11 of the World Tour teams have linked up to create a company Velon. It’s the public launch of a private project that’s been on the go for at least 18 months under the label of Project Avignon.
We don’t have much to go on. Today has seen a co-ordinated media campaign to mark the launch, it’s gone from a project to corporate reality. Whether it now goes from a start-up to an established business will be the more interesting story to follow.
What have we got?
Let’s start with what we had. 13 made up the “Project Avignon” group and now it’s down to 11 following Movistar’s withdrawal and Cannondale is stopping. What’s changed is this grouping is now official, an incorporated entity with a CEO, a website and a Twitter account rather than a furtive group. Each team has a director on the board of the company too.
It’s the “why” that’s interesting. Teams say the current sponsorship model does not work. Cycling has a problem with its sponsorship model as teams come and go, dependent on being able to find a large sponsor. A worry for fans, a survival matter for team managers.
It’s the “how” that’s hard. More stable finances are the goal but securing this is not easy. Teams do not set aside money for a rainy day, pretty much all their annual income is spent on rider recruitment.
One initial plan is to use the holding company to sell on-bike camera footage as a start. Some of this has been given away for free as part of the InCycle media project backed by the Project Avignon teams and IMG, a Swiss sports marketing company. Now the aim will be to make this commercially viable and lucrative. If images are being filmed from bikes then data telemetry is possible too and so on. How valuable this is remains to be seen.
What’s more interesting is the group says it’s “looking for a race calendar that tells a season long story”. What does this mean? Well in reductive terms a season-long contest to determine the best rider of the year: imagine a version of the World Tour rankings you cared about. For me the simplest way to achieve this is to front up a massive cash prize, say €1 million a year. New? No, in times past the Pernod Superprestige became cycling’s top prize because it was so valuable for the riders it became important for everyone. Interestingly it was not part of the UCI, merely a private prize offered by a drinks company and was so valuable that riders – on low salaries in those days – would adjust their tactics accordingly, especially as the season went on. Still a “season long story” is a risky concept, it implies the current season with its variety of races – from cobbles to cols – isn’t one story and there’s something wrong with this. The politics are interesting too: if on-bike cams can be clipped in place by a mechanic, re-shaping the calendar is something that’s totally out of a team’s control. It’s up to races to promote events and for the UCI to decide whether they’re suitable for the World Tour. If Velon created its own rankings it could earn money from them, for example imagine an end of season awards ceremony with all the trappings of celebrity shows with riders turning up in tuxedos on the red carpet, speeches, entertainment and more, all packaged for TV. These things can be big ratings draws.
The Project Avignon teams have said they want a cut of ASO’s income with so-called revenue sharing. But as a past blog post suggests, there’s not much money to go around. The language from teams has changed from slicing up the existing cake to growing the pie.
More money, more problems
Currently any increase in a team budget tends to flow in… and straight back out. No team turns a profit or allocates a sponsor’s cash to a reserve fund. Rather extra sponsorship income goes on extra riders or, with the UCI’s cap on rider numbers, extra salaries. Pour more money in and the result is simply wage inflation, sometimes known as the “prune juice” effect. So the Velon teams are likely to want a salary cap, something the UCI has been exploring. But this surely has to be a UCI initiative, Velon can lobby but imagine the case of a top rider who can chose between a Velon team with a salary cap and another outside the group that pays more. Now you could try to cap a team’s total wage bill but exploring salary caps is a topic for another day. For now the takeaway should be that any extra income will simply flow out from teams in the form of wage inflation unless there’s a cap.
A lot of races lose a lot of money but the Tour de France is the one event that makes beaucoup profit. But Tour de France owner ASO isn’t too concerned about the durability of the participating teams. When, say, the Cannondale team can’t find a replacement sponsor collapses it’s no big loss to the Tour de France; we will see Peter Sagan at Tinkoff-Saxo. Requests for revenue sharing in the past have been met with a firm non. The tension has continued, you might remember Oleg Tinkov talking about boycotting the Tour de France. Like many things he was being provocative rather than thinking aloud and since qualified his words. ASO’s attitude to this will be crucial and seeing how both groups deal with each other, plus others like Giro owners RCS, the UCI and more will worth watching.
The French teams aren’t involved in Velon but largely they’ve not had much sponsor insecurity given Cofidis, Ag2r and FDJ have been sponsoring since the 1990s. Ironically this is largely because they’re French teams and have been guaranteed a ride in the Tour de France over the years. If non-French teams can attain this security via other means they too might enjoy stable sponsorship?
Project Avignon gets serious with legal registration and a CEO from outside of cycling. Beyond this we’ve got little to go on. On-bike cameras are cited as a potential revenue source but it’ll be interesting to see how this is monetized. How much would you pay to watch on-bike cameras?
It’s the broader ideas that will be interesting. More viable teams providing more images, information and stories can only be good and it’ll be interesting to follow what happens. But there are risks along the way too. Project Avignon was a big deal without much publicity. Velon has launched with a buzz and they’ll need to keep supplying updates to avoid looking stale. Whether this continues will depend on the 11 member teams and the new CEO. Let’s hope he speaks fluent French to woo the Amaury family.
If Velon has been launched this week the issues discussed at the time when Project Avignon broke cover. For more reading see these pieces from January:
- The Sugardaddy Paradox (subtext: it’s not about how much money the sport has, it’s how it’s managed)
- Who understands the UCI World Tour? (subtext: the World Tour might be a great idea or not but the marketing and promotion is lousy)
- The Problem with Revenue Sharing (subtext: there’s just not much money to share)