Team Sky’s accounts for the year ending 2016 are out and they’re bigger than ever, the team budget increased by 27% for the year and Sky’s title sponsorship payment by 50%. Here’s a look at their budget, spending, wage bill and more.
“Tour Racing Limited” is the British-registered corporate entity behind the team and it has just published its accounts for the year ending on 31 December 2016. As a reminder it was a successful year with their first Monument classic with Wout Poels winning an icy edition of Liège-Bastogne-Liège as well as habitual wins in the Tour de France and more, so habitual that the most memorable image of Sky in 2016 could be Chris Froome running up Mont Ventoux.
Notes in the accounts say the team is 85% owned by Sky UK Limited and 15% by 21st Century Fox (away from cycling 21st Century Fox is currently trying to buy the remaining 60% of Sky in the UK it doesn’t own in a stockmarket takeover). In case you’re wondering Sky Italia once had a shareholding but this has stopped but they still contribute sponsorship money.
Team Budget = £31.1 million
Team Sky’s budget for 2016 was £31,084,000, up 27% on the previous year as the screengrab from their accounts shows. Since inception the budget has doubled. Loyal readers will remember that 2015 saw a small decrease in part because the British Pound was riding high and therefore it went further when offering contracts in Euros to riders. The accounts state the team is able to draw down Pounds or Euros from its sponsors implying it has some sort of protection or hedge against gyrating currencies. But the budget jumped by 27% for 2016, double any currency movement.
Revenue Sources
- Title sponsorship is what it says, the money from Sky which actually comes from three sources: Britain’s Sky pays in, as does Sky Italia, and 21st Century Fox of the USA. Note the number goes from £15.7 million to £23.5 million, a 50% increase
- Performance sponsorship is related to the other sponsorship contracts, for example Pinarello, Rapha, Shimano and Ford
- Value in Kind means goods or services given instead of cash but there’s no breakdown, it could be Pinarello frames, Rapha kit, Ford cars and so on
- Race fees are stipends paid by organisers to cover expenses when a team participates in a race. “Other income” isn’t defined
How to spend it
Like all pro teams Team Sky’s wage bill is its biggest item although Team Sky’s wage bill is unlike any in the sport, not just because of its size but because it seems to have a flexibility, a line of credit with the title sponsors that other teams don’t enjoy. The wage bill soared by over a third for 2016, in part because Michał Kwiatkowski, Mikel Landa and Beñat Intxausti joined the team although the team had unloaded Richie Porte and Bradley Wiggins implying significant savings too. The accounts don’t explain where the 35% increase went so you can speculate on hiring, wages and renewals but that’s beyond these accounts.
The line on “bike and performance equipment” covers the team buying its own gear. For example they’ve been big buyers of Veloflex tires in the past but are now sponsored by Continental. Still there’s only so much rubber, oval chainrings and worn cleats you can buy and the sum – a mere line among the accounts – is equivalent to some Pro Conti teams or the women’s Boels-Dolmans team. It’s not clear if this sum includes extended training camps in Majorca and to Teide or whether travel for training is still classed under “race costs (travel and accommodation)”.
The note above shows the number of staff employed was 33. With a roster of 28 riders some may wonder but the note goes on to explain “other remuneration costs… … are related to contractors” and it’s a reminder that typically Sky’s staff are likely to be the mechanics and soigneurs. Meanwhile riders are typically not salaried employees of the team but operate in the gig economy as “contractors” who invoice their services to the team, usually a ruse to save tax for both employer and employee.
Welcome transparency
The team’s officials have made various pledges on openness that have not always been followed through. But these accounts are detailed and freely available (from here), something down to British corporate law rather than a team policy but whatever the reason it’s welcome and gives us a glance at the finances of this team. It would be great to see the accounts for other teams, this blog has covered Ag2r La Mondiale recently but many teams simply don’t publish accounts and if the UCI has the data each year for its internal purposes these are never made public. There’s debate about budgets and salary caps but the basic facts are missing.
Conclusion
Accounts can be dry but follow the money and there’s plenty of interest. Here the rich got richer with an astonishing 27% leap in the team budget for 2016 in part financed by a 50% increase in title sponsorship from Sky and 21st Century Fox, in part a response to the Pound-Euro exchange rate but also increased spending. The team budget of £31.1 million is huge but so is the change on the previous year. Team Sky is in a luxurious position being able to tap its sponsors for funding increases like this when other squads have more contained budgets and they have to run just to keep up. But comparisons with other teams are hard and sometimes impossible given the lack of data, even the headline budget numbers let alone a set of accounts to flick through.
Previous accounts have stated the team is funded for years going forward, this is not the case any more. This does not mean Sky’s sponsorship is ending, just that it is not stated. The team shows few signs of slowing down, picking up the likes of David de la Cruz, Jonathan Castroviejo and Dylan van Baarle, presumably all on premium salaries and in 2017 they unveiled a new vehicle, the leviathan “race hub“. Looking ahead the team is moving into rider development by hiring the likes of Egan Bernal, Pavel Sivakov, Chris Lawless and Kristoffer Halvorsen when they’ve typically bought in senior riders.
- Accounts available online at companieshouse.gov.uk
- Exchange rates at 31 December 2016: £1 GBP = US$ 1.23 = €1.17
Look how much cheaper those Fords are to run and service than the Jags
Massively ahead of every other team. Would like to see them set up a women’s team. The budget is there, and women’s cycling is really taking off in Britain.
this ircs me a bit, not your reply as such but Surely the decision to sponsor a woman’s team lies with Sky plc and them alone, It’ll be their money and their brand on the kit. if they dont see a return on investment which the limited coverage wioman’s cycling currently gets then its probably not worth it
from previous inrng and other commentary I don’t believe they are “massively ahead of every other team”; Astana and BMC run them pretty close (and arguably get far less for their money).
At Sky’s inception SDB suggested there would be a womens’ team in the future, he was more typically evasive when asked again recently by The Cycling Podcast. A womens’ team would look like a PR stunt now, especially given all the bad press British Cycling garnered for sexism and bullying all whilst being too inextricably linked with Sky (the BC womens’ team coach acting as courier for Sky jiffy bags, for instance).
I’m going on memory, but Astana’s budget when they had Nibali was thought to be less than 60% of actual 2016 Sky budget. And they don’t look like they upped their investment (the other way around, if anything). I’d call that “massively ahead”.
The only two teams which were within a -30% from Team Sky were reportedly BMC (indeed) and Katusha, I guess you mixed up the ex-Soviets.
Katusha is a bit of a mystery to me, since it was reported to be very close to Sky but their roster didn’t look like it could justify that (home boy Zakarin, old Purito, Kristoff were the big names, followed by Taaramae, Van den Broeck, Spilak…). Dunno.
BMC should have raised his game of a significant +25% to get Sky parity. It’s *pretty much ahead*, to me, albeit, obviously, it isn’t as impressive as the fact that Sky probably *doubled * the budget of 17 out of 22 TdF teams.
Again, I’d say that a needed +25% to get on par means being “massively ahead”, and that would leave only the strange case of Katusha as an exception to “every other team”.
Likewise I’ve seen people saying BMC, Katusha and Astana are close to Sky but never any supporting data. The roster, the race programme, the vehicles etc all suggest they’re behind. It’d be great to see the UCI’s annual team audit of World Tour licences.
L’Equipe published something last year and they pretty much got it right for Team Sky, as they did with other teams about which I also had different, quite reliable sources. Which doesn’t necessarily mean that L’Equipe was right for every single team, but they tend to produce more often than not kind of decent journalism (unlike the Gazzetta).
The problem with the L’Equipe numbers is that the ones we know (eg Sky, Ag2r) were wrong so it’s hard to be sure of the others even if the list seemed reasonable when it came to ranking teams.
@inrng
Well, truth is that Sky figures were fine… they wrote 35 M euros (I only remember them doing it in 2016, and they were referring to 2016 itself, probably trying to use insider sources! I don’t know if they tried again in 2017 because I didn’t follow as much the Tour); even if it looked strange at the time, now we can confirm that they were right.
Others were ok, too.
In Ag2R’s case, OTOH, were underestimating the 2016 budget by some 3 M (more like their 2013-2014 budget). Trying yo make the French look poorer?
Do QuickStep not feature on the big budget list?
Kittel, Boonen, Martin, Gaviria, Gilbert, Alaphilippe, De La Cruz, Jungels, Terpstra, Trentin… Surely these guys don’t come cheap!?
According to L’Equipe, they sit just behind Astana, their budget being roughly half of Sky’s. As I said above, the only team apparently close to Sky looked like Katusha; BMC is some 20-25% down, Astana some 40% down, then Quickstep with half of Sky’s budget and then all the rest a good way down. In that sense, Etixx is in the higher part of the table, yet the budgets spike up impressively fast. At the 2016 Tour, you allegedly had 12 teams with a budget of 10-15 M euros, 4 teams between 15 and 30 M and just 2 teams over 30 M.
With the recent allegations by sports women involving several major sports still fresh in our minds. If I were SDB I would keep well clear of any sponsorship involvement.
I am sure one of his closest allies can testify to the wisdom of that advice.
I find the clamour for SDB to start a women’s team bizarre: he did this already! Does nobody recall the Halfords that was set up to help Nicole Cook (not that she appreciated it particularly much going by her book).
There are plenty of reasons to not sponsor a woman’s team if you are Sky.
The old issues of a return for advertising is probably up there, but given the political swirl around equality, the likelihood would be that they would suffer accusations of tokenism and inequality if they didn’t provide a similar budget and wages as the men’s race. Why enter into that political morasse when you are only on a hiding to nothing?
I will voice my own opinion which is that women’s cycling needs to stand on its own, and not stand on the shoulders of the men’s cycling as this isn’t a long-term winner. I think that current attempts to expand women’s sports by subsidising it may bring about long term changes which increase female participation, and this may then fuel more interest in sport/competition, but the biggest barrier to success of female sports is that it’s hard to grow the audience to a sufficient level, especially when it ends up directly competing with the men’s event. Effectively you’re diluting your audience at best, or else the public vote with their feet (remote controls) and it just becomes a burden to the sport.
One of the problems with televised sport these days is that there is so much of it and much of it not worth viewing. Adding to this will not make the product any more appetising.
The idea that the female audience would take anything away from the male one, or that they’d be *competing* in that sense, is without fundament. If anything, several sports with some more equality than cycling prove that quite the contrary is true.
One of the problem with televised *cycling* is that a lot of it, and generally very worth viewing, is still quite hard to watch live even in main cycling countries (the male pro Worlds weren’t televised in Spain, neither was Flanders; the Vuelta hadn’t any big broadcast in Italy, this year the Giro was broadcast in France for the first time in many years etc.).
Finally, a lot of female cycling is more *worth viewing* (to use the same expression as you) than several male races which are currently broadcast – for example… the recent male TdFs ah ah ah ah! 😉
I have heard people make the argument that they would equally watch both the men’s and women’s races. But I doubt this is even half way true.
I don’t disagree that the women’s race has the capacity for excitement, and may surpass some of the men’s races. But the problem is that you cannot guarantee it. Though I also think this is a simplistic and reductive way of looking at why we watch sport. We want to see people at the top of their game. My friends and I might race, we might be entertaining (more entertaining to watch than the pros), on certain days, but people are more likely to watch the pros because they are at the top of their game, and that counts for a lot. This is why people don’t watch lower league football as much as the top leagues, in any country you care to think of.
Then you have the scheduling issue. With Bike ceasing to broadcast in the U.K., we can see there is limit to the publics appetite for cycling. Eurosport does a great job of hosting most of the UCI’s most prestigious events but where there are two men’s events one will always take precedence over the other which may be shown very late into the night.
As a family man I cannot find time to watch much more than the highlights. So if you are trying to sell me female sports you are never going to hit my market because I don’t have time to watch both.
To say that you will not split the audience is probably true. You just won’t get an audience because life is only so long.
You’re obviously speaking from and about an immature cycling market, whose rapid growth (which, anyway, still places it well behind traditional markets) has yet to prove what’s there to stay and what’s just a bubble.
In Germany, Spain or France, where cycling is more established, the recent offering of new broadcasting of significant events who weren’t being shown until then immediately gathered about 1 M (in each country) spectators – more than the whole UK TdF viewers!
And it happened pretty much from scratch.
Which means that the interest towards the sport and the potential demand is still superior to individual time limitations, or that spectators are ready to include more televised cycling over other options.
Eurosport recent aggressive market strategies supports the same concept.
However, we’re indeed often speaking of top events. The phenomenon you describe (“wanting to see the absolute best”) is spot on.
I agree that the perception of women cycling should be properly adjusted, in that sense. But it’s just a matter of perception.
At the end of the day, people watch – often with more than decent TV results – female tennis, swimming, skiing, gymnastics, athletics, volleyball…
If Belgium, France and Holland can help fund their cycling teams via their respective national lotteries, why can’t Italy (Europe’s largest national lottery)?
“With Bike ceasing to broadcast in the U.K., we can see there is limit to the publics appetite for cycling.”
I don’t think that’s strictly true. I watch a lot of cycling – before moving flats and getting Sky for Eurosport, I only had freeview. I watched as much cycling as I could. Or rather, I watched as much cycling as I knew about – I only found out about Bike towards the middle of last season because someone on here mentioned it in comments. I’d seen nothing about the channel either on telly or any publication. So it wasn’t well publicised to begin with – and when I did tune in, they’ve not had much racing. Though there was some welcome classics and smaller races, it’s mainly been highly-specialist dubbed european programmes and a bit of original content with Andrew Dodd (who knew he was still a thing after Mountain Biking UK?). Also Freeview picture quality is potato-grade, I’ve watched better quality pirate streams.
Massively ahead? Hardly.
BMC and Katusha are rumoured to have budgets almost as big but, of course, we don’t know because they don’t publish detailed accounts. The whole ‘Sky succeeds because of its money’ has become a bit of an excuse a few teams are happy to hide behind.
The other thing is that while Sky dominates the Tour de France, its record in other races is pretty modest. This team hardly looms over the sport the way some people claim.
Come on, let’s try to be serious. Although we’re speaking of estimates, in 2016 Sky probably *doubled* (or more) the budget of 17 out of the other 21 TdF teams.
It’s not a situation you need to see *detailed accounts* to understand.
In fact, Ag2R having a 15 M 2016 budget instead of the 12 M reported by L’Equipe doesn’t change the above, despite a big estimation mistake in figures!
BMC, “almost as big” would have to raise its supposed budget of +25% to reach Sky.
And it’s not about sport domination in terms of victories (something which could happen in the past, even without such a relevant money factor, and it didn’t harm the sport). It’s about keeping other sponsors out and killing other teams out of pure inflation, that is, spoiling the sport. Their lack of some technical skills which prevents them from winning even more races doesn’t change the terms of the economic problem.
Obviously, there’s also the question of buying potential captains who aren’t rivals anymore and who, on top of that, help in controlling other rivals’ actions, thus producing sporting effects which have brought the TdF to lose a huge quantity of spectators in the last couple of years.
Hello – thanks for this. Massive numbers and really interesting.
I don’t get business, and so don’t understand this:
“the team is 85% owned by Sky UK Limited and 15% by 21st Century Fox (away from cycling 21st Century Fox is currently trying to buy the remaining 60% of Sky in the UK it doesn’t own in a stockmarket takeover). In case you’re wondering Sky Italia once had a shareholding but this has stopped but they still contribute sponsorship money.”
Isn’t it all the same Murdoch empire? How / Why would a business buy itself? Is it just some clever tax thing? Can anyone explain this for a simpleton?
The Murdochs control Sky in the UK (James Murdoch, a keen cyclist, is the chairman etc) but they don’t own it fully, they have 40%. The other 60% of the shares are owned by stockmarket investors and the Murdochs/21st Century Fox want to buy them out in full so they can own it completely.
Sky PLC isn’t wholly owned by Murdoch/21st century Fox. It is publicly traded. It was originally founded as a 50:50 merger between Sky (Murdoch firm) and British Satellite Broadcasting.
Current top 10 shareholdings are:
Twenty-First Century Fox, Inc. 672,783,139 39.1%
The Baupost Group LLC 48,800,000 2.84%
Abbey National Treasury Services Plc 44,128,314 2.57%
BlackRock Investment Management (UK) Ltd. 42,996,239 2.50%
Franklin Mutual Advisers LLC 42,868,000 2.49%
Société Générale Gestion SA 37,902,209 2.20%
Robeco Institutional Asset Management BV 33,283,000 1.94%
The Vanguard Group, Inc. 31,196,132 1.81%
Société Générale SA (Broker) 28,618,000 1.66%
Legal & General Investment Management Ltd. 28,227,060 1.64%
Obviously they don’t add up to anywhere near 100% so there must be myriad shareholders with tiny stakes beyond this. Murdoch is by far the biggest and that’s defacto control (so the media always refers to Sky as an arm of the Murdoch empire, or words to that effect).
Murdoch is wishing to buy the remaining 60%, not being an expert but I understand that acquiring beyond a certain percentage anyway means offering to buy all of them (see what happened with Stan Kroenke / Alisher Usmanov and the wrangling at Arsenal FC).
So he’s not buying himself, in this instance. But in others, he did.
See Sky PLC and it’s subsidieries, there’s lots of those – Sky UK, Ireland, Deutschland, Italia plus Amstrad (Alan Sugar’s former firm – probably a satellite dish-related convenience) and others.
As a barely-educated observer, a lot of it looks like creative accounting. Sky Deutschland, for instance, was once owned 57:43 by 21st century Fox (Murdoch) and Sky PLC (itself currently 40 percent 21st Century Fox/Murdoch of course) respectively until Sky PLC bought out the Fox shares. So, Mursoch sold the Germany shares to Sky – but now is buying all of Sky. So he’ll have control of Deutschland again. Murky as, right?
technically speaking ‘the murdochs’ only own 39.1% of Sky, but the next biggest shareholder owns less than 3%, so effectively they control it. They are trying to buy the other 60.9% but pesky hiccups like phone hacking keep getting in the way.
thanks all!
A bit of background: Murdoch split his empire for political reasons after the UK phone hacking scandal, adding further convolutions to an already complicated corporate structure. You might be interested in the story here, although the best coverage has been in the Private Eye (not published online):
http://www.telegraph.co.uk/business/2017/09/13/deja-vu-foxs-sky-bid-spotlight/
Prepare for frothing…
Sky must see a value in their investment to double down. I guess the trick is to find other corporates to see the same.
Sky has about 12.7 million subscribers in UK and Ireland (of which number does not include moi) who, you could very simplistically say, pay less than £2 per year to help run Team Sky.
it costs £10.9m PER GAME for sky to show the premier league, they spend more in a weekend on that than they do on TS for a full year.
Very good point.
Although I’m personally not a Sky subscriber, I was trying to demonstrate that, in relative terms, the cycling team is actually *affordable* to the sponsor.
The return on investment, as measured in Inner Ring’s point below, must be pretty good?
Or this is an insignificant drop in the ocean.
There may also have been a performance-related element to the contract, which Froome’s 3rd TdF win and (possibly) Poels’ Monument triggered, requiring Sky to pay more.
31m UK pounds for a bike team. I wonder what truly is their return on that.
It’s hard to measure and depends on the goals: sales, brand recognition, public image? Note only a tiny fraction of the company’s annual marketing budget goes on the team, in previous years Team Sky has represented about 2% of their annual corporate marketing spend.
So much talk of shares makes me think there might be an interest in making people want to buy their stock. Just a thought.
Jonathan Vaughters has said a sponsor gets a 10-to-1 return on their investment in terms of publicity.
We don’t have the budgets for almost all other teams and yet people consistently say that certain other teams spend as much as Sky. Their rosters suggest they do not – or that they don’t spend that money on riders. And why else are superb riders willing to be domestiques at Sky rather than leaders at other teams if it’s not for the cash?
Having one team able to spend oodles of money on an almost singular aim – winning the Tour – doesn’t make for interesting racing in that event.
If other, newer teams with wealthy backers follow suit, we’ll have an evermore two-tier system as the ‘ordinary’ teams are unable to compete.
The other two Grand Tours will become train-dominated as well. Whether or not you find that entertaining is your own point of view.
Whereas Dumoulin, Nibali and Quintana, other recent grand tour winners, just ride by themselves I suppose you mean.
*rolls eyes*
If you don’t want to see the difference, that’s fine.
Think I’m with the other comment – as soon as people start talking about what is (or is not) entertaining, we have reached the level of subjective opinion.
I wonder how much of the increase is just down to exchange rates. The Pound lost about 15% of its value against the Euro through 2016
It’s part if it it seems, like the strong Pound in 2015 meant the budget was flat that year. But the increases in budget, sponsorship and wages seem far above and beyond any currency movements.
If you put their 2015 and 2016 budgets into Euros it’s a 13% increase rather than 27% in Pounds.
I didn’t realise Rich had asked this question. I looked at it and mention this below, but the most significant increase here is due to the Pound/Euro exchange rate.
Any increases beyond the normal budget increases are due to the exchange rate changes.
£31M sounds a lot – but in the global sporting scene, it actually isn’t. If the sport was properly run, and like most 21st century sports, then other global businesses would surely be showing up to sponsor other teams.
That quite a lot of teams are sponsored by regional businesses isn’t the fault of Sky.
I’d have a problem if Sky had a budget of £100M, but really, their budget is what the sponsor thinks is worth.
Because Sky PLC has a turnover of nearly £13bn (Yr end June 2017), £31m is really a drop in the ocean for Sky.
In Sky PLC’s most recent annual report (https://stage-watch.herokuapp.com/corporate/articles/annual-report-2017) they hightlight an expenditure of nearly £4.8bn on “Sales, general and administration” which would include all their marketing spend, from which Team Sky is likely to be funded. Furthermore, non-UK readers may need to understand that Sky is the biggest advertiser in the country.
I think what this shows is that, with perhaps a tiny handful others (Movistar being part of Telefónica, springs to mind), Sky is of a scale larger than most of the other headline sponsors in the peleton.
Being properly run means being sustainable, and cycling was – it had been for over a century – before the big spenders were allowed in, hoping to fix what wasn’t broken at all (cit. Larry T.), actually risking to destroy the environment cycling thrived in.
Money comes and go way faster than social structures.
Instant business volume isn’t among the best criteria to judge success, while long-term survival of the values or identity you represent might be more appropriate: business volume is useful only as long as it provides resources for keeping your system active, but what if a localised increase in business volume brings a general middle-term loss, or serious damage to the system itself?
Expansion can easily be counterproductive (although it shouldn’t be underestimated, of course, given that it can foster survival through dissemination).
“Before the big spenders were allowed in” Gabriele? Was there a time they weren’t? I think we can all be assured that Sky won’t sponsor a cycling team in perpetuity but I do find it very strange when some people (not necessarily you Gabriele) argue we should be turning them away.
Sponsoring a cycling team doubling the money the rest is currently ready to spend isn’t necessarily good for cycling. And the concept of “allowing” was just to imply the fact that I don’t think it’s *up to them* to self-regulate (also see below). They found a good model – good for them, I mean – it’s in their nature to exploit it. As you say, they probably won’t be around for the fallout. However, there’s a whole debate about the role institutions should have when facing speculative bubbles: not everyone believes that you should “contain”, many think that to “ride the wave” is the best policy. I’m a bit biased by the effects of the construction speculative bubble in Spain, perhaps – that looked like something you’d rather contain.
Peugeot
Renault
La Vie Clare
ONCE
Deutche Telecom
Banesto
I don’t know what their budgets were, but I think they were all capable of distorting the cycling transfer market to their benefit. ‘Big spenders’ is a relative thing and while you can argue that Sky’s spending is unprecedented it will always happen.
My problem is more quantum (quantum has seriously skewed the balance of talent in Sky’s favour), and while cycling has not reached the ridiculous heights of football or American sports, it’s clear that money ruins sport – it ‘guarantees’ winners, it stifles competition and makes whores of the sport. The noblesse and endeavour disappear because the true challenges are removed and it becomes weak unscripted theatre.
@RQS
The mere fact that most of the teams you hint at were active and competing for triumph at the same time suggests how far that was from the current situation.
I just think you look at the past with rose tinted glasses. Some of those super teams of the past failed to dominate in the same way that BMC has failed to make its money count. You choose to blame Sky as a result, but it is as it ever was.
I don’t blame Sky at all, as you can read in this same page.
(By the way, interesting “victim” complex, I witnessed it several times here and there).
BMC has (reportedly) got a way smaller budget than Sky, although it’s big when compared to the rest: 80% of Sky’s.
It clearly isn’t “as it ever was”, given that in the past we rarely saw so many victories as team-dependent as those we had the dubious privilege to witness in the last seasons. Some sprinters’, perhaps.
And “ever” is for sure the wrong adverb.
To put into context with other sports, Neymar is thought to earn £28m per year after tax…
What current situation? Team Sky dominates one event, the Tour de France. I don’t see this as inherently a problem if they’re doing it with a roster of the best talent.
It’d be interesting to have some insight into what dictates the magnitude of budget increases, apart from ‘because they can’. The owners have obviously decided that even this relatively high level of funding is still value for money… which leads to me to ask why are other large companies not following in their footsteps?
If they hadn’t had that massive stroke of luck by stumbling upon Froome, what would the budget-vs-year chart look like now? I imagine it would be largely flat. Also, will 2017’s budget have some punishment for the Wiggins Needle Fiasco?
The budget seems flexible and this has been mentioned in interviews, if Brailsford can present the case why hiring or re-signing certain riders makes sense, or spending on X, Y, Z etc then the sponsors seem to back him. It’s different to the typical plan where a sponsor is onboard for €N million a year for three years.
A topic for another day is Sky’s near monopoly on the Tour de France. If you are a rival company to Sky or just another big multinational do you want to compete and lose every July. Or if you want to win you need to match or beat the spending and it could take a couple of years to get the team going, just as Sky’s first years were far removed from today.
Budget increase for Team Sky is planned at the parent company’s annual planning meeting. They likely have a projected 5-year budget increase plan which gets adjusted on an annual basis.
The 2016 v 2015 budget increase was initially sorted out in 2015 and likely did not factor in Brexit, therefore they did not realise that the Pound would tank mid-2016. The increase in Euros is only 13%, but the increase is exaggerated when you show it in pounds because the pound tanked vs the Euro from the summer of 2016-onwards.
Keep in mind that the sponsorship expense of Team Sky is a drop in the bucket for Sky, so it would be a 5-minute budget meeting item on the agenda.
One of the questions coming out of this is the balance in rider interest between salary and freedom. How much is required to make a rider accept not racing in races he would like to ride or racing in them just to support. They would all surely like to retire from cycling with a future assured but would also hope for the palmares they think that thier ability merited. Quite a choice. Take the case of Landa. Was his salary matched and freedom increased? Fortunately not all the teams are chasing the same pot of gold with Sky wanting the TdF, QSF most wanting (Belgian) classics. BMC must be in the middle while some teams have sponsors visible uniquely in the home country helping concentration and value. Not all teams need big budgets to succeed.
A final thought is that Sky is highly visible in France but with little to sell. Are they missing something?
Sky is highly visible in Italy too and has Sky Italia yet they never send their A Team to the Giro, seeing it as the place to send their rider(s) they want to placate (Thomas and Landa this year).
It seems to me that Sky gets great value from their sponsorship of Team Sky.
It costs about the same to be a shirt sponsor of a premiership club. Clearly, football gets a lot more coverage than cycling, but pretty much all cycling coverage (especially in the UK) includes Team Sky.
I was excited to see “contributions to Sky Pension Plan”, even if its just part of the team, and not the “contractors”. That seems to imply there is a retirement plan in place…
Pretty much every UK employer now provides a pension scheme, as it’s a legal requirement from October.
I think it’s somewhat interesting that Sky invest all this money in running Team Sky and generating brand awareness amongst the cycling populace, but seem to express very little interest in actually broadcasting pro-cycling on Sky Sports, in the UK at least.
Here, almost the entire cycling calendar is broadcast on Eurosport, with a few events also making it over on to the free-to-air channels, but very little (if anything this season?) on Sky channels themselves. I wonder what the business thinking behind this is?
No doubt a lot of people still watch Eurosport through a Sky TV subscription, but it’s far from the only option and you only need the most basic Sky TV package to take advantage of this, rather than one of the ludicrously expensive “Sky Sports” packages. I’m not complaining at all, but it still seems like a bit of a disconnect in their marketing strategy.
If it meant paying money to Sky for a sub, here in the UK, I would happily save my pennies. Much is my intention to see my hard earned go in their direction.
To show cycling Sky would want exclusivity for the biggest races and ASO don’t sell exclusivity to subscription TV. For example, in the UK the Tour, Vuelta and Dauphine are also broadcast on the free to air ITV4 as well as the subscription Eurosport.
By allowing the competition to show cycling they get huge amounts of free publicity including on FTA channels.
I hope the day never comes when cycling is televised on Sky Sports. Eurosport are fair from perfect but endearingly quirky. Sky would do what they have done to football and F1 and overhype and Americanise it.
Ah not quite, you do need Sports for Eurosport 2 (or at least you did when I signed up in February) so you get the whole gamut – they stick some races on 2 in Classics season and when tennis is on. You can also watch Eurosport through one of the Sky apps, even without Multiscreen (which I don’t have, so most other channels don’t work). That’s how I’ve managed to watch at work.
Inrng – you didn’t adjust the revenue and budget analysis for Foreign Exchange rate fluctuations.
The actual annual increase in operating budget is only 13%, and salaries have only risen by 20%, from 2015 to 2016 if you do adjust for Euros. If you use Swiss Francs, the annual increase is 16% and 23%.
These increases in revenue and budget are still large, but if you consider the parent company’s annual increase in revenue is approximately 20%, then the overall annual increase of 13% isn’t significant.
I won’t say anything else about this, but I just performed the same analysis to Team Sky’s 2015 vs 2014 finances. Inrng concluded at the time and above that there was virtually ZERO change in budget from 2015 to 2014, however when you adjust for foreign exchange swings, the budget actually went up 11% in Euro’s.
Therefore, budget went up 11% in 2015 and 13% in 2016. Very similar annual increases, but when you look at it in Pound Sterling, it looks like 0% increase in 2015 and 25% in 2016. As always, the devil is in the details and when you have foreign currencies, you have to look at the currency that monies are being spent in (in this case, rider and staff salaries are in Euros).
The currency matters but hopefully it’s been raised here. Last year’s piece mentioned the strong Pound as a likely explanation as why the budget in Pounds was flat and the fall in the currency is mentioned above too. But how much of Sky’s wage bill is in Euros? Do they pay their British riders and staff in Pounds? I don’t know so it’s hard to work out the impact for sure.
Why would Froome be paid in pounds? He’s never lived there and only seems to go there to publicise his Tour wins. Seems unlikely.
I’m pretty sure Team Sky staff and riders are paid in Euro’s or Swiss Francs. I’m not the UCI expert, but I think the team’s payroll account (and bank guarantee) has to be held in a Swiss bank account – please correct me if I’m wrong people.
Therefore, even if the Team’s home jurisdiction currency is Pounds or US Dollars or whatever, the most relevant currency for any analysis is in Euros/Swiss Francs. Swiss Francs are not fixed to the Euro, however the Euro/SwFr exchange value has been very consistent over the past 2 years.
Can anyone confirm or correct this?
Good write-up. I feel like CN thought so too. Their article feels like it was directly copied from this one without giving Inrng any credit.
It is rather similar, right down the details raised and even the paragraph order. Nevermind and amusingly the author manages to make a mistake or two when trying to differentiate the piece.
Shame they don’t cut and paste your comments section over theirs too… 😉
Curious to see that average number of employees goes up but salary spend goes down by circa £500k. Suggests that some who were on the books have now moved to “Contractor” status. Pick any combination of Sir DB, Tim Kerrison or Rod Ellingworth perhaps? Maybe other staff have moved to the Nice/Beausoleil base?
Not really significant but just nice to note that it may not just be the racing talent that takes advantage of potential savings-another marginal gain in action!!
Once upon a time a lot of the backroom staff worked for both British cycling and Sky – but that distinction (wherever it lay) now academic as there has been a formal split.
The staff measurement is FTE – so staff numbers would increase if these same staff now full time at sky rather than part time.
Sky also ceased being BC’s sponsor (now replaced by HSBC). It is conceivable that for the same “cycling spend” by the parent company the pro team could continue to benefit.
Every July Sky get three weeks of blanket coverage. Surely worth a paltry 31 million? They have Froome painted on vans in the UK.
Can’t disagree.
That’s why we just can’t expect them to stop by themselves. It’s too well worth it.
If Sky’s attitude should ever be stopped or limited or discouraged by cycling institutions – or *not* – is a separate question (not easy to answer, in any direction).
Funny thing is… They have Froome in the Yellow Jersey painted on the Sky maintenance vans… I bet if a survey was carried out of general British public as to who it was, the answers would be;
Wiggins
Cavendish
Hoy
Thomas
Boardman
Armitstead
Brailsford
[Maybe then] Froome
Armitstead? I guess you mean Elizabeth Deignan… she didn’t resemble Chris Froome last time I looked!
Was a joke; that he is essentially an unknown, and, all cyclists are indistinguishable.
What’s the reference to worn cleats?
Running up Mont Ventoux 😉
Some people never walk in theirs so they just don’t understand….. 😉
Might I suggest Fox News US affiliate of (21th Century Fox), having firing both Rodger Ailes, and Bill O Reilly recently has provided 20 million, and 13 million respectively in salary space for James to expanded sky’s WT .
This may provide some insight for the lack of support for a Sky women’s team.
Thanks for this – inrng, curious as to how sky’s budget dominance over most other teams nowadays compares to other eras? For example was postal or la vie Claire also able to out spend most others when they were dominant? Thanks again
Good question, we can only speculate over the “super teams” of the past like Mapei in the 2000s, T-Mobile vs US Postal in the 1990s, PDM in the late 80s. There’s little data today to go on, even less in the past.
If you look at the Sky plc financial statements, Deloitte’s materiality for the audit was £50m. They would barely even have registered Tour Racing for the group audit which adds some perspective when we talk about ‘big money’ in sport. (Although I realise we are talking relative for cycling). If a Sky women’s team budget was say, £2m it would barely even be a rounding error in the Sky FS which are shown in £m. When considering that Dafabet pay £20m just to have their name on Sunderland’s football shirt I’d say Sky are getting pretty good value for money running an entire cycling team!
I’m not so sure. Millions watch Sunderland every week for 9 months of the year. Even more might people might see the shirt indirectly via newspaper/website/news tv coverage. Cycling compares poorly. That’s why there’s billions in football and pennies in cycling.
Millions watch Sunderland? Are you sure? In the recent past, I’ve been checking the Italian figures about football (admittedly, not in its best moment) and, except 3-4 top teams, the rest barely scored *any* decent TV audience.
It’s not like everyone who is watching football also necessarily sees Sunderland or SPAL every time. If anything, some three minute highlights.
Besides that, let’s say some fifty 2-hour matches a year… well, less than 20% will get good TV ratings in the case of a minor team.
In cycling, more or less all the WT teams gets millions of viewers for *at least* two hours for *at least* some 60 days per year. And you could easily throw in a handful of other races besides GTs, albeit with smaller figures.
UK is not the rest of Europe. Well, it isn’t Europe, they now say.
Anyway, when TV rights are negotiated separately by single football teams, the difference between big and small fishes is manifest.
Obviously a separate matter is the potential football has to gain attention and money from his physical, geographical presence in the very local scale (roots & rooting for… they’ll take pages in the local newspapers).
In cycling that’s all converted in a benefit only for the races (fees), not the teams.
Also, a simple comparison of eyeballs doesn’t really tell the whole story. Using the players as a set of billboards is very different from having your name intrinsically linked to the team. How many people watching a football match are really even taking in who the shirt sponsors are? It’s not like the commentators are constantly referring to’Sunderland Databet’ are they?
The BBC’s weekly highlights show gets around 3-4m viewers each week. Live games get around 500-600k, unless they involve one of the big 6 teams. But those are UK viewing figures; the English Premier League claims 12m/game worldwide. No idea how factual that claim is.
Premier League average audience per match on Sky was 14% down last year according to FT, the worst result since the current recording system is on (2010).
According to Bloomberg, last season only two Premier League team averaged more than 1 M spectators for match, Liverpool (1.15 M) and Manchester Utd. (1.05 M). There were other four “top teams” in terms of viewers, all below the 0.9 M mark: Arsenal (900 K), Chelsea (850 K), Tottenham and Manchester City (800 K); the rest is well below.
Comparing this situation to Italy, which looks surprisingly better in terms of audience results, I’d say that a general average of 600 K in UK is quite optimistic, given that Italy is around 650 K. But maybe the situation in the Premier League is more balanced.
In 2011/2012 the national TV market covered some 16% of the global audience (Statista): in that sense, I find it hard to believe the claim of global 12.5 M per match. Some five years before they were shamelessly speaking of some “typical” 80 M world viewers per match… laughable.
However, it’s hard to calculate the data properly, because probably many lower level matches aren’t broadcast abroad, keeping the average higher than you could expect: but that’s a problem for our “Sunderland question”, since middle-table teams will often score a nought in the global TV market.
Then, well, it’s all a bit like the 3.5 *billion* viewers for the TdF… yeah, yeah… like counting a glimpse of some highlight within one of the screens in the background of the anchor of a news program.
I prefer to work with official audience data with the average viewers of a given 90′-2 hrs. programme. People watching the whole show.
The TdF can reasonably boast some 12 M global viewers per stage (perhaps a bit less in the last couple of years), the Giro sits at 5 M.
Footnote: Italy is one of the growing market for EPL and in the 2014 the most watched match was Liverpool-Chelsea at 370 K.
Sunderland AFC playing in the EFL Championship watched by millions? Sunderland is probably better known for the car factory than for the football.
Look Charles, I don’t know about Premier League which is sure doing way better than Serie A, but I just stumbled across an article by Calcio & Finanza detailing the audience data of the current season (week six or so).
Average 6.3 M people have been watching *some* football every week, but, as I pointed out, only a fraction of them is watching a given sponsored shirt for any couple of hourse.
In fact, the average for each match is about 650 K. The average share is 3.8%.
Let me give you some term of comparison: the Giro figures are quite much steady in recent years, and *each stage* averages – just on Italian RAI – some 2 M and a 18% (not 1.8%…) share.
Sponsoring an average football team for an average league season sums up about 25 M “added spectators” having watched your jersey (please note that it’s a conceptual construction just to make a volume comparison, part of that is the same people again and again, while another part of that are fans of rival teams on whom the effect of the sponsorship might be ambiguous).
The Giro alone, always speaking of Italy only, easily makes 42 M “added spectators”.
What’s even worse is that football, as I stated above, entails huge differences (is cycling going down the same path?): the matches “among peers” of the likes of Udinese or Genoa or Chievo Verona happened to be watched by total 5 K spectator. Yeah, some five thousands (0.01% share).
Wow, man!
“That’s why there’s billions”. Sure.
And you shouldn’t think that it means that meanwhile big teams make huge results. The two *absolute best audience results* of the first sixty (60) matches were: the Juventus-Torino derby, 2 M total spectators, 10% share; Roma-Inter, 1.8 M, 11% share.
*Every single* Giro stage, in the last couple of years at least, had a better share than the two best football matches, and the Giro went as far as *doubling* these football’s figures in terms of share some 4-5 times in each edition.
In terms of absolute viewers, the Giro *average* is better than football’s Serie A *top* matches until now.
At least half of the Giro stages end up *beating* the most seen football league shows (and the Giro is often broadcast on working days, always in the afternoon).
The huge monetary success of football is mainly about politics, both on local and national scale, social control, banks, speculation, discursive practices… not at all about the sheer number of people you glue to the screen.
The more I look around…
in the whole 2016/2017 LEAGUE season the most watched team was Juventus and it averaged 2 M viewers in its 38 matches, with a 9.6% avg. share.
Second placed Milan was far back, not even achieving 1.5 M / 7% share (wow, it looks familiar… is it cycling budgets?). We’ve got only *four* teams between 1 M and Juventus (more and more familiar).
Only the five top teams present better “accumulated spectators” than the Giro alone. None of them, not even the best one, Juventus, can offer you as many “accumulated spectators” than the Giro + Tour.
13 out of 20 Serie A teams average 500 K per match or less over the league season. Less than 3% share.
Top matches. Only a total of *two* matches in the whole football league season could do better than the Giro top stages (3.3-3.4 M) in terms of audience, always speaking of Italian RAI TV only: Juventus-Inter and Napoli-Juventus (both at 3.7 M).
Curiously, in both cases the share wasn’t exceptional, less than the *worst* Giro stage (13%). In terms of share only the best match of the year, Inter-Juventus (3 M absolute viewers) could get something comparable (18%) with the Giro *average*.
Interesting debate you started. What is better value for money of advertising dollars?
20M pounds for slot on footie jersey vs. 30M pounds for cycling team
I don’t think it’s as simple as ‘how many people see it’ to work out the value for money. As David said, it’s that intrinsic link with the whole team.
If you surveyed the British population you’d guess WAY more people watch football than cycling. But if you asked who the name was on Sunderland’s shirt how many people would even know that? Yet I’m sure if you asked the average Brit (who has probably never watched cycling) to name a cycling team they’d say ‘Team Sky’.
By paying the relatively small sum of £30m it gets you the best cycling team in the world and with that it becomes a household name in one of your key markets. To boot they have also been able to associate themselves with Wiggins, Cavendish, Froome who are all also household names in the UK, probably bigger than most, if not all the Sunderland players. Again, intrinsically linked with the Sky branding.
I’d also like to apologise to any Sunderland fans, I wasn’t picking on Sunderland, it was just the shirt sponsorship deal roughly nearest £30m!
Irrespective of how it compares to other advertising deals though, for effectively pocket change for Sky it seems like they are getting a lot. Not just from a business point of view, but also a sporting one.
Maybe they can now afford the most basic back-up system for their laptops, and a PR firm to persuade us we were all indeed born yesterday.
They had a cloud backup system back in the day. Despite all SDB’s managerial talk he failed to enforce certain doctor to use it.
I hope you are not hinting a foul play?
Are we even discussing cycling if there’s no suggestion of foul play by Sky somewhere in the comments? 😉
Income: £2.1m – ‘value in kind’.
Expenditure: £2.3m – ‘bikes and performance equipment’.
Lets say 100 bikes are worth £1m… Are they buying the bikes or being given the bikes?
Which ever way it is, the figures seem way over the top when adjusted – e.g. £2.3m on ‘performance equipment’, or, £2.1m gifted in Ford cars and Rapha kit?!?
Thanks for this.
One of the big topics of the year seems to be budgetary equality (not least in this blog’s comments). Would be very interested if you chose to devote a post to it, you always seem to improve the quality of the debate when you do.
Thanks INRNG as ever on the money.
Don’t most riders when asked why they joined sky, or those on sky already asked the same question, give the same answer, the support they provide us is the best.
Bearing that in mind, is the amount that sky spend on bikes and performance equipment and sports science so much greater than other teams? I’d like to know what other teams spend on those areas? Paying a rider top dollar is the easy answer as to why they join sky, but riders do come and they generally fall into a role that may not seem to the best of their ability, so outside of the salary, they must be doing something right and maybe it just is, they actually spend money on areas that need it and not waste it on areas that are just nice to haves.
One thing I can imagine in the corporate world, is that brailsford must account with reason for his monetary requirements and then back them up with results.
One mis-perception regarding Sky is that, when it comes to stage racing, it is all about Chris Froome. The logic follows that since Sky riders don’t have chance to shine in races, they went to Sky for the money.
In reality, Sky gives rider very good support, See how much Landa improved his ITT whilst at Sky, and they all have got a chance to shine in their respective races. The difference is that Sky rider, when not being the team leader in a targeted race would work very hard to help their colleagues. This is especially the case with classic squad: Thomas, Henao and certainly Kwiatkowski Moscon as well as Stannard.
Most successful teams in WC has such a culture. Etixx Quick step is certainly like that in most of their races and Sunweb sent Barguil home in the Vuelta when he decided not to play team game.
It’s a mis-perception Mikel… ;0)
http://www.cyclingnews.com/news/mikel-landa-sky-and-me-werent-always-compatible/
I generally agree with your second and third paragraphs. Sunweb really do stand out for me.
I hope Landa isn’t bitter, he knew what he was signing up for when he went there.
I’m always amazed when anyone plays the ‘heritage’ moan about a successful new bunch of money chuckers in cycling. Jeez, if dodgy Russian pseudo dollars hadn’t inexpicably funded Chelsea FC a few years back English-based football would have remained a tedious Man U outdoing a fading Arsenal season on season on season. Thesee days several dubiously funded teams have a chance. And the entertainment is improved, way ahead of the drab three club league of Spain, or one club leagues like Germany or France.
Obviously cycling has never been an embarrassing or shameless sport that has pretended that drug cheats are regular competitors…
Of course the money does not always win in football – Monaco are current French champions, not PSG, Leicester City 2015/16 in England – and nor does it win everything in cycling.