Don’t bury the USA Pro Challenge … yet

The USA Pro Challenge is taking a year off as it seeks a new ownership group, so hold off on donning funeral attire, writes Fred Dreier.

If your reaction to last Friday’s news that the USA Pro Challenge will not return in 2016 was to recite last rites, don your funeral kit, or to make this face, you’re not alone.

Cycling’s twittersphere was full of sad emojis. Fans I spoke to appeared to be in mourning. My dad even called to lament the news.

I was disappointed too. As a journalist, I’ve reported objectively on the race’s finances and sponsorship since its inception in 2011. But as a cycling fan and Coloradan, I am completely biased. I want the race to survive. Hell, its final stage runs past my childhood home.

And like most cycling fans, I know that bike races die. I can rattle off the list of deceased U.S. stage races faster than I can name my immediate family members (Coors Classic, Tour de Trump, Tour DuPont, Tour de Georgia, Tour of Missouri).

So when I read the news release from CEO Shawn Hunter saying he hopes to assemble a new ownership group, my feelings were mixed. I believe there is a credible survival scenario for the race. But Hunter’s plan is hardly a slam-dunk.

Here is what must happen: Management convinces existing sponsors to carve out budget space for 2017. They create an ownership group capable of pooling together, by my estimate, about $3 million a year. Finally, cycling fans stay interested.

It’s a tough row to hoe. While I wouldn’t book my travel plans for the 2017 USA Pro Challenge just yet, I also wouldn’t write its obituary either. Here’s why:

Races have returned from the dead before

Dead bike races occasionally come back to life. Italy’s 130-year-old Milano-Torino went on hiatus from 2008-11 due to a spat between the race’s owners and organizers. The Giro della Romagna went dormant in 2011, only to merge with the Memorial Marco Pantani two years later.

In the USA, the Tour of Utah canceled its 2007 edition, only to return in 2008 and then blossom into the country’s third-largest race.

At the time, Utah’s official explanation for the cancellation was sponsorship woes. My sources within the race, however, tell me that ownership change and timing also played a major role.

When the Larry H. Miller group purchased the race in 2007, it brought in a solid financial foundation. But the owners needed time to assemble a management team, register the proper paperwork with USA Cycling, and secure a spot on the calendar. Deadlines were missed, and thus, the decision was made to take a year off.

And to the surprise of cycling fans and racers alike, the race returned in 2008 with a five-stage course. By 2011 it had attracted UCI WorldTour teams.

Sponsorship is not a problem

The epithet for your typical dead American bike race includes a sentence about a lack of sponsorship dollars, or more frequently, a title sponsor calling it quits.

That’s not the case with the USA Pro Challenge. In fact, the race’s sponsorship portfolio at the end of 2015 was strong. No, the race did not have a title sponsor willing to cough up millions. Instead, it had 12 “Founding Partners” who all contributed sums between a few hundred grand and a million bucks each.

There were also 24 “Official Partners” who paid anywhere from $10,000 to $50,000.

These financial building blocks allowed the race to cut its losses each year by incrementally raising prices across the deals. The structure withstood sponsor departures and even sponsor delinquency, which occurred in 2013 when Exergy Energy stiffed the race on $2.5 million.

I’m sure many readers winced when the Denver Post reported that the race had lost $20 million since its inception in 2011. But half of those losses occurred during the first year. According to the Post, sponsorship dollars and other income covered all but $2 million in 2015.

If management convinces enough sponsors to carve out space in their respective 2017 budgets, the race could conceivably return without enduring a time-consuming sales cycle.

This isn’t that far-fetched, especially for mainstream brands hoping to target cycling’s demographic. You would be surprised how little $300,000 buys you in the mainstream sports marketplace these days.

Good owners could save the race

Like all major U.S. bike racing operations, the USA Pro Challenge requires a sugar daddy — or several sugar daddies — to act as a financial backstop. There’s been a lot written about why the race’s former owner Rick Schaden was not the ideal patron.

Schaden relinquished ownership to race management in September, which gave them a five-month window to create a new ownership group.

My sources within the race told me they came extremely close to that goal, with a potential deal falling apart just days before Friday’s press release went out. So the question is whether they can pull one together between now and 2017.

After some back-of-the-napkin math, I estimate that backstop needs to be around $3 million to be safe. From what I know of the USA Pro Challenge’s management team, those guys and gals don’t have quarters in their piggy banks to cover that gap themselves.

Who could? In a perfect scenario, the race would attract an owner with the same cash, reputation and patience as Phil Anschutz, who has shepherded the Amgen Tour of California since its inception.

That’s unlikely. A next-best scenario is to attract a consortium of high net-worth Coloradans who see civic value in a statewide event, or who support cycling, fitness and the outdoors.

The final scenario is to win over one of the power players in endurance sports, such as the Dalian Wanda group, ASO, or Richard Branson’s Virgin Sports.

Dalian Wanda has been on a spending spree, buying Ironman in August, which in turn purchased France’s Lagardère Sports and Entertainment last month. Virgin has yet to make any sizable purchases, but there are rumors out there that it is in the hunt. A sale to ASO would bring a level of politics and baggage into the mix as to generate a year’s worth of pithy cycling columns.

So before we don our funeral attire and grab our shovels, let’s give the USA Pro Challenge a few more months. I’m not ready to bury it.