La Française des Jeux, the French lottery and gambling company, has launched a takeover of Kindred, a Swedish gambling company. No, you haven’t opened the Financial Times or Bloomberg, there’s a cycling story here. La Française des Jeux is FDJ, co-owner of the Groupama-FDJ team while Kindred is better known to many as the bookmaker Unibet, title sponsor of TDT-Unibet, the Dutch team. Only cycling’s rules don’t allow one company to own two teams so this spells trouble for one of them.
As we’ll see there can be ways around it but while their sponsors try to merge, it’s down to both team managers to resolve, separately of course.
The rules bit
Pro cycling doesn’t allow one company owning or sponsoring two teams, the idea being that if two squads were under the same roof or funded from the same pot then they’d be de facto team mates. Here’s the rule:
2.15.052 The members of a UCI WorldTeam may have no link with the members of another UCI WorldTeam, with a UCI ProTeam or with an organiser of a UCI WorldTour event likely to influence the sporting course of events or to be perceived as so doing. In exceptional cases, which do not challenge the integrity of the competition or the sporting fairness, the UCI Management Committee may grant an exception.
As you can see it applies to WorldTeams and ProTeams alike, the labels for the top two tiers in the sport. Why this rule? The risk is the owner might get the teams to collude, it could be in a race or in the transfer market. If none of this happens then as the rule says even the perception of this can be sufficient to stop one person or company having two teams.
Teams share bike sponsors like Specialized and Wilier or Shimano and so on. But these companies do not own or control the teams. Under the UCI rules the jargon used is “paying agent” as in the person or legal entity behind the team and this can’t be the same for two teams. Similarly the rules refer to the “principal partners”, think title sponsors, the kind of backers that keep the team on the road.
Long way to go
There’s another rule (2.15.063) that both sides have to notify the UCI within ten days of a change but we’re not there yet, so far FDJ has said it wants to buy Kindred and launched a takeover offer. If it goes ahead it’ll take months before FDJ legally takes ownership; in the mean time Kindred shareholders might reject the offer or another company will make a higher offer with the side effect of making this blog post redundant. Still the central scenario for pro cycling is a merger between sponsors so we’ll explore this a bit more.
The alternative case study
Two teams with the same owner? Having just said it’s not allowed. Loyal readers may remember reading that Cofidis and Arkéa are both part of Crédit Mutuel, a French banking group. But this is probably the exception that proves the rule because Crédit Mutuel is a complicated organisation, trying to draw the corporate organigram would be a headache and as Wikipeida puts it “Crédit Mutuel group has a decentralized structure, despite being designated as a single significant institution under European Banking Supervision”. It’s more like several different banks Arkéa being a brand of one of these and Cofidis belonging to another.
Unibet and FDJ could find a way to be independent of each other but it’s not easy. FDJ’s Présidente directrice générale is Stéphane Pallez and she regularly appears with the Groupama-FDJ team (and the FDJ-Suez women’s team too) and she could soon be the boss of Unibet too. It would have to be demonstrated that Unibet was independent of FDJ to satisfy the UCI, in simple terms that Pallez wasn’t in charge or had sway over the newly-acquired Swedish asset. This sounds unlikely, why set up a convoluted corporate structure just to ensure their cycling teams are separate?
Which brings the bigger risk, one outside of the UCI rulebook. The enlarged company will look at its marketing budget and think “we’re sponsoring one cycling team, that’s plenty”.
None of this is written in an alarmist tone but the merger of two companies each sponsoring a cycling team goes from a “what if” theory to a practical example now. One company can’t be the title sponsor for two teams so a likely outcome is only one team will be left, it depends on the corporate deal and the UCI review later this year, little will change this season. But as we know you can’t really merge two cycling teams. There might be a way for both teams each to exist alongside each other but if the deal goes through you’d imagine the established, directly-owned Groupama-FDJ franchise stays and TDT-Unibet is left looking for another sponsor at the end of the year. We’ll see what the outcome is but that’s probably the one to bet on, or at least insure against.