2011 UCI Financial Accounts

It’s that time of year when the UCI publishes its accounts for the past year after approval at the UCI’s annual congress. Now we can see what happened during 2011 and if accounting is boring, often the money isn’t.

Here’s a quick take but we will probably need to re-read the full report a few times to understand the finances in full.

The UCI accounts use the following exchange rate 1 Swiss Franc (CHF) = €0.824 = US$1.07 for its accounts meaning you can swap Swiss francs for US dollars for a quick calculation

Income Statement
Going through the main UCI accounts here are some of the items that stand out:

• Revenue from the world championships remains the UCI’s biggest source of revenue. In 2011 it earned 10.9 million francs in revenue from the worlds, across all disciplines. This accounts for some 40% of the UCI’s total income

• The worlds are highly profitable for the UCI as they cost CHF2.3 million francs implying a gross profit of CHF8.6 million although 2011 was not as lucrative as planned, the Copenhagen worlds resulted in a “shortfall” says finance director Alain Siegrist
• Of the CHF10.8 million in income from the worlds, 36% comes from “fees”, ie charging the host organisers, 36% comes from TV rights and the remaining 28% comes from sponsorship and other income
• World Cup events, whether the World Tour or other events like the MTB world cup generate CHF3.9 million but cost CHF3.6 million, a more slender margin
• The second biggest source of income is “affiliations, calendars and licences” which includes national federations, pro teams, races and more and accounts for CHF7.5 million
• Whenever you see the UCI praising the success of the Olympics remember the governing body depends on the International Olympic Committee for funding. In 2011 in collected CHF 3.0 million as part of a settlement from the 2008 Beijing games
• Riders and teams seem to have been better behaved in 2011 as income from disciplinary and anti-doping fines fell 16% from CHF654,000 francs to CHF546,000 francs
• The total wage bill for the 64 employees in Aigle was CHF6.7 million up a little from the previous year
• The UCI reported a net surplus of CHF235,000, up from the previous year. Note this is “surplus” and not profit as the UCI is an “association with economic goal” under Swiss law and enjoys generous tax perks for itself and its staff so long as it remains a not-for-profit association

Pro Tour Reserve Fund
This is the fund of money controlled by the UCI but nominally managed by a committee called the Professional Cycling Council which includes some UCI-staff. This is the fund that collects money from teams when they buy a UCI Pro Team licence or when a race organiser pays money to the UCI.

• 2011 looks to have been a leaner year with falling income for the fund and rising expenses although the fund still generated a surplus
• Expenses have grown significantly. Last year I wrote that the 2010 expenses looked high and thought this could be due to high set up costs for the the Pro/World Tour. But no, the 2011 costs are even higher with rising management and legal costs only mitigated in part by a chunky fall in the marketing and PR spend
• Unlike 2010 when French one day race the GP de Plouay received some cash there was no payment out to support an endangered race in 2011. Next year’s edition should show how much – if any – money was used to keep the Tour of the Basque country afloat
• The UCI siphoned off another €136,000 to fund GCP, its race promotion arm meaning that it has taken a total of €758,000 out of the UCI Pro Tour Reserve Fund in three straight years
• The outflows to GCP are believed to be a loan going by quotes in the media but this is not stated in the accounts. If it was a loan it would be an asset owned by the UCI but I can’t see it. Sometimes transactions with related companies like this are declared under some kind of “related party” disclosure but again this isn’t visible

Cycling Anti Doping Foundation
You can guess what this body does. It is funded by the teams, race organisers, riders and the UCI. Here’s the breakdown of the funding:

• As the diagram makes clear, it is the teams that put in about two thirds of the funding for anti-doping. The UCI puts some money in and has also made “extraordinary” contributions to top up the fund and bring it back into equilibrium
• Elsewhere in the annual report we learn the UCI conducted 375 in-competition urine tests and 28 blood tests, 38 pre-competition blood tests and 178 urine tests and 178 out of competition urine tests and 132 blood tests. This is across all disciplines

World Cycling Centre
This is the UCI headquarters with its velodrome, restaurant and more. Set up as a separate entity, it loses money but modestly.

Global Cycling Slowmotions
For the first time we get a summary set of accounts for Global Cycling Promotions, the events company created by the UCI to organise races. It is now linked to the ill-fated Tour of Hangzhou but in 2011 only the Tour of Beijing counted.

• In 2011 it collected an impressive CHF 3.0 million in revenue for one single race, the Tour of Beijing. But the Chinese race had equally impressive expenses of CHF2.8 million. For comparison the Tour de Romandie in the UCI’s Swiss backyard has an annual budget of about CHF4 million francs
• The reported surplus of CHF256,000 is offset by personell and other general costs of CHF427,000
• Therefore despite being created to earn money for the UCI, GCP is losing money. It reported a modest loss of CHF10,000
• But without the CHF165,000 (€136,000) injection this loss would have been, by arithmetic extension, a loss of CHF175,000 in 2011 which would have wiped out most of the equity in GCP
• The numbers are for nine months only, from 28 March 2011 – 31 December so it is possible personnel costs, eg monthly salary payments
• GCP is 100% owned by the UCI

We will have to see what the impact of the cancellation of the Tour of Hangzhou is but it is legitimate to fear yet more losses.

Conclusion
A quick look upon publication shows slightly stronger results for the UCI in 2011, building on 2010 which was also mildly profitable. But we probably need to go over the accounts with a finer comb to double-check some of the items because as fellow blogger FMK explained last year, things aren’t always as they seem with the UCI accounts.

GCP remains a big concern. Events like the Tour of Beijing mean more money flowing into the UCI coffers but the business was still draining money from the Pro Tour Reserve fund for a third year in a row; if it wasn’t for the soft funding from the Pro Tour, GCP would be in a perilous state. GCP is only in balance after taking money from the teams who, if given a vote, probably would not vote for this.

The outlook for the UCI looks better especially as the settlement from the 2012 London Olympics should provide even greater income. Also because the UCI’s bio-passport is now an established anti-doping tool thanks to case law, and thus not a potential legal liability that it was feared a few years ago. Another risk has diminished now that the Swiss have pegged their franc to the Euro meaning less exchange rate hassle for now. But economic woes remain a risk for the sport and shrinking TV contracts, vanishing races and struggling pro teams can all cut revenue for the UCI.

The UCI accounts use the following exchange rate 1 Swiss Franc = €0.824 = US$1.07 for its accounts meaning you can swap Swiss francs for US dollars for a quick calculation