Now that the dust has settled after the final stage in the Tour De France it is a time to reflect and see which teams made what. It was surprising to hear from the management of team Visma Bike that every team expects to make a loss. Do not feel sorry for them as they make enough money running like a business and I will explain how this all works.
Unlike other team sports the prize money does not match the cost outplayed and you wonder how they can afford to keep racing. The truth is the sponsors cover the costs and the prize money is a bonus handed out amongst the cyclists and support staff. This is definitely not a sport that relies on the prize money to survive because there would be no teams competing if that was the case.
The really big top teams will cost in the region of $60 million per year as it is not just the cyclists they have to employ, but all the support staff (30-60 people) to keep the team going. A top cyclist will cost you upwards of $1 million with the really top stars like Pogacar $6 million. You wonder if this is even worth the added expense of having the big names, but these big names allow you to attract the top sponsors who will ultimately cover your $60 million budget.
A professional cycling team participating in the Tour De France will have to outlay in the region of $100K just for the start of the race. A team bus with built in facilities another $500K plus the hotel accommodation along the route equating to hundreds of thousands of dollars. Team cars and support vehicles which will be partially covered by car brands wanting to be seen, but again another significant cost. Each team will have to transport in the region of 54 bikes (6 per rider), 80 spare wheels, chains and all the spares that would be required.
Team UAE who won the Tour de France with Pogacar as an individual and came second in the team classification being beaten by team Visma Bike for the title. Team UAE won 700K Euros and team Visma Bike was the second highest earning team winning 383K Euros. A team like Cofidis only earned 15K Euros, but everything is relative as they have a much cheaper team assembled only costing $24 million compared to Visma $45 million and Team UAE $60 million.
Surely the teams have to be making money some how and this is not being done for the love of the sport. When we look at how teams are transforming for example Wout van Aart being a rider of Team Visma Bike is sponsored by Red Bull so the team allows individual sponsorships so Red Bull will pay the team for having their helmet branded for this one particular cyclist. This allows them to make more revenue and at the same time reducing the salaries for certain cyclists as the income is now subsidized.
As you can see from the above chart the costs or budgets for the various teams differ ranging from $18 million up to $60 million for the season. What is interesting to see is how much their estimated income is worth throughout the 12 month period.
A team Like Cofidis may have earned a paltry sum of 15K euros from the Tour De France but as an overall income they spend $24 million and earn around $205 million annually. Team UAE spend $60 million with an income of around $337 million so these teams are definitely making cycling a profitable business.
XRG is the title sponsor of team UAE and they are a international energy and chemical company looking to change global energy systems. Where could they advertise and get the same type of attention as they do as a title sponsor?
What has changed over the last few years is many normal name sponsors are being replaced by oil rich companies and pharmaceutical companies. When you consider this is a tax write off for many of these companies it actually costs them nothing to be involved in a global televised sport. Where else would an oil company advertise especially one you have never heard of before?
The more UCI points your team wins the more prestigious events you are invited to attend and each event your sponsors pay for the privilege to advertise with your team. The top 3 or 4 teams competing in events can charge that much more and why they have such a big budget making sure they have the best riders and equipment. This directly impacts the earnings of the team via performances and why companies will pay out $20-40 million to sponsor a team for just one event. The tv time for a title sponsor on one of the major teams is worth in excess of $100 million so this is still regarded as a bargain advertising campaign.