tremendous amount of my attention.

However, I will not separate that from our responsibilities to grassroots cycling in America. Because if we don’t support and foster cycling for everyman, we will have a difficult time developing elite athletes.

Those two things are never far from what we think about and I rarely separate the two and will never do it publicly.

VN: While reexamining the product you offer the members, the numbers on the athlete side are dropping. I believe that in 1996 and 1997 you had 23 coaches on staff and now you have six. Given your resources how do you meet the responsibilities that you have? Do you have a plan for increasing the resources for those programs?

GB: They are going to get more money in 2003 as they focus on Athens and Beijing in 2008.

One of the benefits I hope we will all see is that there will be savings as we increase our efficiencies. One of the concerns I have with the groups that left is that they are buying insurance, we are buying insurance and no one is really benefiting from the economies of scale we would get if we enlarged the insurance pool.

The more service we can offer, the more members we attract and the more efficiencies we create and eventually there will be more dollars we can invest in elite athlete programs.

Aside from that, I have also opened up a lot of dialogue with the large pool of independent coaches out there. I’d like to support those coaches and reward those coaches for their efforts in developing athletes, too. The structure is different now, of course, with professional athletes taking a bigger role in the Olympic movement.

VN: Finally, now that you have been on board for a while, you may have a feel for the long-term outlook of the sport and of USA Cycling by now. Where do you see – or hope – the organization will be in, say, five years?

GB: I think most importantly, it’s our responsibility to position USA Cycling as a service organization and to give people a reason for wanting to be part of it. If we can achieve that, we have made a big step, not only in increasing our membership base, but also in being able to talk to significant funding sources, because we will have a much broader resource for sponsors to tap into.

Eventually, I would like to expand our appeal beyond just the licensed rider – to avid and interested cyclists, who would want to be part of USA Cycling, but just don’t see themselves as racers. But that’s a long-term strategy…

First and foremost, we have to clean our own house and try to get USA Cycling back into the position of being the organization that competitive cyclists look to for guidance, direction, safety, officials, training and the path for the athlete who wants to pursue the sport to the elite level. Ultimately, I’d like our membership to view us in a positive light… but we’ve got a ways to go yet.