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KEARNS, Utah (VN) — Seated on a child’s chair in the nursery of a suburban recreation center, Tour of Utah Chairman Steve Miller presented the business philosophy that keeps his race alive.
“We believe in living within our means,” Miller said. “It’s about being frugal and using our dollars wisely.”
The frugal approach may seem strange for Miller, who is a board member the multi-billion dollar Larry H. Miller group, which owns the race. The Miller empire includes a nationwide network of car dealerships, the NBA’s Utah Jazz, the Megaplex movie theaters chain, as well as a dozen or so other companies. Forbes Magazine recently valued its chairman (and Steve Miller’s mom) Gail Miller at $1.7 billion.
But Miller is not made out of money, and his family’s cash commitment to the Tour of Utah has limits.
So while the country’s two other weeklong stage races — the Amgen Tour of California and the USA Pro Cycling Challenge — operated with budgets north of $10 million, the Tour of Utah has eked by on comparative peanuts. How low? Miller pegged the current budget at one-third the cost of a $10 million event, so approximately $3.3 to $3.5 million.
“The goal is to execute at the highest level possible, and to do it for a fraction of what the big races do,” Miller said. “That way it’s a more sustainable model.”
The plan appears to be working. The history of U.S. bicycle racing is rife with dead races that boasted multi-million dollar budgets. Most recently, the USA Pro Cycling Challenge died after management was unable to find ownership to help backstop the event, which lost several million each year.
Utah, however, has slowly grown into a stalwart on the international calendar, despite its paltry budget. When the Miller family purchased the race in 2007, its operating budget was a few hundred thousand dollars. Over the ensuing nine years, the Millers gradually invested, and the race blossomed.
Now, with the USA Pro Challenge cancelled, Utah is now the country’s second-largest race. It’s become the premier ground for young, up-and-coming Grand Tour hopefuls to challenge WorldTour riders.
“The guy who wins the Tour of Utah one year will go on to win the Tour de France, maybe in five years time,” said Cadel Evans, who attended the 2016 event. “To be part of that journey is fantastic for any race.”
And its frugal approach may be the smartest way forward for American cycling.
Grow slow to limit losses
Major American bicycle races lose money — it’s just the nature of the business. The Amgen Tour of California has never disclosed its total losses since its launch in 2005. During its five-year run, the USA Pro Challenge lost more than $20 million.
Miller did not disclose his race’s total losses, but said it is comparatively small. This year Miller said his family wrote a check greater than $1 million to cover the race’s expenses. But each year, the sum shrinks.
“For us, it’s manageable,” Miller said. “We look it as good will, philanthropy — it’s for the benefit of the communities.”
And since the race has steadily increased its budget since those fallow early days, the losses the race has accrued are substantially less than other races, Miller said.
How does the Tour of Utah keep its costs low? A simple stroll around the start and finish line reveals a modest footprint with no grandstands and limited race infrastructure. The race vehicles are a fleet of Factory Turnback cars from a local Subaru dealership. At least one contract employee said he earns less at the Tour of Utah than at the Amgen Tour of California or USA Pro Challenge.
“If getting a smaller paycheck means that the [Tour of Utah] gets to come back next year, it’s a tradeoff I’m comfortable with,” said the contract employee.
The race’s opening three stages also target a remote sector of the state, where the limited impact keeps the bill small for police and road closures. And along the route, the race houses its teams and staff in budget motels, university dormitories, or other low-cost housing.
The race’s television bill is also less. Buying live broadcast time on a major network, such as NBC Sports, can cost a race upward of $1 million, with an additional $1 million spent to produce the show. The Tour of Utah broadcasts a nightly recap show on Fox Sports, with the online Tour Tracker showing the race live.
“Do you need to have big hotels and fancy dinners?” Miller said. “It’s a different model than what we’re doing.”
Other than a few gripes about the food options in some of the rural towns, pro riders and teams had no complaints about the Tour of Utah’s infrastructure. Instead, they collectively sung its praises.
“There’s international media here. People are watching it live,” said Jonas Carney, director for Rally Cycling. “Doing this race is worth exponentially more to our sponsors than something on the [USA Cycling Pro Racing Tour] level.”
Growing sponsor revenue
With limited income from the sale of VIP tickets and international TV rights, bicycle races must cover their costs by selling sponsorships against the event.
Jenn Andrs, executive director for the Tour of Utah, said the race’s larger sponsorships generate low to mid six-figure sums. The race’s list of sponsors includes the Utah Sports Commission, Zion Bank, America First Mortgage, UnitedHealthcare, and others.
“We look for partners who understand the race,” Andrs said. “Every year their contribution to [the budget] is expanding.”
This year, the race added Clif Bar and Mavic as sponsors. Its international TV rights holder, IMG, also sold a greater international TV package.
Perhaps the most important financial sponsorships come from Utah’s state boards of sports and tourism. The race has committed itself to a rural format, in part, to showcase Utah’s national parks. This year the Utah Tourism Board launched its “Mighty 5” campaign, built around the state’s five national parks: Zion, Bryce Canyon, Arches, Canyonlands, and Capitol Reef.
The race’s European broadcast and proximity to the parks — this year it started in Zion and skirted Bryce Canyon and Capitol Reef — justifies the cash sponsorship by the government entities.
“It’s about planting the seed in people around the world to come visit [Utah],” said Joel Racker, a member of Utah’s board of tourism development. “We want people to plan their whole vacation around [the Tour of Utah].”
A quest for title sponsorship
In recent years, the Miller family has tightened its belt. In 2015 the family shuttered the Miller Motorsports Park, which reportedly lost millions annually. With the Tour of Utah’s losses at a manageable level, the Millers decided to keep the race going.
“Our interest has never been to fit the bill for the entire race,” Miller said. “We want partners to spread around the risk a little bit.”
Indeed, both Miller and Andrs said the race is on the hunt for a title sponsor. Even a presenting sponsor, Andrs said, would be a welcome addition.
The hunt for a title sponsor has hurdles. The Tour of Utah’s commitment to rural communities sacrifices its spectator count, which is a selling factor for mainstream companies. Major brands also use bike races to entertain clients — the entertainment options in tiny Tour of Utah towns Torrey and Richfield are limited.
And then there are the natural challenges associated with cycling. “It’s tough to sit down with a prospective partner to introduce them to cycling, and they then ask you to point to a success story,” he said. “It’s like let’s not talk about [the Tour of] Missouri or the Tour de [Georgia] or the others.”
So instead, Miller will continue to back the race. As he sat in the rec center nursery, Miller compared the Tour of Utah’s budget to a big meal. The Utah Sports Commission takes a bite, so does the state’s tourism board. A dozen or so smaller sponsors then eat more.
“Whatever is left, we eat,” Miller said. “And you know what, we’re OK taking the big bite.”