The business of a Tour de France team

As the Tour de France moves towards its conclusion in Paris, Kevin Roberts talks to Ralph Denk, team manager of the German Bora-Hansgrohe team about the business of running and funding an international cycling outfit.

The team rose from amateur to UCI WorldTeam status very quickly. What are the key business lessons you learned along the way?

That sometimes you just need to be confident. There can be moments where you must take decisions amid uncertainty, but if you don’t take them you just won’t progress and will be stuck in a chicken and egg situation.

How much of your time is devoted to the commercial side of running the team?

I would say more than 50 per cent of my time is dedicated to working with our current sponsors or finding new sponsors. We are always trying to increase the visibility and ROI for our sponsors and while that takes up a lot of time, it is well spent and important for our partners.

What are the core costs of keeping the team on the road and what role does sponsorship play in balancing the budget?

In cycling most of the budget – about 70 per cent – is dedicated to riders’ salaries. Another big block is the vehicles. The team has 1 kitchen truck, 2 mechanics’ trucks, 2 big buses and 20 cars/vans – and traveling costs. Some of the staff members are on the road around 200 days a year.

Beyond title sponsorship what is the inventory and what other brands are associated with the team?

Besides Bora (a kitchen equipment manufacturer) as a main sponsor and Hansgrohe (bathroom fittings) as a title sponsor, we have Specialized (cycle and accessory supplier) as a premium partner and Sportful (cycling clothing) and Auto Eder (car-supplier) on a partner level. In addition, we have about 20 sponsors on a supplier level.

Bora and Specialized have deals until end of 2021 and Hansgrohe until the end of 2020…and we are already in talks over renewing these.

Our budget is above the €18m ($20m) average for a UCI WorldTeam, but we are nowhere near the big budgets of Team Ineos or Team UAE.

How do you sum up the appeal of cycling for sponsor brands?

The exposure is exceptional. For example, some 69,000 hours of the tour de France are broadcast in 190 countries, watched by almost 2 billion people. In 2018 the Bora-Hansgrohe team generated €400m of gross media value and has 3.2 million followers on social media.

Some of our sponsors achieve a ROI in gross media value of above 1:15.

Cycling is a global sport and the season is almost year-round. That means our sport offers great opportunities to activate different markets. And on top of that cycling is emotional and you will hardly find any other sport where fans and athletes come so close to each other. Think about the big climbs at the Tour de France and all the people surrounding the riders.

How do sponsors activate?

It is not just about events at races. For example, they also organize fan rides with employees, or fans at their headquarters. They invite customers to races to get a kind of VIP experience with some behind-the-scenes access. At the Tour de France final in Paris, Bora and Hansgrohe bring around 300 guests to a three-day event, including a great party with the team after the race.

Peter Sagan of Slovakia and Bora-Hansgrohe retains the green jersey of best sprinter following stage 4 of the 106th Tour de France 2019, a stage between Reims and Nancy (213,5km) on July 9, 2019 in Nancy, France (Jean Catuffe/Getty Images)

How does the team’s success – or lack of it – impact on sponsorship? Are you able to measure this on a race-to-race basis?

We can, but it is also about how you race, not just the result in the end. Being at the front for two hours in TV coverage is paying off. But of course, winning is most important. I can tell you that the victory of Peter Sagan at Paris-Roubaix 2018 alone generated a media value of €11.8m.

How do you use technology to engage with fans and boost the value of the team to sponsors?

We get a lot of data such as heart rate, power, cadence and speed from the riders, which we use to optimize their training. Of course, this data is also interesting for fans and the TV audience. That’s why the biggest pro teams founded Velon, a company that is developing and marketing these assets for them. At the Giro (Italia) for example you sometimes see this data on the TV live feed. There is still room to improve, but we are working on it.

How could pro cycling change to make it even more appealing to sponsors?

I think the sport needs to focus more on bigger cities. We need the Monuments of Cycling like Milano-Sanremo, the Tour of Flanders and Paris-Roubaix, which are races which have a lot of history and are the basis of our sport. But we can learn from Tour of Catalunya for example where you start outside Barcelona, complete a bigger lap, but then race the last 60km on a lap in Barcelona. Sometimes it is stupid to start in one little town and do 200km to finish in another little town, both in the middle of nowhere. It is expensive in terms of TV production and it is not ideal for the fans. I think we need to work on this. With Velon we started the Hammer Series which is a different racing format with shorter races and laps of 10-15km. I think for some races that is an attractive format.

Overall, how do the brands and the team measure success?

On the sporting side it is about winning races, achieving your goals, getting points for the World Rankings (like the ATP rankings but for teams). We finished 2018 as the third-best team, which is outstanding; we are currently in second spot. But of course, we also measure the media return for the team and sponsors, that’s also very important.

Can you give an indication of ROI for the team’s sponsors?

Well, this depends on a lot of things. In general, all our main sponsors achieved a return of at least 1:12 in 2018, some exceeded that by far.

What are the biggest commercial challenges you face?

Our sport is totally different to football for example. We have no stadium, no club members, not a lot of merchandising, most of our budgets come from sponsors and that’s really challenging.

The point is that as our seasons are getting longer and the number of racedays increase, all our costs, in areas including transport and logistics, also increase. There are weekends where we have three different squads at three different races. Those two aspects together, the financing and the costs, are truly challenging.

But on the other hand, we are in a more natural environment, a lot closer to fans and sponsors. Cycling is in some way more accessible. The media returns are quite good, and it is a highly popular sport, especially in Europe.

What has been your most memorable moment/achievement during your career?

That’s a difficult one. I think to get Peter Sagan [the Slovakian often described as the most popular rider in the world] on board was a remarkable achievement. But for me the greatest moments are when the team is performing well. I can still remember when I saw Lukas Pöstlberger winning the opening stage of the 100th Giro d’Italia to take the pink jersey, or the victory from Peter Sagan at Paris-Roubaix. Also, the stage wins from Cesare Benedetti at the Giro this year means a lot to me as he has been in my team since the beginning and normally, he is always working for the team. It was quite emotional to see him finally taking a win. And of course, to see Peter taking the World Title in Bergen was amazing. I was there together with Willi Bruckbauer, the founder and chief executive of Bora, and we both couldn’t believe it.

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