Garmin Director navigates route to pro cycling’s sustainability and growth

Jonathan Vaughters’ article provides a clear and sustainable business model for professional cycling. Although The Geox Paradox, published almost one year ago, foreshadows Geox’s exit from professional cycling, Vaughters’ solution provides an achievable roadmap for professional road cycling to navigate difficult times.  The foundation of the Garmin-Cervelo Director’s business model is: Sustainability, Accountability, Flexibility and Partnership.

Sustainability: Recent sponsor defections clearly illustrate the need for long term contracts between events, teams and, ultimately, sponsors. Vaughters proposes the UCI contractually guarantee teams participation in major events for 10 years. The evaluation criteria would be based on history (not “what have you done for me lately?”), performance and ethics. Today, teams and sponsors are faced with a few options to combat the year-to-year cycle (each with their own consequence): win, win at all costs or stack rosters with riders carrying the most points. One could argue longer term contracts and guaranteed entry would help companies, wealthy benefactors and sponsors avoid the “immediate results today” mentality, and could shift focus to cycling sponsorship’s positive impact on business objectives.

Accountability: If all parties are held to specific ethics and standards, contractually, there could be a decrease in sponsor defections. Drugs, cheating and unethical behavior are obvious. Two areas worthy of exploration are sponsor expectations and measurable results. Why? If a sponsor is guaranteed their team will compete in the Tour De France and they don’t the sponsorship contract is voided. Another option worthy of consideration is to have teams and sponsors contractually agree upon measurable results (i.e. – Sponsor investment will deliver an ROI of increased web traffic of 15%, increased sales of 25%, increased brand recognition of 10%).  Once again, if results aren’t achieved the sponsorship contract is voided. One would believe greater care would be taken before contracts are signed. (Ed. – I am suggesting the example for measurable results. Successful partnerships should always include well defined objectives and results that can be measured.)

Flexibility: The ability to adjust strategy and tactics is as important in racing as it is in business and sponsorship. Options often create opportunity and can help establish a roadmap for success. In Vaughters’ model, sponsors could opt to fund teams guaranteed entry into Tier 1 events, or choose to fund teams that will develop slowly and eventually compete at the highest level. One only has to look at the genesis of teams like Garmin-Cervelo, Team SpiderTech and GreenEdge to understand the merits of building a team (and a brand) slowly.

Partnership: Professional road racing is the pinnacle of teamwork and partnership. Teams, sponsors and events could adopt an environment that fosters collaboration and cooperation to achieve a common goal.  The end result would be success for the team and the sponsor which would facilitate growth for our sport. Vaughters suggests two areas where partnership can help professional cycling. The first is sponsor equity investments (similar to employee stock options). Teams could sell equity when sponsorship dollars are not readily available to cover operating expenses. The second area partnership impacts is perceived value. Limiting the number of teams guaranteed entry into top level events, over 10 years, creates exclusivity and limits the number of sponsorship opportunities. Exclusivity always creates greater value which is a basic rule of economics (supply and demand; when something is in short supply it becomes a more valuable commodity).

Had pro cycling instituted a model similar to Vaughters’ maybe we wouldn’t be witnessing title sponsors exiting the sport. And, potentially prospective sponsors like BigMat would jump at the chance to promote their brand through cycling sponsorship (as they once did as BigMat -Peugeot-IBM).

Think about it.

Thanks for visiting. Remember, until next time, “Keep the rubber side down.”

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