The Finances of Team Sky


2013 was a great year for Team Sky on the road and in the accounts department. A second Tour de France win was obvious but behind the scenes they took on board a substantial new sponsor and signed an agreement to fund the team through to the end of 2016.

What is Team Sky’s budget? The income statement above lists the figure in black and white: £22,061,000. ($36.5m / €26.7m, exchange rates at the bottom of the page). Teams are business-like but they are not run for profit – UCI rules constrain this – so there’s no surplus. Now onto the money that flows into the team’s coffers.

Team Sky lists three sources of income. Title sponsorship comes from the naming rights, like Sky and the other brands you see on the jersey, which included 21st Century Fox during the year. Performance sponsorship is related to the other sponsorship contracts, for example Pinarello, Shimano and Tata Motors’ Jaguar brand. Race fees are stipends paid by organisers to cover expenses when a team participates in a race, the numbers are not made public but you can see it’s a substantial component of team income, less for Team Sky but vital for the likes of Europcar.

Having covered these accounts before one discreet element was that the team was part owned by BSkyB and Sky Italia, the British and Italian entities operating the Sky brand in their respective countries. This had explained the willingness to race the Giro and include several Italians on the team roster from the start. However one change during 2013 was that Sky Italia disposed of its holding in the team to 21st Century Fox. The ownership is now 60% BSkyB – 40% 21st Century Fox. This Italian to American switch is listed in the notes of the accounts but has a sporting reality, see how Bradley Wiggins made the Tour of California a target for 2014.

Having looked at the money coming in, let’s look at what it was spent on during 2013.

A comparable year to the previous period. One thing that stands out is the wage bill, it’s big at £15.6 million. It’s the same in 2013 as 2012 and back in 2011 it was £11.1 million. Mark Cavendish might have left the team before 2013 but the team issued new contracts to Bradley Wiggins and Chris Froome among others and this accounts for the spend. Note the line on “bike and performance equipment”, this is where the team buys its own material, preferring to buy some gear rather than take on a sponsor. We’ve seen the team using non-Shimano rims and aero wheels and they have a large, private stock of Veloflex and FMB tyres.

Vehicle running costs include keeping the two “death star” buses on the road, the tanks take 650 litres so fare il pieno during the Giro could cost €1,000 a go for diesel although teams rarely fill the tank to the top because it’s just more weight to drag around. The bus drinks fuel even when parked as the motor doubles as a generator to power aircon and onboard electricity for fridges, shower pumps and electronics.

You can see the wage bill above with the team having a staff of 12. Given it had 27 riders and many more staff from mechanics to “carers”, their word for soigneurs, most of these are hired as contractors as opposed to employees. The difference is related to tax, it is up to the contractor to cover their employment and social security charges. This isn’t always a saving but it puts the onus and expense on the rider… and there are no charges at all for those living in Monaco.

Big budget team… or cheap publicity?
The image above isn’t from Team Sky’s accounts but cropped from parent company BSkyB’s 2013 annual report. As you can see the company spends £1.117 billion (yes, billion with a b) a year on marketing. So if Team Sky is one of the wealthier squads in the World Tour, its budget of £22,061,000 is just 2% of BSkyB’s marketing spend… and remember from above that BSkyB owns 60% of the team so pro rata for the £14.6 million “title sponsorship” income implies £8.6 million for 2013, or just 0.8% of BSkyB’s marketing budget.

Sponsorship through to 2016
The final note of the accounts shows there is funding in place until the end of 2016 from the title sponsors. The sponsorship commitment should allow the team to recruit more riders to make amends for a difficult year. I gather there’s a further talk of the team continuing to 2018 too.

Conclusion
This is one of the rare teams to publish their accounts in full, in fact I think it’s only one to give such comprehensive disclosure. But Team Sky is also an exception for its budget, the spend is far above average for the World Tour and sometimes double or more than of rival teams in the same tier.

The more interesting exercise would be to compare team accounts, for example to show where and how Team Sky spends its money compared to other squads, for example it’s said others have a giant rider wage bill but spend less on coaching staff and other “performance” items like training camps than Team Sky.

Thanks to reader Andrew for sending in a scanned copy

  • Exchange rates at 31 December 2013: £1 GBP = US$ 1.65 = €1.21

48 thoughts on “The Finances of Team Sky”

  1. Working as a sub contractor instead of an employee very common in UK. Income tax is 20% below £42000, 40% above. Set yourself up as a business and you pay 10% corporation tax instead. Obviously employer saves on other costs.

    Huge outcry when it was discovered many BBC (state owned broadcaster) staff including v highly paid TV presenters used this to “tax dodge”, BBC have now changed their policy.

    • Without turning this into a debate about the UK tax system, that is not how it works and the amount of factually bobbins reporting and misguided public outrage about this generally sends me into angry shouty mode . You, the individual, still pay income tax on what you get paid. There will be a tax saving as you can class some expense as business and deduct them before tax, but you do not simply pay 10% tax on total earnings.

      • Well you can pay yourself a salary out of your service company up to the 40% rate, then pay yourself the rest in dividends which attracts a lower tax rate than earnings from employment. Sure your service company will also pay corporation tax, but overall there is definitely a tax saving, especially when you take national insurance into account.

        And your ’employer’ saves the not inconsiderable 13.8% national insurance tax because they’re not paying you a ‘salary’, which means they can get more bang for their buck.

    • It also allows foreign domiciles/residents to charge accordingly. Plus the well paid cyclists have salary income but also bonus payment and image right royalties, so the tax is always different than a standard employee in the UK, Belgium or Italy etc.

    • Between 3 and 4m euros each. Same as for Nibali (till he won the Tour, at least), Cadel, Gilbert, Contador, Sagan’s rumoured new salary at Tinkoff, Cancellara etc.

  2. This is a great example of what Hein Verbruggen brought to the sport – team budgets that are small change for the Murdochs and other oligarchs, but beyond the reach (especially when you factor in the potential for doping scandal) of most commercial sponsors. Not one, but TWO buses? Eddy Merckx never had a team bus. Thanks Heinie for pushing the sport into the same mess F1 and MotoGP deal with, costs spiraling out of control and squeezing out the competitors who’d like to play but can’t some up with mega-euros. You’ve really improved things!

    • It’s an interesting point as to how much spiraling costs act as a barrier to entry. Taking the F1 example, spend double the amount on engine development or aerodynamics and you will get a clear performance advantage. Cycling is clearly more about the rider. If Nibali had pitched up at the Tour in the back of a transit van would his performance have suffered that much? I think it’s more a case that the teams with the big money sign the best riders (because they can offer more money) and also get the best equipment (because they can).

      • Yes, the World Tour (or whatever it’s called at present) is such a great value 17 teams are vying for just……..18 places. F1 and MotoGP struggle with spiraling costs making their starting grids ever smaller and the competitors with a genuine chance of winning an even smaller subset.

        • I wouldn’t argue that there are problems with the WT finance structure but I just think that a huge amount of the cost incurred by the big teams falls into the ‘nice to have’ category, probably a contributing factor when convincing a top rider to sign, but not a huge impact to end performance. You’re right, Merckx never had a team bus and if you could somehow transport him into todays peloton he’d win, with or without a team bus.

          Take the last three tour winners, put them on sponsor provided tyres / sponsor provided wheels (two bits of kit specifically called out elsewhere that Sky shop around for) and get them to rock up in the back of a transit van instead of a luxury bus. Can you really argue that the end result would have been any different? Wiggins / Froome / Nibali?

          • I think you missed my point. Verbruggen’s “Pro Tour” (or whatever it was called back then) has jacked up costs by requiring teams field squads at multiple events – increasing the number of riders, staff, equipment, etc. needed to run a team. To what benefit? You see teams with zero interest in races like Paris-Roubaix forced to turn up while lower level teams who would die for the chance to compete are excluded. Of course we don’t hear from the “Boy, we’d LOVE to sponsor a team, but the costs are way out-of-line for the benefits” folks who don’t sponsor teams, but Belkin bailing out after only one year should be a wake-up call. They say major changes are coming for 2016 – if they insist on some sort of top-tier they need to put some real benefits into being a part of it and restrict it to a dozen top squads, leaving room for the smaller teams to be invited by the organizers.

    • Ahh, but those oligarchs like to complain like weekend warriors complain about entry fees at industrial park criterium filled with $10K bikes.

      Hein actually has done a very good job at funding the UCI. How he’s done it, how much he made on the side, and his disgusting record of being perfectly okay with doping and fraud to the point of making the sport a joke to take that all away though.

    • Formula 1 has many more problems than high team budgets. The chronic 20 year+ design flaws in the cars which mean overtaking is a rarity, the focus on winning by doing fast pitstops (zzzz), and the asinine tracks in the middle of a desert which look like car parks with miles of tarmac run off space, are three which spring to mind. As teams like Toyota and Honda showed, you can throw all the money you want around, but it doesn’t mean you’ll get any success. It’s the same with cycling. How was Sky’s TDF, again?

      In the end it’s about the human on the bike. You can buy a decent bike for £600. F1 cars cost millions. If F1 collapses (which looks likely), then it’s bye-bye F1 altogether. If cycling implodes, then it’s back to the 1970s, with races predominantly in Europe and smaller-scale teams. I don’t see any problem with that, since at its heart it’s potentially such a low-cost sport to participate in.

      • The big increase in spending by teams has gone on rider wages. But this outlay on riders has come other spending to help ensure the money spent on riders gets results, whether organised doping programs in the late 1990s or today’s windtunnel sessions, training camps and hiring more support staff.

  3. I found it interesting that their reported race costs were slightly below what the race organizers pay them in stipends and other income.

    Is this report just their cash P&L or does it include a valuation of in-kind support (equipment sponsorships, value of services or race organizer provided housing, meals, etc.)?

  4. Very interesting. It just shows how hard the top athletes actually have it. If you take out Wiggins, Froome and probably Bosen-Hagen, Porte and Thomas it leaves a very small amount of money for the remaining riders. Then remember the staff who aren’t in the 52k figure but are contractors, so all in all many riders and almost all staff are really not earning a large amount for the sacrifice.

    It is a shame as the AFL in Australia has team budgets which are similar to Sky, however due to the nature of the sport and locations, running costs are lower, so the athletes share a lot more. The teams are also significantly funded by TV rights and ticket sales, in addition to their sponsors.

    Any chance of getting a copy of the whole document?

  5. I found it particularly interesting that, for a team who’s so sports-science orientated, their spend on sports science & medical is less than the cost of running their buses 🙂

    • You sound like my wife when i bought my ‘good’ bike: “What kind of upgrade does a new bike need?”. It was quite a challenge explaining the wheels were simply not up to scratch (in my mind at least). 🙂

      • You can just imagine the phone call to Rapha when they’re telling them that Geraint fell off again and needs more shorts, “sponsorship contract states 20 pairs per rider per season, you can go online and buy the bloody things yourself if you need more!” That would eat up a fair amount of the £2m alone.

    • Sky continue to build a substantial training base in Nice. This may account for some of the ‘bike and performance equipment’ expenditure.

  6. Interesting read, you have graphed the wins/team before, which was an interesting read given the estimated variance in team budgets…

    It would be cool to see a graph of budget Vs UCI points, or even Budget Vs Wins, especially this season as AG2R have punched far above their weight, whereas sky and BMC seem to have been fairly anonymous.

    Also in advance of La Vuelta a Espana, do you know if there is a rulebook available which states the rules of the points competition? Even if Cav has the beating of Bouhani, he may not be able to amass enough points (5-7 flat/hilly stage win opportunities) to beat a GC contender/mountain goat who keeps winning mountain days… Not sure if Sagan will finish to compete for the Green jersey.

    • Budget vs wins would be nice but it’s so hard to compare. Take the French teams which must all hire their riders as salaried employees and meet the substantial employment taxes applicable in France. If Cofidis suddenly decided to hire Peter Sagan for €4m they’d have to pay about €1.6m on top in payroll taxes. So budget never stretches as far in France, one Euro spent in one country is not the same as a Euro spent in another. To complicate it more, Ag2r La Mondiale is a mutual healthcare insurance company and enjoys some tax perks (it reclaims value-added tax) which means its budget goes further than Cofidis or Europcar.

      As for the Vuelta, no sight of the rules yet but the points competition often goes to a climber/GC rider.

      • Please anyone jump in on this one: what is the motivation for teams to register in F? There are other examples where teams have bases mainly in third countries but actively seek to present another national flavor. A team like Cofidis could be based in CH with a French sponsor and a mainly French roster but avoid this financial hindrance?

        • They would be uproar if a team tried it. Italian teams have done this in the past being registered in Dublin and London but I can’t see it working in France. The sponsor’s image would take a hit by going off-shore, the story could go bigger than the team. Plus there’s the legality of French staff working for a French looking team with a base in France.

  7. I really don’t get the not for profit element. Surely better for Sky to be able to put money aside for a rainy day, for example of they could save 5 or 6 m over the course of 5 years or so, then if Sky pull the plug on sponsorship the need for an equivalent high paying sponsor goes out the window. No wonder teams disappear overnight – imagine if Euskatel had a fund to dip into to tie them over / help out when sponsorship was withdrawn?

    Is this at all on the UCI agenda, or are they happy with how it’s run at present?

    Also in regards to the comment above on new riders for Sky – given the current spend on riders, have they got scope to bring in experienced riders / riders for the classics? I think probably not unless savings are found elsewhere.

    • Sorry, not understanding your suggestion (and that’s quite possibly my fault). Sky own both the licence and are the primary sponsor. Why would they put in extra money ‘for a rainy day’ against them pulling out? Its not as though Brailsford owns the licence (as was the case with Riis till he sold it to Tinkov for 6m or whatever, last year). Are you suggesting that Sky put in more money than the annual budget demands, so that a replacement sponsor could benefit down the road? What would be the payback for Sky in doing that? The sport needs more sponsors, not scaring off potential sponsors by imposing an inflated cost, I’d have thought.

      As for current spend, a couple of comments. If Brailsford and Wiggins do come to terms for a 1 year 2015 contract, I doubt it would be at Wiggins current salary level, given the desired reduced road racing program he may be wanting. EBH leaving also frees up a fair amount. However, Brailsford will have had to pay a very decent increase to Thomas for his re-up, and I know he had to shell out £££ to keep Stannard last year.

      I wouldn’t be concerned about Brailsford having/finding the money to bring on new riders – there’s going to be a fair turnaround end of the year. Having said that, according to the Cycling Podcast guys he wasn’t prepared to pay what Lars Boom was demanding.

  8. I also don’t get the not for profit concept. I had no idea this was the case. Not allowing team owners to make a profit severely discourages new teams from forming. Did someone say there are 18 WT team slots but only 17 WT teams now? No wonder.

    • Since the chance of making a profit with a professional cycling team is rather slim (even if it was allowed), I don’t think there is any great disincentive here. There are many ways of showing, or not showing profits; where there are rules, there are loopholes.

      Yet, changing this rule might be the foundation for other changes that could lead to stability and sustainability.

    • To be more specific, here’s the rule:

      “The income deriving from the activities of the UCI ProTeam must be allocated exclusively to its operations or to the development of cycling… …The allocation of the profit must be decided after the annual accounts have been established and audited. No advance payment of profits may be made to beneficiaries during the course of the year.”

      What this means is the team can make a profit but it has to be paid back, it’s not a financial operation with dividends. Of course if income > expenses then the squad can tuck money away… or the owner just awards himself a big payout, sorry, I mean salary.

    • But if the team owner has a role in the team, or owns a company that supplies materials/services, it’s pretty easy to engineer a situation in which a surplus is not a profit.

  9. For contrast: Man City recently spent more than Sky’s entire annual budget on a single 23-year-old central defender. Just the transfer fee, not including wages, bonuses, agent fees, backhanders etc.

    Even with teams like Sky, professional cycling is still very much in Beazer Homes League of world sport, in terms of finance.

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