Pro cycling is beautiful sport but follow some of the sponsors behind the teams and they’re not always as clean as the riders are supposed to be. Look at the pro peloton today and you’ll find teams representing despotic governments, accident-prone chemical companies and a range of other questionable sponsors.
One by one each of these sponsors might have its place but does their collective presence say something about pro cycling?
Where to start? Let’s go in alphabetical order. First up, A for Astana, the team named after the capital city of Kazakhstan. The country has plenty going for it, whether its sheer size and abundant resources. But it sits very low on indices that rate press freedom and corruption although many probably know the damage done by Borat instead. The Astana team has been a vehicle to harness the sporting popularity of Alexander Vinokourov who is no stranger to politics, having been on the electoral list at the behest of the ruling Fatherland’s Ray of Light party. The team helps give a better image of the country, especially as it tries to sell gas to Europe. Nibali’s Giro win helped promote the country’s image in Italy, a counter for the tale of “extraordinary rendition” of an opposition politician.
Next B for Baku, a small cycling team but sitting on top of a lot of money. Baku is the capital of oil-rich Azerbaijan some of its cash is going on pro cycling. The route of the new Tour of Azerbaijan tracks the route of a new oil pipeline. Eurosport viewers might remember the “movin’ ahead” adverts only progress for most Azeri citizens isn’t so obvious. It rivals Kazakhstan for low scores on openness and corruption. They’ve just had elections and Ilham Aliev won, just as his father won previous elections. Only this time with an amusing twist as the government announced the election results by accident days before the vote was due to happen. Most of the country’s wealth is divided up between a few clans and the team has the President’s seal on the jersey.
Now cross the border from Azerbaijan to Iran and we get to MTN as in the MTN-Qhubeka team. A fun team with a good charitable mission, Milan-Sanremo trophy and more yet South-African based cellphone operator MTN could do with some good publicity. It operates developing markets but it’s also got flak for its operations in Iran and Syria. Here’s London’s Financial Times:
“Touted as one of South Africa’s biggest corporate successes of the post-apartheid era, MTN has over the past year been at the centre of controversies over its operations in Iran that rattled its share price and brought sharper scrutiny of its business in other frontier markets… …a saga that illustrates the extraordinary risks MTN has taken to profit from doing business with pariah states and poor countries with limited infrastructure”
– Telecoms: Dealings in the danger zone, FT.com, 2 July
Maybe MTN’s work goes with the terrain, read the FT piece to judge for yourself or if you struggle with the paywall, see Reuters. But you can understand why the telecoms operator would like some good publicity in Europe, far from its home market. But unlike Astana and Baku at least you can at least buy MTN’s products and services and the team’s success in African races is a viable promotion.
You can’t buy a Katusha unless you’re an arms dealer
The pro cycling team is named after a patriotic song and does not represent any consumer products. There is a surface to air rocket but that’s named after the song and has no connection to the team. Katusha is Team Kremlin, loyal readers will be familiar with the Tinker, Tailor, Cyclist, Spy blog post, probably the most read item on here. As we’ll see with the Sochi Winter Olympics, Russia’s keen to exploit sport to promote its national identity instead of letting others print stories about odd election results and street protesters being given lengthy custodial sentences. The money behind Katusha is also supporting Rusvelo.
Next up, Orica. The Australian company makes explosives and other speciality chemicals for the mining industry; it bought Norwegian dynamite firm Nobel a few years ago. The company does not have a great reputation with explosive disasters and numerous chemical leaks, an unfortunate way of putting something back into the local community. Unless you’re the purchasing manager for large mining operation you cannot buy Orica’s products so the sports sponsorship is another example of a company trying to improve its image with something positive.
One thing you can buy is a Cofidis product only the trick is not to have too much. The French cycling team has run non-stop since the 1990s and is backed by a consumer lending company that targets revolving credit to people euphemistically described as subprime. It’s got bad publicity with stories of over-indebted consumers. No doubt cycling sponsorship helps with branding but it’s got a sales aspect too, aiming direct at the blue collar demographic in France and Spain where it operates that makes up much of the TV audience for races.
There’s Sky too. Part of a British media company ultimately controlled by Australo-American Rupert Murdoch, a real life version of The Simpson’s Montgomery Burns. Various British outfits have been in trouble – one newspaper was even closed down – and the founding force behind Team Sky, James Murdoch was called to the British parliament to explain himself over alleged criminal practices by his journalists. It’s said the cycling team was created for other reasons – James Murdoch is a cycling fan – but the success of Wiggins and Froome has been an invaluable boost for the corporate image.
So what?
What if cycling suits a few shonky sponsors? There’s plenty of relativism, you can place some of the names listed above on a scale that goes from legitimate and regulated French consumer credit all the way to despotic nations that rig votes and torture political opponents, a vast distance. It’s better the money goes into cycling than something else. And it works, you probably think better of Kazakhstan thanks to Astana and Orica rhymes with cycling rather than environmental damage. Sponsorship allows us to see the good news.
Risk vs Reward
But I think there could be something particular to pro cycling. You know the pro cycling sponsorship sales pitch by now: lots of publicity for relatively small outlay. It sounds good but a big return on a small investment usually means one thing: high risk. Run with this idea and some sponsors might not have much to lose when it comes to their image so spending some cash on cycling sponsorship can help redeem their image. Cynically if it all blows up in their face with a doping scandal, well it’s not going to hit the image of a country used to attracting headlines for the wrong reasons.
The Good Guys
It’s worth stressing the majority of sponsors in the sport are there for the right reasons. Garmin sell lots of cycle computers, Cannondale make good frames and so on for Quick Step flooring, Movistar telecoms and Lampre laminated steel. And even if you might be uncomfortable with the money or people behind some teams, we’re miles from the mafia-backed money laundering Roslotto team.
Conclusion
Sometimes those team names and logos on a jersey can seem strange, you might not know what Cofidis or Orica actually do. Cycling is a means for some sponsors to rehabilitate their names. This is the essence of sports sponsorship, a way to associate a corporate activity with something dynamic and fun and it goes well beyond cycling, see Russia’s Gazprom sponsoring football and more.
But amongst the roll call of team sponsors there are several names whose products you cannot buy. Instead they appear for more vague reason of branding and promotion. Is pro cycling’s risk-reward profile a cheap way to boost their reputation?
Another fascinating article INRNG.
Of course a helpful “GreenEDGE” after Orica blinds most of us to what they actually do – before this I knew Orica were vaguely mining related, but somehow in a green/environmentally friendly way.
Sochi – no T –
Fixed, thanks. Different countries spell it differently, Soci in Italian, Sotchi in French etc.
When you see Astana like this you see no wonder they don’t care about signing a truckload of ex-dopers.
PS love the line “numerous chemical leaks, an unfortunate way of putting something back into the local community”
That’s a bit harsh, the country has its problems but the management is probably more reflective of the current/past state of pro cycling than the sponsor. That said the sponsor obviously has no zero tolerance policy. Note there’s plenty to help Kazakhs get cycling too, a whole pyramid structure with the pro team at the top. But yes, when the team wins it is does present a more positive image of the country and its government benefits as a result.
There’s a recent article in ProCycling magazine about how Astana have taken major steps to clean up their act, with an internal anti-doping testing regime run by an independent company among other things. Obviously it will take a while for the image to catch up with reality – no doping positives or investigations for the foreseeable future would certainly aid that.
On any rational measure, Astana (the team) will continue to lack credibility as long as Vino remains at the helm.
Where would you categorize Argos in this? BP rebranded itself from British Petroleum to “Beyond Petroleum” to look more green and supportive of sustainable energy. So it would make sense for me if Argos tried the same with cycling as a vehicle to look greener and more sustainable.
Interestingly, Argos are ending sponsorship of the team beyond end of this year. New title sponsor to be announced.
To be honest, INRNG, if you start reviewing sponsors across any sport, you start to hit either individual name or sectors that have some hint of tainting even by association:
– Banks – the devils work, responsible for the global recession etc etc (paraphrasing there)
– Mining companies – environmental issues, treatment of workers
– Oil and Gas – environmental issues
– Manufacturing – working conditions in less developed countries, sweatshops etc
– Telecoms – how many units and components are sourced from factories that fall into the above. You cite Movistar and Garmin – where are their products being built. Same with bike manufacturers.
– Companies taking massive advantage of tax loopholes and paying tiny tax bills. Its legal but many find it unethical. How would people feel if Starbucks or Amazon started sponsoring?
etc etc
It’s probably appropriate that banks are at the top of your list Sam. Dante put practitioners of Usury – i.e. money lending, down in the 7th circle of hell of his Inferno – and for good reason in the society of the period which was characterised by a steady state economy in which such practices were parasitical and destructive to the economy. Mind you, it’s only the last couple of hundred years of the extravagant consumption of the above indicated fossil fuel energy that has made continuous economic growth and Usury practices temporarily viable again. Unfortunately, the greed of the banking industry has led them to expand their practices far beyond the ability of the planet to underwrite them with actual resources and hence our current global recession.
If you look at any business/operation in the world where lots of money is involved in 90% of cases there are activities in grey or ethnically questionable areas where the money comes from. Be it corruption, tax evasion/loopholes, health issues, environmental issues, treatment of workers (child work) etc. If you play 100% by the rule book, you’ll hit a ceiling quick. Nothing wrong with that, as you might be able to look yourself in the eyes in the mirror.
Great piece. I see this as exemplifying the contradictions of advertising: ultimately it has become about image, you sell through image in most cases. And in most instances these images are based on a lie. (Greenedge!)
I have to say that for the average cycling fan a predatory outfit like Cofidis really does more harm than a dictatorship sponsored-team.
But yes, this piece helps us reflect on the commercialization of sports. Ideally, I’d rather it be amateur all the way. Cuba does it with baseball and they regularly beat team U.S.A. That should tell us something. Fun to watch. Great players. No adds and therefore no crooks! Ah, Cuba….
Cuba is another much maligned society that has only suffered with such bad publicity because of its refusal to allow itself to be taken over by US Corporate/Imperial interests. Hence the decades of embargoes and sanctions, which every year, the United Nations General Assembly votes to end almost unanimously, with the only votes against being the US and Israel and possibly an obscure Pacific territory like the Marshall Islands, dependent on US aid. Ah, Cuba indeed!
What kind of vetting process is their before a possible sponsor receives a green light? For example, will a large clothing company that utilizes sweatshops in Southeast Asia cause any type of roadblock?
It seems as if anyone who can demonstrate the financial wherewithal (whether real or falsified) to support a team can jump in. Reember Le Groupement?
If it’s a legal company then it can sponsor a team, the UCI will reject tobacco companies and an alcohol sponsor must not produce drinks over 16% from memory so wine and beer sponsors are ok but not spirits and liqueurs.
What has changed since Le Groupement is that teams at World Tour and Pro Conti level get audited to check the money is there from the sponsor.
Interesting read. Many have made the same point about certain investors into British football clubs. The numbers are significantly larger but the issues are the same. Despite being ‘investors’ many of them will never see a financial return, rather they obtain a reputational enhancement via proximity to the sport.
The green edge after orica is the holding name the team originally ran with at setup and has nothing to do with the orica business aka 1t4i, highroad or recently blanco
You can add Amgen , title sponsor of Tour of California and maker of EPO, presently paying a $762 million fine for improper marketing of Aranesp (EPO).
The sponsors of the ToC make EPO? Jesus Christi.
I think you’re correct, as a relatively cheap way to get publicity, pro cycling attracts a fair share of dodgy operators as pro teams are willing to take money from pretty much anyone. I think this is part of the reason the sport’s in such bad shape at present, the positive image these operations are trying to use to buff up their image (remember the Tour DuPont, sponsored by the chemical company or before that Tour de Trump, trying to make that ruthless screwball real estate magnate Donald look good, or how ’bout the brothel (Diana) from a few years back?) isn’t particularly positive these days with all the dope-cheats being outed.
Sam – I’d say the big difference is that some of these sponsers aren’t trying to sell you anything (like bank accounts, or oil, or phones etc) but have some other hard-to-quantify motive. In a way, the cycling fan should almost be glad for their presence – would the funding gap at the top be bigger without the suppot
(As an aside – I hadn’t read the Katusha piece before – that was an excellent piece, and I’m pretty familar with the shady workings of the oil and gas industry in the CIS.
There is an amusing comment on there from another reader ranting about the ridiculous-ness of a piece in Cycle Sport suggesting that 2012 could be the year of “Evans, Froome and Wiggins”. That is the problem with the internet – it remembers all of your comments, good and bad!)
I’m quite prosaic about it, to be honest James. Most sponsors in any arena, not just cycling, will have some aspect to their operations/sector etc that someone somewhere will find distasteful. Riders are mobile marketing billboards – and its been the case forever.
Come to the Inner ring for cycling news and leave a better educated internet user!
It’s interesting that MTN is brought to task for being a mobile phone company. Are Iranians and Syrians not allowed mobile phones then? Iran has invaded nobody and despite the US and Israeli propaganda has no Nuclear Weapons program whatsoever. It’s in the cross hairs simply for its refusal to be subservient to Western Corporate interests. As for Syria, well Assad is not under fire for being a dictator, but rather for not being the dictator that the Gulf Monarchies and the US want to be in charge. Hence the fact that Saudi Arabia, Qatar, Turkey, Israel and the US have been fomenting the Civil War there.
In a sane world, it would be the US* and Israel that were classed as “Pariah States” for such crimes as for instance invading and droning everyone in sight for the former, and running an apartheid state to oppress the Palestinians in the case of the latter.
Of course the other point to mention here, is that the corruption and criminality of some of the other sponsors and countries mentioned here is not headline news for precisely the opposite reason that Iran and Syria are: namely because the aforementioned Western interests such as Oil and Gas in the Caspian region are the deciding factor.
*It’s interesting to consider the recent Lance Armstrong fallout and look at it in the following context:
The original investigation with Novitsky and the FDA was suddenly quashed, with the pieces picked up by Travis Tygart and USADA but with a much narrower scope – i.e. only sporting issues could be considered. Now, no-one is going to tell me that the likes of Thom Weisel of Tailwind Sports, and the CEO’s of Nike, Trek and Oakley et al, didn’t know full well that Armstrong was doping (in fact we already have some evidence that they did), but the dropping of the original case spared them from scrutiny, despite the huge profits they have made from fraudulent performances. I wonder why you failed to add these to your article?
I’m looking at current sponsors; if we go back in time there some choice sponsors, for example Sauna Diana, a brothel, once backed a team and for propaganda, see the East German programme.
Note there are ongoing investigations in the US into Weisel and others.
Yes, it will be interesting to see if those above Lance in the hierarchy – and there were many, albeit without a public face – do in fact face some scrutiny and sanctions for their complicity. That, we presume is what the Floyd Landis case is all about. It will be interesting to see how far it goes, but I suspect it will be mired in many years of litigation for which there will never be a conclusive outcome. As I indicate above, it’s my belief that the first investigation conducted by the FDA was quashed for the very reason that certain interests didn’t want to see what would unravel if the Armstrong loose thread was tugged too hard.
I think CeramicCyclist has got it right about MTN falling foul of the western bias against Iran. In defence of MTN, they seem to have been the pawns in a bigger game.
What INRNG didn’t report (how would he be expected to know this?) is that the lawsuit brought against MTN for allegedly selling technology to Iran was in fact brought by a Turkish company named Turkcell, who had lost out to MTN in the tender to supply mobile phones in the expanding Iranian market. So Turkcell brought a lawsuit against MTN alleging all sorts of things, to try to get some of the cash that MTN was earning from its Iranian mobile phones.
To their credit, MTN appointed the retired British judge Lord Hoffmann to investigate the Turkcell allegations. Hoffmann concluded that Turkcell’s claim was a “fabric of lies”and he published a detailed report saying this. Quite soon after this, Turkcell withdrew its case against MTN and the entire saga ended. Its unfortunate for MTN that this withdrawal was not reported as widely as the allegations.
See:
http://www.bdlive.co.za/business/technology/2013/02/01/mtn-committee-finds-turkcell-allegations-a-fabric-of-lies
and
http://pressoffice.mg.co.za/mtn/PressRelease.php?StoryID=
This makes me support MTN: they received a claim that they thought was bogus, they suffered negative headlines and publicity, but instead of paying the claimant to be quiet they investigated openly and publicly. Once they believed the claim was unfounded, they fought the claim in public and stood their ground, eventually the claim was withdrawn.
Chapeau MTN, lets hope your Pro Team keeps the same fighting spirit!
Interesting! That’s the problem with smears. The retraction never hits the headlines like the original allegations do. Unless of course the smeared have more power than the smearers! This blog is becoming a regular study of Geopolitics!
As usual wonderful coverage Inrng, lets not forget it’s PRO Cycling.
If anything know I know the real story behind companies, which I may not have ever been exposed too.
Thanks Inrng, the problem as I see it is when the a country or company unduly influence the UCI fair policy to advantage its self.
Inrng has pointed out some nefarious influence does seem to surface from time to time.
Hope I’m not miss quoting you on this!
An then, there was the U.S. Postal Service team …
It will be interesting to see who sponsors Katusha next year given that Makarov has sold ITERA to Rosneft (although the ITERA name will continue to be used as Rosneft’s gas producing arm up around Nadym-Pur-Taz region). Gazprom and Rosneft are both sponsors this year (another amusing side story given how much they dislike each other), and I wonder which will take precedence. Gazprom may be higher profile, but Rosneft provides much more revenue to the Russian state (and is headed by another close associate of Mr Putin).Either way since the mid 2000’s ITERA (pre Rosneft) has been a pretty smooth company with its interests taken care of by others, and it just collecting a cheque at the end of the day by dint of its 49% stake in its operations, waiting to get picked off.
I’ve often thought that it speaks volumes to the risk of brand damage from sponsoring cycling that there are few, if any, multi-national FMCG firms that are willing to take advantage of the potentially massive exposure that cycling can bring.
If I’ve got my facts right, the Qhubeka of MTN-Qhubeka was started by the guy who assembled SRAM from all the old-line bicycle manufacturers.
Qhubeka is a non-profit with a for-profit entity below it selling a utility bicycle into developing areas of Africa. Maybe someone knows if poverty-reducing donations of Qhubeka are really just funding various bicycle racing development in South Africa??? I really don’t know.
For many sponsors the corporate hospitality aspect is of high importance.
For example Orica apparently have had key potential clients in the mining industry calling them chasing TDF ‘junkets’
These were from companies Orica previously struggled to get access to.
A key motivation for Sky was ambush marketing for the 2012 Olympics. Sky didn’t get the rights, so why not attach your name to what is likely to be the most successful team at the games (British Track). Notwithstanding Sky being the Italian part of the business, again, plastering your name on another TV channels coverage. Rupert couldn’t give a cr@p about cleaning up his brand image.
How do you find the time, energy and talent to produce such great, thorough, original work?
An oligarch in the shadows?
As already mentioned, another great unbiased, informative piece. Thank you.
With Sky, I think the team costs them less than 1% of their worldwide marketing budget. Now that represents a great ROI.
I’m surprised companies like Tesco, Virgin, Vodafone, Santander and Red Bull don’t get involved in Pro teams.
Most of the companies you mention have chosen the other high profile sport in the world, Formula 1 But we could see Santander in cycling from next year with the Alson project.
Just a funny thought. The danish jeans company Jack & Jones was one of the first sponsors of the team now known as Team Saxobank. They will be in formula 1 next year as sponsor for new McLaren driver Kevin Magnussen.
Red Bull are all over cycling, but not in the World Tour. They are all over the BMX scene and the other extreme parts of cycling.
Actually i’m amased how much money you can earn on a drink that taste so bad. Seem to me they sponsor more or less everything extreme in the world. Snowboard, Skateboard, BMX, Motorsport, Sailing, Extreme skydiving, Football (soccer), Icehockey, Skiing , Windsurfing and a lot more.
So please find another 20 million € for a cyclingteam.
Wouldn’t really call it unbiased. The delineation of ‘good’ and ‘bad’ sponsors is based mostly on the author’s personal opinions.
Oh its 0.5% of their budget. Where did I read that? Yep that’s correct, on this website quelle surprise 🙂
Cycling has its share of ethically challenged sponsors, but it’s worth pointing out that so do other, higher-profile sports:
* Most of the majors have a booze sponsorship of one kind or another – for instance, Heineken sponsors the Champions League. Budweiser sponsors the Super Bowl.
* Junk food companies, similarly, sponsor many of the world’s highest-profile sporting events.
* Where it’s legal, betting agencies are heavily involved in sports sponsorship. Most Premier League clubs have a bookie “partner”.
* And while it’s banned virtually everywhere now, professional sport used to run almost entirely on tobacco sponsorship.
Let’s not forget those motorsport tobacco sponsorships (one still continues to this day with Marlboro and Ducati in MOTOGP I believe) were ONLY because most other forms of TV advertising were forbidden to them. Painting their logo and livery on racing cars and motos was pretty much the only way to get around this and have the brand promoted on television. As an ex-moto pilot I always laughed when someone told me about the tobacco company’s so-called PASSION for motorsports over the stick-and-ball stuff. As soon as (in most parts of the world) all the logos were banned from TV, these passionate companies seemed to lose that passion for motorsports pretty quickly! On that note, does anyone else remember the “Kent Tour of China”? They wanted Chinese people to start getting the “benefits” of their products, how promoting them via a bike race made any sense, only the marketing mavens know. But we’ve probably all seen the cigarette promotions using pro cyclists – Fuentes (L & M?) was probably the biggest one?
I had no idea what Baku was. Seeing the government sign on their jerseys puts me right off. The team are “useful idiots” used to promote a nasty regime.
The varying reputations of companies and state sponsors do not say anything negative about pro cycling as a whole. Rather it speaks to the realities of the business model, which involves a much more complicated arithmetic to sustain teams year in, year out. Other sports teams make gobs of money selling tickets, branded jerseys, hats etc. Not so for cycling teams.
Increased sales of widget X from sponsoring a cycling team are going to be inherently hard to measure anyways. Therefore I think you’re automatically going to have more sponsors who come to cycling looking for that reputation improving “halo effect” for their brands. When advertising first started, you placed an ad, and if sales went up, it was assumed the ad was the cause. Today that brand marketing manager will have to prove the growth is other than organic.
So while I may have opinions about the ethics of a mining company or countries that are democracies in name only, when it comes to cycling I am glad they are there to keep the sport I love alive. It’s a a pragmatic opinion. Furthermore, would a cycling team spurning a sponsorship deal because of ethical concerns lead to changes in the sponsors behavior? I find this scenario too far-fetched for the world we live in.
I could as a marketing man find a lot of scenarios where a sponsorship in cycling could prove very profitable. Specially if you are a company not yet on the european market.
I’m so old that I remember the 7-Eleven team and I also remember that there was absolutely no 7/11 shops in my country. Today 25-30 years later I can’t turn a corner or enter a gas station without it being a 7-Eleven shop.
Same thing happened when Quickstep entered cycling. Their brand marketing manager went out and did a lot of surveys. He realized that sales was up around 20-30 % just related to the sponsorship.
Today I just heard the owner of Jysk ( danish company selling everything for the bedroom, furniture and garden furniture) tell that the 15 million $ he is about to throw into a sponsorship for at golf tournament is cheap compared to the price of advertisment today.
That tournament will be broadcasted to potentially 220 million household around the world. (His company is represented i most european countries).
So if you are a company with a large marketing budget the 10 -15 million $ you pay a year as a name sponsor in cycling, is easily justified.
It works both ways. Rabobank didn’t want to sponsor the cycling team anymore because of doping scandals, but I guess that after the LIBOR scandal the cycling team is happy not to be sponsored by Rabobank anymore.