We have been noticing this anecdotally for years, but literally, billions and billions of dollars continue to pour into sports with several more examples this week. The value of everything sports-related – athletes, teams, league sponsorships, NFTs, and particularly TV and media rights – is skyrocketing, particularly as concerns about COVID have started to wane.
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Versailles – Where is the money going
The world’s most valuable company – Apple – just made a $2.5 billion bet on Major League Soccer – to broadcast all of its games over the next ten years. The NHL announced that its revenues will be up to $5.2B this season, up more than 10% since the last full season in 2018-2019. Another Walton family member purchased another Denver sports franchise – this time Rob ponying up about 10% of his net worth, or $4.65 billion for the Broncos. Tom Brady and Michael Strahan just raised $50M for their Religion of Sports venture, seemingly effortlessly. CVC just invested $2.2 billion with the Spanish soccer La Liga, to share in TV rights. Springhill Productions was recently valued at $725M, elevating owner Lebron James into the billionaire category.
There seems to be no end to this sports investment frenzy. New private equity firms, like Dynasty and Arctos Sports, are springing up specifically to find, vet, and invest in sports properties. Indeed, private equity as a whole invested $51 billion in sports properties just last year, with the most highly valued or sought-after areas seeming to be television and media rights. In the meantime, where is pro cycling in all this flurry of investment? Pretty much nowhere. As we pointed out last week, none of the top ten global sports sponsors have any stake in cycling, and most commercially sponsored teams continue to worry about their longevity and sustainability. A minuscule sliver of these dollars could purchase the entire sport and totally transform it. We wish there were at least a few parties in the sport thinking about clever ways to tap into just some tiny share of these dollars – an investment which could go towards developing pro cycling and increasing its visibility and accessibility to a broader and younger swath of fans . The Outer Line will have some suggestions to make in this regard over the next few months.
UAE and Bahrain putting money in cycling
Simultaneously, we are also cautious as to the kind of investors cycling attracts in the future. As reported across the news media for the last month, the controversial Saudi Arabian-owned Liv Golf International Series has turned the sport upside down. Not only has the new Liv tour begun tournament play in competition with the PGA’s Open season, but cash guarantees and excessive payouts to entice PGA defections have stolen the spotlight away from the current coverage. The consensus view is that the Saudi Sovereign Fund is using golf to wash its historically deplorable human rights record. But this has not dissuaded golf stars like Phil Mickelson and Dustin Johnson from taking obscene appearance money – leading to suspension from future PGA participation. And not surprisingly, these stars’ answers to human rights questions about their tour sponsors were as well-coached as their professional game: misdirection to talk about the tournament play, rather than the power play behind the tournaments.
ASO and Tour de France dominance – Good or bad?
Pro cycling should be paying attention to how the LIV tour debacle plays out over the season. On one hand, sports investors argue that the LIV Tour is simply well-funded competition to the PGA’s virtual monopoly of golf’s elite game – disruptive, but not disingenuous or malevolent. The same general situation applies to pro cycling: ASO’s virtual monopoly, focused on maintaining the status quo of Tour de France dominance. At the same time, cycling is so underfunded, weakly-governed, and poorly organized, that there is also potential here for new investors to swoop in, buy or create new events, and implement a modern racing league. It seems inevitable that the LIV tour will succeed at some level, simply due to the cash involved, and those who are willing to take it. It is interesting to speculate what pro cycling might do if it reached a similar crossroads, where ASO was no longer the financial hub of the sport’s wheel.
Thomas – Winner of a covid hit Tour de Suisse
Ineos’ Geraint Thomas likely cemented his status as the team’s Tour de France GC leader when he sealed overall victory at the Tour de Suisse over the past weekend. While Thomas turned in an impressive performance, his win was overshadowed by the rapid spread of COVID during the week that completely decimated the field. Positive COVID tests forced about half of the event’s 153 starters, with the top two favorite teams for Tour de France victory – Jumbo-Visma, and UAE – having to pull out of the race altogether. This development significantly diminished the competitive quality of the race. More importantly, it left major question marks hanging over many teams’ roster decisions for the Tour de France. Despite the rapid spread of the virus at the race, teams and riders were surprisingly unconcerned about it, with unmasked riders co-mingling in the podium tents after the stages and regularly in close contact with the public and press. If stronger protocols aren’t put in place quickly, the continued spread of the virus could potentially play havoc with the season’s most anticipated race, now only two weeks away.
Thomas’ win at Suisse might have been the weekend’s main event due to the race’s classification as a WorldTour event, but we again saw a significant overlapping of races on the weekend. From Thursday to Sunday, cycling fans could also have watched the Tour of Slovenia, Baloise Belgium Tour, and the Route d’Occitanie, all arguably featuring bigger names and talent than Suisse. Having four stage races, each with top-class riders – Pogacar and Mohoric in Slovenia, Thomas and Evenepoel in Switzerland, Pedersen and Wellens in Belgium, and Quintana and Valverde in France – all running at roughly the same time made it impossible for even the most dedicated fans to stay abreast. Indeed, the TdS was outshone not only in terms of start list quality, but also in television visibility, since Eurosport only had digital rights for the Tour of Switzerland; the smaller races were more visible and had a much wider reach than the actual top event in road cycling this weekend. More importantly, it once again created the senseless situation where the sport’s best riders rarely seem to actually face off against one another. This mess of overlapping races and diffusion of top talent has already hit a tipping point for one event, with the popular Benelux Tour canceling its event for 2022, reportedly due to overcrowding in the calendar. This kind of overlap makes it difficult to promote cycling as a global sport, and again underlines the need to revisit the UCI’s race rating system.
Dauphiné, Suisse, Belgium Tour and Slovenia all at the same time
Even with its recent TV distribution and start list troubles, the Tour of Switzerland is an interesting case study to examine; its organization and distribution are a bit different than most of the other top UCI races. At one time it was considered the fourth most prestigious grand tour on the planet, and it represented a major decision/conflict for riders planning their Tour de France preparation – to race the Tour de Suisse (TdS) or the Giro to gain top form. In the 1980s, the Swiss tour ran for almost two weeks, and tackled some of the highest mountain passes in Europe. However, disruption from the Tour du Pont in the 1990s, and shifting focus to pre-Tour French races like the Dauphine to curry favor with ASO deprioritized it in ensuing years. Despite all this, the TdS has been sustainable and successful through the years, retaining a WorldTour designation even though the Dauphine steals much of the attention and prestige in June (it ends on the day the Suisse tour starts, thus limiting teams’ participant options) . One reason for its continued success is undoubtedly that Switzerland is the UCI’s home country, and despite competition from the Dauphine, it maintains an enviable UCI calendar slot. Probably more important is the fact that its race organization is entirely separate from the traditional and ongoing competition between ASO and RCS to dominate cycling events; the organizer’s primary focus is on the development and success of the event in Switzerland. Finally, its international media rights are managed by the aggressive Infront Sports & Media portfolio, a unit of the Chinese Wanda Sports group, which is already marketing a group of top UCI races and which is also a founding partner in the race organization company. So, while it may not have the prestige that it did forty years ago, its unique approach imbues it with a stability from which other organizers might learn.
The Outer Line
Steve Maxwell / Joe Harris / Spencer Martin
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