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Making A Hash Of It

The Qhubeka-Nexthash team is gone but the demise left a lot of questions, particularly what happened with Nexthash, the title sponsor unveiled with a five year deal… which didn’t last five months.

The sponsorship deal was announced at 3.00pm on 24 June 2021, two days before the Tour de France started. Right then your blogger was done with a recon of Stage 7 of the Tour de France and the Signal d’Uchon and riding over to visit Le Guidon, literally “the handlebar” and where, in some sense of mystical determinism or just randomness, Bernard Thévenet was born. There wasn’t much going on in Le Guidon but the roadside stop meant a chance to check email and twitter to see what the pre-Tour de France news was and there was the new Qhubeka Nexthash deal. Nexthash?

Standing by a field of charolais cows, and with a weak 3G signal, a quick search of company filings revealed a small company with little cash and few assets, plus a news story about an investment in a UK online skills company in mid-2019 that saw the company collapse just months later. Here’s Google:

You could find this at your fingertips so it wasn’t the cowbells of the charolais that rang out, it was the alarm bells for this deal. Still, the crypto world is both weird and awash with money, a bull market in more ways than one. Just prior Coinbase, an online exchange for cryptocurrencies, had its IPO and saw the company valued at $85 billion, which, if it were a bank would put it in among the top-20 banks in the world. These companies have been spending big on advertising to attract new punters. Perhaps Nexthash had new funding that no roadside search of retrospective accounts could show and now it needed to go big on marketing? Still asking on Twitter and nobody, even crypto bros, had heard of Nexthash. There’s lots of money and buzz in the sector but Nexthash had no presence.

Now a piece on CyclingTips fills in some of the missing info. The story of North Korean hackers is wild but par for the course in an unregulated sector full of wasted wallets and missing apes. What’s striking is team owner Douglas Ryder saying a “reputable sports marketing agency” brokered the sponsorship. This wasn’t a last throw of the dice, or the branding equivalent of putting on a face. But this brings us back to both the agency and the team’s owners not being able to spot that Nexthash had next to no backing, assets or cash and so probably shouldn’t be the title partner of a sports team. Perhaps the reputable agency involved banked a finders fee and didn’t hold out for the long term? If so that’s not very reputable.

To prevent teams from signing up with questionable sponsors the UCI could audit teams announcing new sponsors mid-season. The same accountants used to evaluate a team’s licence over the off-season could review if a new sponsor is strong enough to support the team; something that could have been useful during the Manuela Fundación fiasco. But if they’d said “no” to Nexthash, what would have changed? Arguably the team would have ended anyway, and without the initial cash payment from Nexthash, the one it did meet and riders would have signed elsewhere faster leaving less of a team for any remaining sponsor search to appeal to. And the squad could have found it even harder to meet wage bills until the end of the season. But a UCI sense check could have warned riders and staff, who instead read about the five year deal. And the World Tour as a whole might look better with teams that have safeguards against dodgy sponsors, because we’ve been before several times over the years and it’s not a good look for the sport. Also staying with the UCI angle, Assos could have stayed as rules allow for several naming partners so it could still have been Qhubeka-Assos-Nexthash (although the more names you have, the more you’ll see people just say or type “Qhubeka”).

This won’t be the last sports team to be taken in by the allure of a dodgy sponsorship deal, for any con you need both the perpetuator but crucially, a victim willing to suspend belief. For all the unsuitability of Nexthash, the team’s demise began much earlier and it was in a fragile position with few options left by the time Nexthash appeared.

Rewind and landing Dimension Data as a title sponsor for 2016 was a coup and allowed the team to climb in to the World Tour. Later Japanese firm NTT bought Dimension Data and the software company was duly rebranded as NTT… but oddly the cycling team stayed as Dimension Data which was suggested the cycling team wasn’t central to the new owner’s marketing mix. It did become NTT but come late 2020 the sponsorship ended and the team was in danger of not having a licence for 2021. Then Assos came in with a late save and it started 2021 as a nice team with an underdog vibe that had made “moneyball” signings, 17 riders were recruited. Starting 2021 was a minor miracle.

The team also traded on its African identity – legally it was actually Dutch – which was noble, a new pathway. But the unseen side was the bureaucracy of work permits and residency. It was great to see Eritrean and Ethiopian riders hired, only harder to spot them racing. In blunt teams hiring African riders was riskier than hiring, say, Europeans, an unfair rod for the team’s back.

Another loose end is the UCI World Team licence. We know several teams are desperate to win one, or retain theirs. And When the CCC team stopped the Wanty-Gobert team bought the licence. But nobody bought the Qhubeka licence, why? Because if a team had bought it, they’d buy the points scored during 2021 with it and the team finished 20th with only 4,368 points, Arkéa-Samsic had 5,000 points. So from this we can see the value in a World Tour licence is really based on the points that come with it, not necessarily the licence itself if there’s only one year remaining.

Although many staff will be left without work, most riders have found work, Simon Clarke’s just signed with Israel, which is good but remember many won’t have been in a great negotiating position so the demise of their old team could be costing them this year and beyond. There’s still the unresolved case of Domenico Pozzovivo’s contract. In the past when a team has stopped and riders held valid contracts for the next season then the old team has (part-) funded the rider at a new team, but the Italian’s stuck as other teams are full.

Lastly, there’s still a Conti team left with the Qhubeka name and it’s been a strong performer on the Italian U23 scene, this continues and can act as a bridge for African riders wanting to race in Europe.

 

Comments on this entry are closed.

  • Larry T Wednesday, 19 January 2022, 4:50 pm

    “Still, the crypto world is both weird and awash with money, a bull market in more ways than one.” Great line!!!:-) IMHO the crypto world seems to be good only for spending “money” in nefarious ways and/or scamming other people out of their real money.
    But scams are not limited to fake-money, I assume you remember this one: https://www.cyclingnews.com/news/ferretti-falls-flat-no-sony-ericsson-squad-for-2006/
    But do we really want the UCI to be vetting these things? I’d say they should require some sort of extra bank guarantee (as in real money) from a sponsor coming in AFTER all the usual team paperwork has been submitted, audited and OK’d for the year, but tasking them with trying to tell real companies from fake ones seems far out of their range of competence.

    • The Inner Ring Wednesday, 19 January 2022, 9:35 pm

      The UCI does a good job with the licence review process… but it’s outsourced. There’s a big accounting company to review the documents and the licence commission has some heavyweights on it, think the Swiss version of retired surpreme court judges. So they could review a new sponsor mid-season and come to a useful view.

      • Larry T Thursday, 20 January 2022, 8:32 am

        “So they could review a new sponsor mid-season and come to a useful view.” but I fear it wouldn’t happen quickly enough, unlike a standard license review, especially with these scam artists who profit from rushing things to avoid serious scrutiny. I can imagine it now, “You gotta let my crypto-crooks sponsor in right now! Otherwise my team is in jeopardy and my riders won’t get paid! Hurry up!” UCI could say, “OK, as soon as we get a bank guarantee from them for X euros, they’re in. But if they fail our outsourced licensing review later, they don’t get their money back.” A real company interested in the sport should have no problem with that, right?

      • DaveRides Thursday, 20 January 2022, 1:01 pm

        Surely the big issue here is that the licence renewal process in late 2020 did not pick up that Ryder did not have enough funding to make it to the end of the 2021 season.

        If it had been done correctly, the team should never have been allowed to start the 2021 season.

        • The Inner Ring Thursday, 20 January 2022, 1:36 pm

          They did, at the time the UCI announced the first round of licences, NTT was left out as presumably the UCI couldn’t see where the funding was coming from, the team was facing the end of the road. But Assos came in and saved things, I think as late as December 2020.

          • DaveRides Thursday, 20 January 2022, 9:28 pm

            That is the issue – when Assos increased their input it looks like the Licence Commission just accepted Ryder’s word that it would get the team through 2021, when they should have scrutinised a revised application properly and rejected it a second time.

          • CA Saturday, 22 January 2022, 2:18 pm

            Assos likely had to secure an LC to cover extra salary costs.

            That would have satisfied any review process. And it got them through thia year didn’t it? So the review process worked.

            Plus, don’t forget what the result would be if the UCI reviewed teams too stringently. How many teams would we lose? All Continental, most Pro Conti, and how many WT teams? And on the women’s side we would lose many teams. The peloton would be very thin. This isn’t a commercial sport where another team would rise up to replace the fallen team. A lot of riders would be forced into retirement.

            The review process did its job and this year Qhubeka is back to its roots, not the worst outcome. I suspect we will see more of them one day.

  • KevinK Wednesday, 19 January 2022, 8:57 pm

    Typos: “head” should be “heard” and this end of the sentence is missing in”Still asking on Twitter and nobody, even crypto bros, had head of Nexthash. There’s lots of money and buzz in the sector but Nexthash had”

    Nice article to go with the Cyclingtips article. I was especially glad to have the question answered about why no one bought the UCI license. I suppose TotalEnergies could have bought it, I think that points total is about where they are now, so it would only be for a single year, but it would allow them to get into any races they want. With Sagan’s signing, they’ll get invites they probably wouldn’t have anyway, but I’m not sure they’d get invites to the Giro of Vuelta, for example (assuming they’d want that).

    Can Pozzovivo ride for the Qhubeka Conti team just to keep himself out there?

    • The Inner Ring Wednesday, 19 January 2022, 9:39 pm

      Pozzovivo could be a good example but the Conti team is largely an U23 squad so he’d not be able to accompany the riders in a lot of races.

      As for Total, I’m not sure they could ride all three grand tours anyway. They’re a lot stronger this year obviously but only so much. The team’s one to watch, is this the start of a project or a last hurrah for squad that’s been slowly running out of road, its once legendary development squad has practically dried up etc.

  • brent sword Wednesday, 19 January 2022, 9:46 pm

    This sort of scam sponsor thing has happened many times in formula 1 and thats a sport you would have expected to have heaps of money and smart people to think about sponsors.
    There was even a “Nigerian Prince”.
    In Australia we had an obviously scam product “firepower fuel pills” manage for several years promote themselves and sponsor several different type of sports teams.

    The truth is some scammers see team owners and sports fans as easy targets. Helped in part due to in inadequacy of journalists.

    • Ecky Thump Thursday, 20 January 2022, 10:56 am

      It happens in all walks of life unfortunately; romance, finance, sports, pensions etc.
      I’m not sure that you can pin blame on journalists?
      More that a common thread is the lack of / inadequacy of laws and police action in the countries where the scams often proliferate.
      I wonder how much Nexthash’s initial cash (?) injection was?
      Were Nexthash schmoozing at the Tour de France Inr Rng?

      • The Inner Ring Thursday, 20 January 2022, 11:08 am

        Outwardly it looks like the team were in trouble so they “didn’t look the gift horse in the mouth” but to the point of bumping Assos off the name etc, a messy situation given the Swiss firm had saved them months before. No info on the payment or more, or any networking but apparently there will be more on cyclingtips soon, the Ryder interview with more details.

      • brent sword Friday, 21 January 2022, 5:29 am

        I did mean helped in part not fully blamed on journalists. And not this particular case in question. I am to far removed from Europe to know who other than inrng may have questioned them.

        But in other cases like “firepower” which had a clearly fraudulent (scientifically inplausible) product which existed for years without any scrutiny from mainstream media. Any half hearted effort could have prevented it from destroying many lives and other peoples money.

        “At its height, Firepower was one of Australia’s biggest sporting sponsors. Under the company’s mounting debts, commitments were reneged upon, leaving sporting teams struggling with financial pressures. The Sydney Kings, an Australian basketball franchise part-owned by Tim Johnston, ceased to exist because of the collapse of Firepower.”

    • The Inner Ring Thursday, 20 January 2022, 11:09 am

      Note this time several journalists were ringing the alarm bell about Nexthash… and this blog too.

      • Eskerrik Asko Thursday, 20 January 2022, 11:53 am

        Maybe someone should have heard tiny bells ringing a year ago? A sports agency “expecting to generate as much as €45m in sponsorship revenue” in three years is perhaps a tad too keen to promise something that it might not be able to deliver? It certainly looks *now* that the seeds of the debacle were sown there and then.
        https://www.independent.ie/business/irish/sport-endorse-in-45m-african-cycle-deal-39946471.html

        • The Inner Ring Thursday, 20 January 2022, 1:26 pm

          I saw that and it reads like one of those PR claims which get made because they can’t say otherwise, eg “we don’t think we can raise much as we’ve not landed any cycling team sponsorship deals at this level before, but we’ll try” wouldn’t sound very promising. The agency isn’t very famous but Ryder’s also said he was working with several so it’s not certain they were the ones who made the Nexthash deal.

  • plurien Thursday, 20 January 2022, 11:36 am

    It would be madness for the UCI to sit as judge on the probity or substance of all sponsors beyond the immediate requirement for a bond of security at Team level. We can all think of massive corporations that failed or only just scraped by. The operation that later became Sky very nearly bankrupted Murdoch, for instance. Face it, there are many companies that like sports sponsorship which are heavily reliant on marketing spend and we know it’s hard to predict what consumers- no matter how brand aware – actually choose to spend their money on. This makes the business side of procycling inherently unpredictable. There are not many Uncle Jim of Ineos characters around, so high risk/fast money is the rule.
    The UCI would be better respected if it put the riders first and devised a means by which they could be saved when the inevitable fallout from chancer team owners Vs dodgy sponsors occurs. Sure, there’s the bond to pay wages but that’s widely discounted as teams run down, so they know to stop paying wages early.
    It’s tough on Pozzovivo when he’d come back from bad injury, but I can’t think how the UCI could help him right now.

    • Larry T Thursday, 20 January 2022, 1:21 pm

      “Sure, there’s the bond to pay wages but that’s widely discounted as teams run down, so they know to stop paying wages early.” That kind of abuse should be stopped. Perhaps some of the bond money should go towards an insurance policy of some kind? Those guys would do some serious diligence before underwriting the risk, no? As to Pozzovivo, he should take the hint and call it a career.

    • The Inner Ring Thursday, 20 January 2022, 1:29 pm

      The UCI does just this, but every off-season. Contracts are checked, teams have to post wage guarantees etc, it’s precisely to protect the team from sponsors who can’t fund a team properly. Some kind of check – “their accounts look empty, Doug” – could have led Ryder to go back and ask where the money was really coming from and budget/plan accordingly. It’s only an admin task, doesn’t fundamentally change things though.

      • DJW Thursday, 20 January 2022, 1:41 pm

        With Ryder/Nexthash or earlier with Greenedge/Manuela Fondacion, when the owner is desperate for a miracle they probably don’t want to ask the difficult question which will confirm that miracles don’t exist. At least Gerry Ryan could and was prepared to provide the safety net himself. Ryder couldn’t.

        • Cinjet Thursday, 20 January 2022, 3:12 pm

          Very true, teams are in a difficult position when looking for a sponsor and it’s difficult to be dilligent. Remember Belkin? Became sponsor of Blanco for next to nothing (big part of the team was already funded by Rabobank), got plenty of publicity (Tour of Bau and Lau) and then bailed when they couldn’t be in the cheap seats anymore.

  • MellowVelo Thursday, 20 January 2022, 11:41 am

    I’m impressed, as always, with your dedication – but surely if you could discover this information on a mobile in the middle of pastureland, it might not be too hard for the team management? I suspect it is very hard to turn down any offer when you are desperate, but ultimately it has to be the recipients’ responsibility, at least partially. I seem to remember being flamed on here for suggesting that the shoe shop were unlikely to stay the course.

    There’s another problem here, in that I could foresee trouble for any licensing body effectively cancelling an African linked team, for whatever reason. When you add in that some people would like to cancel ISUN for political reasons, similarly the Gulf based teams , and the extractors……ultimately the market is the only way to decide.

  • gabriele Thursday, 20 January 2022, 3:24 pm

    OT I’d have posted this in the Pa-Ni route blog entry, but comments are already closed. Today the Tirreno-Adriatico route was presented. Not great vibes, although the double ascent to Monte Carpegna with a thrilling downhill finish after a 200+ km long day has the potential to be a little gem of a stage.
    Just incredible that, having moved the last two stages to weekend, they decided to have a flattish stage for sprinters on Sunday, as if it was a GT (and in GTs, too, finishing the race with a sprint stage has a hugely negative impact on audience; even at the TdF, sometimes, where the Champs Élysées tradition is obviously a must and a fine stage in itself – imagine elsewhere. Imagine in a week-long race! Absolute nonsense). It would have been great, with such a distribution of racing days through the week, to “copy” (for once) the Pa-Ni and have a hilly day open to desperate attacks or creative solutions on the very last stage. Even the classic ITT would have been acceptable, given that the only moment when ITTs score decent TV results is usually on Sundays, even more so when they’re the last day. This is just absurd, I can only guess that it depended on last minute changes (as I know for certain it was the case for other stages, this year).
    I’ll leave it here, given that this is OT, as I said, but after a decade when Ti-Ad was clearly dominant over Pa-Ni in terms of course, startlist and racing quality, I think we’re about to see how the wind turns a different direction. What keeps me even more worried is that it looks a trend through several RCS race (quite similar feeelings for the Giro, too).

    • The Inner Ring Thursday, 20 January 2022, 4:20 pm

      It’d be nice to leave comments open so people can drop by to update or ask a question in the light of new events etc (or point out a missed typo, always welcome). But comments get closed automatically as bots try to post spam comments, and to leave thousands of blog articles open means tens of thousands of fake comments attempts stuck in the spam filter, bandwidth drained etc. This blog’s had 143,000 real comments over the years… and close to 1.2 million attempts to post spam about Russian brides, erectile cures, cheap opiates, paid URL placement etc, presumably it’d be double if comments left open for just another week.

      As for T-A, I hope we can enjoy both races almost at the same time, you can flip from one to the other thanks to different finish times usually. Nice to see Carpegna. But agree on the last stage, less likely to zap backwards and forwards. When I heard it would finish on the Sunday I thought it would be a chance to spice things up, especially given the potential for a prime time audience and the terrain with all the walls. So good to get rid of the San Benedetto del Tronto time trial (flat, short, nice for specialists but few upsets/drama: an epilogue)… but didn’t think they’d replace it with a flat circuit race for the sprinters.

      We’ll see for RCS although stories of Vegni’s replacement with Davide Cassani – an Adriatic local – seem quieter now Cassani’s linked to the project of a new Italian pro team.

    • Larry T Thursday, 20 January 2022, 5:38 pm

      “I’ll leave it here, given that this is OT, as I said, but after a decade when Ti-Ad was clearly dominant over Pa-Ni in terms of course, startlist and racing quality, I think we’re about to see how the wind turns a different direction. What keeps me even more worried is that it looks a trend through several RCS race (quite similar feeelings for the Giro, too).”
      I’ll leave this here too, maybe Mr. Inrng will devote a post to T-A 2022 where I can ask, “OK, what would YOU have done for a course?”

      • The Inner Ring Thursday, 20 January 2022, 6:11 pm

        Ok, since you ask… a short TTT opener but on a technical course, to test teams and make it hard even for a squad full of millionaires. Why not have a little sterrato midweek? Also a TT midweek with a feature on it like a sharp climb. Then a box office weekend, a ski resort summit finish on the final Saturday followed by a hilly “muri” stage in the Marche etc on the Sunday that pits the GC contenders and classics guys together, a Pogačar-Van der Poel day that ends with the riders going through medieval city gates and duelling up some stone-paved lane into the centro storico.

        Now, all easier said than done of course, obvious but worth repeating as the race crosses regions, provinces etc and you can’t just draw it on the map and make it happen, good luck closing a ski resort in March on a Saturday too. But you asked, so there it is.

        • Larry T Friday, 21 January 2022, 8:46 am

          Not bad, though I think your course is a bit formulaic and since T-A comes right after Strade Bianche wouldn’t a sterrata stage be kind of redundant? Both TTT and TT, so two chrono stages out of seven? And don’t forget it’s kinda/sorta a lead-up to when “the real season starts” Milano-Sanremo, so IMHO should have something for the fast-men, rather than a dress-rehearsal for the Giro months later. They already have one of those, I think it’s called the Tour of the Alpes these days?

          • plurien Friday, 21 January 2022, 11:08 am

            What could any organiser at any time do to make a better final stage than last year’s P-N?
            Maybe RCS took five seconds to think about any kind of stage apart from a sprint finish, but I doubt it.

          • Larry T Friday, 21 January 2022, 4:03 pm

            Plurien – Yeah, sure. Arrange for Roglic to collapse again. I’m sure the P-N organizers saw that coming when they mapped out the race course.
            IMHO a sprint finish in race leading up to MSR and on a holiday weekend will have a tough time being less interesting than a chrono stage along the coast as has been usual for recent editions of T-A. And it’s not like they’ve never done it before, Daniele Bennati was talking recently about a finale like this during his career.