Geox team future in doubt (updated)

Geox team logo

The Geox-TMC team looks set to stop at the end of the year after its main sponsor pulled out at the eleventh hour. The squad’s management have been filing paperwork with the UCI as part of the registration process to ride in 2012 but when the matter of depositing the bank guarantee for the 2012 season arose the sponsor Geox refused to provide the necessary funding. Without this the team cannot continue.

As a reminder, the UCI imposes conditions on teams wishing to register for 2012 to ensure various things are in place. There are administrative tasks to complete and perhaps the most formal of these is the bank guarantee. This involves the team placing money in escrow under terms agreed with the UCI. The funds are there to cover a problem mid-season, to ensure riders wages are at least paid in part should the sponsor quit or have cashflow problems in the middle of the season.

The sums involved are big. Here is the relevant UCI rule for a team wanting a Pro Tour licence:

The amount of the guarantee shall represent one quarter of all the gross sums due for payment by the UCI ProTeam to riders and persons under contract for the operation of the team during the registration year plus the amount of CHF 15,000. In no case may the amount of the bank guarantee be less than CHF 975,000

975,000 Swiss Francs is close to €800,000 or US$1 million, a considerable sum to find and park in a bank account. As for the lower Pro Continental status, the sum is CHF 300,000.

This places the future of the squad in doubt. Geox has now told that it wishes to leave the sport. But Bike Live SA the holding company behind the team says it is mulling taking the Italian shoemaker to the Court of Arbitration for Sport, saying it has contractual commitments to fund the team. This sounds odd as the CAS is usually reserved for disputes over the rules of sport rather than financial or contractual matters undertaken in the business of sport.

When the team says in public that its sponsor won’t pay then things look irretrievable, surely the relationship between sponsor and team has collapsed?

The squad includes Vuelta winner Juan-José Cobo and, amongst others, Colombian Fabio Duarte, Italian Fabio Felline and Russian Dennis Menchov but the demise could see all the riders and support staff lose their jobs on the very day the transfer window closes. Other teams will be able to recruit riders but it is now late with many squads having finalised their rosters and budgets for 2012.

Geox itself is a well-established Italian shoemaker and seemingly in fine financial health. It spends more on being the shoe sponsor of Formula 1 driver Sebastian Vettel than it does on the entire cycling team and in the first half of 2011 had sales of €448 million and earnings of €24 million.

Pulling out late is awkward for Geox, they don’t look good. It now seems Geox is determined to quit the sport. We will see what legal means the team has to keep going, whether it can claim funds from its sponsor. But such a step is the last resort and the prospect of a Spanish team suing an Italian business brings to mind courtroom delays and more. Were it to go to court, this could take many months, perhaps years.

The sponsor and team have had an awkward relationship from the start. When the squad was started Geox hoped to be in the World Tour and ride the Tour de France, indeed it signed Dennis Menchov and Carlos Sastre for this purpose. But when the team didn’t get a licence late in 2010 they were reportedly furious and threatening to walk away from the sport. But they continued only to, seemingly, pull the plug at the end of the season.

In order to survive the team will need to find alternative funding. And fast. The UCI is in the process of allocating teams licences for 2012 right now and the money needs to be in place now, if not in the next few days. Unless funding is found urgently then the team will cease at the end of the year. The sponsor pulling out is bad enough but the timing only makes this worse.

38 thoughts on “Geox team future in doubt (updated)”

  1. Geox barely got off the ground this year – remember the rumors of the sponsors yanking the team away from Gianetti in favor of Crespi? Or the lack of kit until February? These guys were lucky to have gotten it together at all. If I was a sponsor, I’d be running away as quickly (and quietly) as possible.

  2. Here’s a thought to ponder on the arbitration side – what leverage does CAS have over Geox? Even if they find against them, will any government be willing to enforce it? Could they attempt to ban them from associating with sports other than cycling? Does F1 or football/soccer have any care for the rulings of CAS?

  3. I don’t get this whole “transfer season ends today” thing.

    In previous years, riders have been signed in January too (Luke Roberts with Saxo Bank, for example). Why is that possible if the transfer season ends in October?

  4. I’m interested how they feel it is worth spending more sponsoring Seb Vettel than the cycling team. I watch most F1 races and was completely unaware of their involvement in that sport. Obviously I am far more familiar with their name as a cycling sponsor.

  5. CT: the UCI rules state the transfer window closes today. Any rider under contract cannot sign a deal outside this period. So a rider out of contract can join in January. But if say you are Leif Hoste with a valid contract with Katusha to the end of 2012 then from tomorrow onwards you cannot sign a new deal until the window opens again in August 2012. Or the Geox riders today have contracts running out on 31 December. Technically they cannot sign deals until their contract expires but I hope the UCI waves this rule.

    Away from the technical interpretation of the rules, there is the more important practical side. All the other teams know about the window and have fixed their rosters and budgets accordingly. Few squads have the room to take on any riders, those that do just might not have the money if they wanted. If the team does go down, many riders will be unemployed and most of the staff too.

  6. Maybe there’ll be a sudden spate of ‘serious back problems’ in other teams, to make way for some of the top [ex] Geox riders such as Menchov and Cobo. *shrug*

  7. @Inner Ring: if I’m not mistaken, due to the fact that Geox-TMC failed the October 1st deadline, all riders are free to go elsewhere. I cannot remember that someone used this rule last year, but this is the rule. Same applies to Movistar and Garmin.

  8. Watch TV in Italy and you’ll know about Vettel and Geox. Until I saw the spots I didn’t know about it but let’s face facts — F1 (boring as it usually is but this last race had me staying tuned in ’till the end) draws much more interest than cycling. Why ANYONE would sponsor Gianetti’s team is beyond me…the guy almost kills himself with PFC or whatever it was, then registers the team in the doping capital of cycling (no, not Luxembourg) and hires the little pharmacist and the flying trullo who get nabbed with CERA. He then hires Russian/Spaniard Menchov who doesn’t inspire much, even when he “wins” the Giro. So now a guy comes from sort of nowhere and “wins” the Vuelta. Doesn’t GEOX own Diadora who supplies shoes to Cadel Evans? Now THERE’S a guy ya wanna sponsor….maybe that’s why this is going on now? Who wouldn’t want to ditch the dope squad and instead hitch their PR wagon to Cadel and BMC?

  9. I suppose 1 million dollar is not the problem – but 25% of the operating budget. As I read the UCI rule we are talking 3-4 million dollar.

  10. This is pathetic… And what about Cobo and his agent – how could they not see this coming? All those offers on the table after winning the Vuelta and now he is in no-mans land? Surely this cannot be a surprise to insiders.

  11. It feels like things have been handled badly. Not by the sponsor, but by Bike Live SA, the holding company behind the team. It would be interesting to find out what promises were made to the sponsor and you can almost guarantee that Geox will not disclose this. Why should they? At the end of the day it’s their money and they need to see a return on it. Right now all of this is negative publicity for their company and brand so will be putting limitations on what goes out into the media. Bike Live SA have a lot to answer for in my opinion!

  12. This sucks for the riders. Now I don’t feel so bad that I bought a bootleg version of their kit. Duarte has gotten screwed in Europe. I wonder if he gets picked up or goes back to Colombia. Menchov could have been a contender in TDF 2012

  13. I am wondering: Is there any connection/relevance between Geox cancellation and the leaks about EUR 2,5 mil. being seized from Mr Menchov bank account in Swiss bank (linking him with Dr Ferrari and his questionable reputation)? I hope that Geox decision is based on their internal strategies and that there is no pending news about positive drug test at the Vuelta.

  14. Also hosed in all this – all the other team sponsors. If you’re a lower-level sponsor, for whom this team is a huge chunk of your marketing budget, what do you do now? What about all the materials you’ve developed around team sponsorship? GEOX has plenty of cash, but the little guys are going to get killed on this.

  15. Cobo should have no trouble finding a new team; if this was any other year I would say the same for Menchov and David de la Fuente…. Will be interesting to see who is lucky enough to find a new home.

  16. This issue of licences has been gone over time and again.

    JV makes a good point that the licence should be longer, but 10 years seems an ambit claim. Nonetheless a period of 3+ years would provide a brand stability for investment.

    It has been raised before, but the points system has to change to allow an accrual of points to the team. Otherwise there is no surety under which to invest in the future of the sport e.g. developing young prospects. However an increase in the term of licences would go some way to blunting the current points mercenaries.

    Stability and certainty are key, but not at the cost of dynamism. 12 months is not certainty but 10 years is institutionalism. Somewhere in between is better.

  17. I assume this question has been asked and answered before, but what’s wrong with a franchise system for the top-level teams, like American professional sports?

  18. I feel like a franchise system would tie teams to a geographical location more so than they are now. It would be like there were 18 Euskaltel’s… Not to mention the fact that this system would likely hurt the UCI’s crusade to “globalize” the sport.

  19. Jared, not necessarily. Think Formula One – though in F1’s case almost every team is based in the UK, regardless of their supposed national identity.

  20. Theoretically Geox’s riders are worth nothing now. Unless the UCI does something about it, which is unlikely.

    So Cobo’s Vuelta win is pretty much worthless as far as points go.

    I would be surprised if one of Felline, Menchov, DLF, Cobo, Ardila, Duarte and Valls didn’t get a ride somewhere though. The rest of the squad I don’t know much about/can’t see teams scrambling to them. Sad situation for the mechanics/support staff too.

  21. I find the sentence “it spends more on being the shoe sponsor of Formula 1 driver Sebastian Vettel than it does on the entire cycling team”, incredibly sad. One of the beauties of pro-cycling is the relative accessibility of pro-kit to fans, Formula 1 is merely brand awareness.

  22. @jarod I think geographical entities are probably a good thing. If you had 18 “franchises” or promotion and relegation and each team had some kind of continuity and identity seperate from their sponsor – Slipstream/Highroad/Basque sports foundation/Europecar’s Vendee tie in etc it would give teams a more secure base and structure. At the moment most of the big teams are just a guy with a bus looking for sponsors – a “vehicle” if you want. No assets (apart from the bus!), no support structure, no grassroots, no loyalty and if it goes down no-one really cares. Think instead about a football team going under…tears, city centre protest and lets pass the bucket around to try and save the club. The only team that is likely to get saved by a bucket being passed around for donations is Euskatel. Every year teams go bust and we all say “what a shame” and by Paris Nice next year we’ve forgotten about it and their kit already looks dated.

    I honestly see regional/national teams as being the future. Or better still “clubs” like La Pomme moving up through the ranks and getting a sponsor to become “Carrefour – La Pomme” or something and when the tour goes to Marseilles everyone is cheering for their guys. When the shit hits the fan and the sponsor goes they still have a soul beneath it all and perhaps the local government or a local company will come to the rescue….or the good cycling folk of Marseilles pass a bucket around and organise fundraisers. I see greenedge being tied into the national set up as waaaayyy better than last year’s pegasus shambles which was just some guy wanting to start a team.

  23. HTC started with money paid by Telekom, when they decided to stop sponsorship, no?
    Similarly Geox can be renamed Team Barefoot and run on Geox’s money. IF they really signed a sponsorship contract for 2 years.

  24. Rumours about GEOX have been rife since this time last year !

    How Cobo came to resign for GEOX with his Vuelta win remains a mystery , could his manager have been flying a ” kite ” hen he claimed “offers on the table”?

    Lets hope that ” Diadora and other brands ” get left on the shelf and CAS & UCI take action to compensate the staff let alone the racers who are likely to take minimum wage to stay with WT teams whilst awaiting 2013 contracts !

  25. @ jkeltgv and Robert, I agree – I was not saying it would be a bad thing, just that Mr. McQuaid and friends probably would not want the sport going that way…

Comments are closed.