It’s been a winning year for Ag2r La Mondiale with Jean-Christophe Péraud’s second place in the Tour de France but so much more including Carlos Betancur’s win in Paris-Nice plus the team prizes in the Giro and Tour de France and they might have won in the Vuelta had Domenico Pozzovivo, Carlos Betancur and Alexis Vuillermoz been present and in-shape. Nevermind the speculation, they’re third on the UCI’s team rankings today.
But how much does it all cost? Having looked at Team Sky’s accounts recently here’s a look at the numbers for a French team.
Ag2r’s La Mondiale’s team budget for 2013 was €11,856,563, up from €10.6m in 2012 and €9.4m in 2011, an increase of 13% a year.
Of this €11.856m in income, €8.8m came from France and €2.965m from outside. Where? We don’t know and the copy of accounts for EUSRL France Cyclisme – the corporate entity that is the team – is the minimal version required under French law and not as explanatory as the set of accounts produced by Tour Racing Ltd, aka Team Sky. It’s not too wild to speculate that the the foreign income is from foreign sponsors like Focus bikes of Germany, Campagnolo from Italy and other sponsors.
What do they do with the money?
- €595k is spent on buying “raw materials”. There’s no breakdown so this could include everything from fuel and insurance for the team bus and all sorts of things not supplied by the sponsors but which are essential inputs for the team
- The team spent another €2.6m on “other purchases and external charges” which can might from rent to travel expenses*
- The biggest spend is €6.0m on wages… but it’s not a lot. Teams like Tinkoff-Saxo, Sky or OPQS can spend this amount hiring two riders
- €2.2 million is spent on the euphemistic-sounding charges sociales which are payroll taxes
- The team made a modest profit €42,924 for 2013 although this is just the result of balancing income with expenditure rather a corporate goal
Looking at the numbers above we see the stated wage bill is just half of the team’s total cost. It looks low while the “other purchases and external charges” is high. It could be that the team tops up wages this way, for example buying in the services of a masseur here, paying a performance bonus there. French law’s pretty strict on this but it’s also complex and it’s still
It’s not in the accounts but the team’s budget is modest enough that riders have to buy their own SRM power meters although once purchased the team mechanics are happy to install and maintain them during the season. It is curious when even the world’s best riders like Romain Bardet have to buy something so basic for their training but it’s not scandalous. I suspect they a trade discount and they can write off the purcahse against tax. This anecdote illustrates the budget limits not shown in the accounts.
France’s Taxing Problem
With €6.0m in wages come €2.2m in charges sociales . Alternatively for every €1,000 spent on wages the team has to find a further €360 to meet the payroll tax. A payroll tax is a tax paid by the employer based on the employee’s wages, you might think of workers in a factory but of course it applies to a pro team with rider and staff salaries.
France has some of the highest payroll taxes in the world and by some measures the highest according to the OECD. The rates vary with sliding scales, deductions and other variables that help keep accountants and payroll software vendors in clover. But the number is about 40%. For example to pay a rider the UCI minimum wage in the World Tour of €36,300 the cost to the team is €51,500: €36k in salary plus €15k in tax on top. Once the rider receives the money they’re then liable for income tax and their own social security contributions.
This is a hot political topic in France as the government tries to navigate a route between needing tax revenue to pay for public services and contain its budget deficit, all while trying to reduce this tax on jobs at a time of record unemployment. If this debate seems remote or technical viewing it through competitivity of a sports team rather than an industrial sector helps bring the matters to light.
For those who suggest Ag2r should simply relocate offshore to make its budget go further, pas possible. The sponsor is a mutual provider of private health insurance whose slogan revolves around messages of solidarity and togetherness, the very opposite of shopping for low tax rates and offshoring.
Comparison with Team Sky
The UCI gets all the team budgets as squads are audited as a condition for their World Tour licence but the budgets are not made public. Published, audited accounts of pro teams are hard to find but Team Sky’s numbers were covered last month and comparisons are probably the most interesting thing.
| y/e Dec 2013 | Ag2r La Mondiale | Team Sky |
| Budget | €11.9m | €26.7m |
| Payroll Taxes | €2.2m | – |
| Wages | €6.0m | €18.9m |
The easy takeaway is that Ag2r deliver more bang for the buck but remember they’ve had a great year while Sky have had a bad one. Expectations are such that Péraud’s Parisian podium was a dream come true while Sky are almost expected to win the Tour.
On the payroll tax question Sky hire riders as “contractors” and leave the onus on them to meet social contributions. At a simple level this leaves the rider liable for the tax but given the rate is lower in the UK there’s less to pay and for riders based in Monaco there are no charges levied at all so the considerable wage bill buys a lot more rider.
Take this with a pinch of salt because accounting policies, exchange rates and even translations make comparisons hard. Even in France it’s not easy, Ag2r is a mutual health insurance provider and this status involves several tax perks like deductions for Value-Added Tax (TVA) which, it has been reported, extend in part to the team. So comparing Ag2r to Europcar can be a fraught task.
Summary
A modest budget but some good results, Ag2r La Mondiale are outperforming some of the sports largest squads. The entire team’s wage bill wouldn’t stretch to cover the top-2 riders at Tinkoff-Saxo, Team Sky or OPQS.
Remember these are accounts for the year ending 2013. The team’s budget has grown by 10% for the last two years and it’ll be interesting to see what they’re spending in 2014 and 2015, having renewed the contracts of J-C Péraud and Romain Bardet. The number’s bound to go up. Like all French teams the payroll tax consumes a large share of the budget, an uneven playing field when the team’s up against others not troubled by these taxes.
Thanks to reader Nicolas for sending over a scanned copy of the accounts.
- Exchange rates at 31 December 2013: €1 = $1.37 = £0.82
Good article INRNG. Gives plenty to think about, especially when comparing income with performance.
Almost written as a social vs free market comparison via the medium of sports teams ? Or perhaps that is just how my brain works.
Regarding the “contractors” at Sky -a couple of free-market business models became popular in the 1990’s… one was “The Nike model”. Companies give up ownership of factories and produce products through an intricate web of contractors and subcontractors allowing them to put their resources into design and marketing.
Other companies during this period went for the “Microsoft model” – these would have very few employees, who would perform the company’s ‘core competency’ and outsource everything else to temps, from running the mailroom to writing code. Some called companies that underwent these radical restructurings ‘hollow corporations’ because they were mostly form, with little tangible content left over….. How very “sky’esque” or “Mudrock’esque” shall we say?
Interpret how you will I guess… but for me, perhaps another reason why I enjoy following the triumphs of AG2R.
The tax is the big difference between French teams and their Anglo-Saxon rivals, at least financially. It shows how teams have to cope with local factors to compete internationally. The tax rate might be high but French teams can delight in having the world’s biggest bike race, a huge network of roads and a giant pyramid of teams, clubs and more to do 95% of their talent detection for them.
Have thoroughly enjoyed watching them outperform the ‘bigger’ teams. Everyones favourite second team? Chapeau to them. I just wished they would ditch the Brown.
Why brown? Because Ag2r La Mondiale’s corporate HQ is on Boulevard Brune in Paris (Brown Boulvard)
What a fascinating titbit, cheers for that.
Brown shorts because your sponsor has offices on Brown Boulevard? Shorely shome mishshtake!!
Brown shorts because brown is part of the colors used by the sponsor in their logo etc. And the sponsor are using brown because they have their headquarter on Boulevard Brune. He must have thought you would be able to think that out for yourself, so he didn’t explain it in full detail.
I actually like the brown, makes them stand out and certainly a change from the mass of black in the peleton.
Brown and light blue has a pleasingly retro 70s vibe to it too.
This beer brewery agrees:
http://www.ohbeautifulbeer.com/wp-content/uploads/2011/12/hilliards_cans.jpg
Loving those designs
Any color is better than the horrid white shorts that seem to be in vogue today…
As far I as know Pozzovivio’s contract expires at the end of this season and has yet to be renewed. My fear is that JC and Bardet’s great seasons have resulted in contract renewals so expensive that there’s no budged left for Pozzovivio. Hope to be proven wrong as he might be able to pull off a GC-podium in the Giro or Vuelta next year when Quintana, Froome, Nibali and Contador all are focusing on the tour. I suspect Nibbles’ plan on riding the Giro will be as a mentor for Aru, merely polishing his form for the Tour.
One to watch for the future is Alexis Gougeard who’s had an amazing debut season at 21 years. Willing to go in long breakaways, always pulling hard on the front in the group and more importantly also really keen to have a go for the win. We might have a sniper in the mold of Gallopin/Bakelants/Chavanel coming through the ranks.
This taxation is quite bizarre. Is the income tax rate in France lower because of how they also pay payroll tax? Not sure many other countries use this system of both (significant) payroll tax and income tax.
The UK has national insurance as a payroll tax. Not as significant granted, but I imagine all countries have similar?
Russia has a payroll tax of about 40% but income tax is only 13%. Unfortunately the payroll tax is not being used for pensions, healthcare and education, it is being used to bail out Putin’s cronies who are suffering due to sanctions.
Worth pointing out the Katusha template might be Team Kremlin but it is registered in Switzerland, presumably for tax.
I wonder if taxes were called “social charges” everywhere whether less people would try to dodge them? Much friendlier name than “taxes”, and demonstartes the point of them.
Also I managed to get to the end of a tour of Britain stage last week and was struck by the differences in bus / minibus sizes per teams. Drove home again the different budgets that these teams work to.
I thought the same (from ToB stage), but also for the difference in the cars they drive – Team Sky’s Jag has a massive loud engine, sounds like a V8, whilst some of the other team cars are worse than I have at home.
Most of Team Sky’s Jaguar sportbrakes are 3.0l V6 or 2.2l 4-cyl diesels, but there are at least a couple of XFRS V8s. The F-Type TT support vehicle is also V8 550hp, great for getting bikes off quickly so long as the mechanic doesn’t take too long getting out of the low slung seat . . . .
I was there too. Giant Shimano’s was the most surprising contrast for me – as many stages as they win for Kittel and Degenkolb, they had a tiny motorhome and a small Luton van.
I assume the bigger team buses were at the Vuelta. Sky probably has multiple and they were also on home soil. No need for a ferry trip.
CD probably right.
Sky do have two I think, but even they don’t take them everywhere. Seem to remember them having some kind of camper van for the Tour of California a few years ago.
Some top flight teams have two buses but it’s a huge cost to ship them to U.K. to support a comparatively small team of six riders and then there’s fuel on top. Teams often use motor homes as a cheaper option (they also use them in addition to team buses at grand tours such as during a TT stage if start and finish are some distance apart).
The Sky service course is in Belgium and I believe both their buses are based out of there (last time I checked they had Belgian plates) so would require a ferry trip, but yes, as the home team they would want all the bells & whistles.
As for taking a Death Star to California, no chance. Teams will use locally sourced vehicles for anything outside Europe and as has been observed for ToB, sometimes use hired vehicles when the need arises.
The United Healthcare team has buses on both sides of the pond to service race programmes in both locations. There a GCN video on the US one if anyone’s interested.
Sky’s service course is in Belgium, so the bus *would* have needed a ferry to get to “home” soil. 😉
Cilmeri, no, unfortunately not.
In Germany there are taxes and social charges. These social charges include e.g. a pension fond, an unemployment fond, heath fond…
Now, these social charges are being paid by the employers and the employees, there is some complicated key how much each of them has to paid, but there are lots of ways to undermine them I guess. I believe all cyclists riding for German teams and paying taxes in Germany must pay those social charges all by themselves since they are self-employed and their contractor does not have to pay them.
And on the other hand, there is not one week I guess where some employer friendly press/lobbyist cries out these social charges are too high, we have to reduce them (at least on the employers’ side), that will create jobs. As if….It only creates a bigger revenue for them and more social imbalance.
Anyway, before I get too political, I really dislike it, when inrng.com always writes about the “France’s Taxing Problem”. There is surely a way to write about this using more neutral words. I mean it is a dilemma for French teams, but it always looks as if those taxes were something negative, which they are not. Unfortunately for the French, their government is trying to reduce employers’ and cut social expenses to copy Germany and create a huge low-wage labour market. And such ideas start which language. So, if you please could be a bit more careful with your words the next time. Thanks.
The self-employment option isn’t available in France which is a big difference.
Note a “taxing problem” is a phrase for a complicated issue. The French government policy is to make hiring employees less expensive while balancing competing matters like raising the revenue to fund social schemes, not easy I suspect. The point is that this isn’t just a figure for sports teams but front page news for everyone else.
I can’t see how a rider can be selfemployed in Germany either?
Not knowing the contracts of course, but I can’t see that the criteria for selfemployment are met (for example:own financial risk, own decision when the work is done, no integration into the business structure of the/a client…), so I think a rider’s job would be evaluated as employed by a team regarding social insurance in Germany.
Apart from that: agree with you on the “As if..”
I don’t know how self-employment goes elsewhere, but I’m presently more or less self-employed in Spain and no criterium is required besides the client’s will of contracting you as such instead of employing you. For sure, I’m not meeting (by far) any of those criteria. Nevertheless, here I am, paying my own taxes *and* social charges.
I doubt it is that hard. I don’t exactly know, but I think it is just a matter of paper work to set up your own “business” and work as a contractor. Which would be the positive option. In a world with a “flexible worker market” they could even be rented by the teams. Which is basically what all the temp agencies do right now. They lend their workers to other companies. Which imho is really sick and undermines the whole systems.
+1
“Sick” is the word 🙁
In terms of their performance, AG2R and Sky got almost exactly the same amount of bang per buck in 2013:
AG2R’s €11.9m got them 691 WT points in 2013, which is 58.1 pts/€1m.
Sky’s 1561 points for €26.7m is 58.5 pts/€1m.
Ytd (assuming 2013 budget)
AG2R – 77.2
Sky – 28.2
Interesting….
^interesting, Nick – thanks for working that out!
Always something of interest on your blog. Bike racing, culture, history, wine,food, international doping law, politics, and money! You must not sleep…
Does seem to point to the fact that Sky benefits from the UK public paying for some of it’s cycling development , while the French at least tax the teams who benefit from those similar programs as you point out. “The tax rate might be high but French teams can delight in having the world’s biggest bike race, a huge network of roads and a giant pyramid of teams, clubs and more to do 95% of their talent detection for them”
Sky should thank their host country England for the help!
Sky put a shedload into BC, into the track and road programmes, and into the development with the Academy.
But I’m sure you’re aware of that.
Same deal as with OGE and Cycling Australia. Gerry Ryan underwrites the sport in Australia, including the track and road programs and the Aussie development set-up. But there’s also money from the Govt – AIS/Australian Sports Commission.
So you could say OGE reaps benefits from the Australian taxpayer
Its a model that other countries eg France, Italy, are desperate to follow – there’s just no big sponsor stepping forward in their cases.
Wait, wait, wait… Italian Federation indeed is desperate to find a big sponsor for any national project (including the National Cycling Team who just lost Skoda and was quite unable to replace it properly), but, feel assured, they aren’t eager at all to follow Australia’s or BC’s model.
Because they just don’t want to put ANY significant public money *in the sport*.
That is, public money is flowing to the Italian Cycling Federation, but it won’t arrive so easily *to the sport*, and there’s no intention to do anything constructive like what happened in England or Australia. Sad it may feel, FCI is a problem probably worse than the crisis itself for Italian cycling.
Thanks, I was going on what I’ve read.
What you say is sad (for Italian cycling’s interests, I mean)
Sam you are right! The UK is not alone, all countries which choose too sponsor cycling development should be thanked for developing individual riders that in turn go and make “bank” and choose to live in Monaco, Switzerland or ? and pay no income taxes back to their “homeland”
I’m jealous, if the US spent .0001% of it’s GDP on cycling development they the US would be sending the max riders to the Worlds as does some of the European countries you have mentioned above.
Do FDJ and Lotto-Belisol have similar links with their cycling federations, as they’re also in receipt of lottery funds?
Astana and (less obviously) Katusha also seem well tied into their national structures.
No, it’s very different to the Australian and British model, the pro teams are independent. OPQS/Patrick Lefevere would go crazy if Lotto-Belisol got special treatment.
Any chance that some of that revenue comes from riders bringing it into the team?
Many may remember the multiple-sponsors-names-all-run-together-as-the-team-name from not so many years ago that were pretty common below the first tier teams. Part of that was the rider bringing sponsors to the team in an exchange, hire the rider and the sponsor funds the team.
With this team it’s a different format. Presumably Focus is behind the hiring of Germans like Patrick Gretsch and Julian Kern, similar to Evan Huffman at Astana for Specialized or Sütterlin at Movistar for Canyon. It helps with marketing back home.
You might be on point there, Mr.Inrng, but Gretsch has certainly pulled his weight this season. Classy rider!
Sure, no allegation that they’re packed in to the team for nationality alone. Just that the sponsor helped broker the deal, it suits everyone.
So AG2R’s riders are employees of a French company, right? Does that mean that Carlos Betancur, as a non-EU-citizen, needs a French work permit? And that there could be a problem if Betancur wanted to have a Colombian domestique, because the ministry of labour could decide this job could just as well be done by a EU citizen?
He needs a permit, yes but has got one before when he was racing in Italy and if it’s not a problem, it’s still an extra administrative task. One of the reasons of the dispute with Ag2r this summer was that he was due to show up to race with the team but also they’d book an appointment in the town hall to get his permit approved… but he never showed. They made an appointment for later.
Interesting post. It makes me wonder if there are any uci budget caps. Or any rules about financial fair play, which you slowly see playing a larger role in (European) soccer.
The UCI is looking at a salary cap. But it’s hard to put in place, first to comply with European laws but also to genuinely limit earnings in the whole. To cap a salary is one thing but image rights, bonus payments, sponsorship endorsements and more are another.