News feature, April 6, 2007
State of race promoting in the US: Up or down?
The American racing calendar for 2007 has grown larger compared to previous years, with more higher-rated events coming onto the scene. These events range from new events with new promoters to older events elevating to a new level. This upsurge could represent a change in the share for cycling amidst the highly competitive American sports sponsorship market. However, the financial stability of some of these races has recently come into question, with a few announcing postponement until 2008 due to sponsor issues. Cyclingnews' North American Editor Mark Zalewski spoke with these and other top promoters in the nation to get a sense of the state of cycling promotions in the country and what may be ahead in the future.
2006 was an all-too-typical roller-coaster year in terms of race promotions and sponsorships on the North American calendar. The Tour of California burst onto the scene as a new race with a lot of money from the title sponsor Amgen. (Every rider received a free iPod for starting!) This was followed by an uncertain Tour de Georgia that was trying to replace its title sponsor of two years.
Fortunately the Georgia Ford Dealers Association stepped in to take over, but only for one year. Next, the annual race known as 'Philly week' suffered a blow, losing both the national championships and their title sponsor of more than two decades without much notice. But like Georgia, the race managed to secure enough eleventh-hour sponsorships and funding from the local and state governments to stay afloat.
All things considered, even with the uncertainty surrounding some major races, 2006 ended up a successful season in terms of U.S. based racing - and things looked bright for 2007. Sponsors were coming back in Philly and California, races like Georgia had commitments from local governments, and seven new races were on the UCI America Tour calendar. The new additions included both existing races like the upgraded Tour of Utah, and completely new races like the US Open Championships in Virginia, the Austin Invitational and the Tour of Missouri.
USA Cycling was encouraging the developments by creating a new tier of racing in the country called the USA Cycling Professional Tour, consisting of all the UCI sanctioned races. USA Cycling's CEO Steve Johnson agreed that the increase in high-level events was a positive sign. "The creation of this calendar signifies a major step forward in the evolution of our sport at the highest level within our own borders."
Even if some uncertainties existed, such as title sponsors for a few of the new races, the enthusiasm surrounding the beefed-up calendar overshadowed any criticism, as the road scene left Interbike in Las Vegas for its annual hibernation (also known as 'cross season.)
The road calendar once again came out of the winter solstice with a bang at the Tour of California, once again sponsored by Amgen. However, the title sponsorships of the majority of the UCI races on the calendar had yet to be announced. Then the first shoe dropped when the Austin Men's Invitational announced that it was postponing its race a year in order to better secure financial sponsorship.
Robin Morton, a partner with the promoting company g4 Promotions, said that many factors contributed to the decision. "One is the awareness by sponsors that Lance isn't involved anymore," she said. "Sure he is still an icon and part of the industry, but there is no Lance with the racing. And then the drug scandals. People say don't focus on the negative, but that is what happened with the Austin race. People and potential sponsors are concerned with linking their name to a sport with an uncertain future."
The second shoe came when the US Open Cycling Championships, scheduled for early April, announced in March that the executive director of the event was stepping down and that sponsors were not yet in place. However, the race quickly named John Eustice to the post, promising that the event would still go ahead as planned.
Eustice, a long-time promoter of U.S. races like the Univest Grand Prix, said that the quality races of the past has helped the most in getting the race back on track. "Thank goodness for the Tour DuPont. They did such a good job here and ten years later, they are still remembered as being a professional bunch. And that helped getting this thing re-launched, as it were. Once they saw we are at that level, they came on board."
When asked about any negative impact the recent scandals and disputes within the sport have had on sponsorships, Eustice replied, "Not really with the people I deal with. I know big sponsors have backed off because of that, which is understandable. At the same time, it's an important time, because cycling represents something important for all of professional sports. The problem is systemic across all sports, and from what I have seen there is blame on both sides."
Eustice said that if asked, he tries to be as up front as possible. "What I tell sponsors is that there is a real problem. I tell them ... cycling is in the headlines because it is fighting to make the sport clean. And the entire scene with Pound and all of the statements in the press have lost them credibility, and the sponsors don't like it either. But I tell them that if you work with it, you can be seen as a leader in this effort of cleaning up sports. And I get acceptance to that."
Other promoters said that neither the drugs, nor the infighting between the UCI and Grand Tours, has come up within sponsor talks. "We have not had any negative reaction whatsoever based on the drug controversy," said David Chauner of Threshold Sports, promoters of the Philadelphia International. "If it ever did come up, it was more all pro sports have it. Cycling in the US is growing and without drug scandals."
Greg Miller, chairman of the Utah Cycling Partnership which owns the Tour of Utah said the same. "I have been part of at least six presentations to sponsors and I have not heard a single comment regarding doping or scandals. That is not a concern to me, because I think the sport is bigger than a scandal or a tainted rider. It's a beautiful sport that is family-friendly, and there are so many positive aspects about the sport that will exist long after those riders or scandals."
Chris Aronhalt, a partner with Medalist Sports, which runs the biggest races in North America, said that while sponsors are aware of the negative issues, the events themselves help to overcome them. "When the questions are asked, we fully explain the situation," he said. "What we see in Georgia is that the event and platform are bigger than the alleged actions of a few individuals. It's disappointing, but at the same time, everything else that this race represents overshadows it. Also, how the teams are dealing with it, like T-Mobile and Slipstream, is a huge help to us. We are all in this together."
Medalist also has run into troubles this year in attempts to secure a title sponsor for the Tour de Georgia. In March the race was $800,000 short of its operating budget, and the organisers were getting anxious about closing the gap, putting out an impromptu 'call to action.' Thankfully, the local community responded and provided enough money to confirm the race. More recently, AT&T Georgia was signed as a major (but not title) sponsor, further ensuring the race's start in April.
The fact that the Tour de Georgia is able to exist this year, and the reason that the Philadelphia Invitational was able to happen last year, is due in large part to significant support from the local governments. Further, Georgia is happening this year sans a title sponsor -- instead, it is relying on a number of presenting sponsors to fund the race. Does this indicate a shift from the traditional model of inking a major corporation to a race, hoping when the contract is up that the company is happy with its return on investment (ROI) for a renewal?
John Eustice explained it this way. "Trying to sell the sport on pure eyeballs doesn't work -- there are too many intangibles. It's an emotional sport that people really like once they are in the community. But the qualities don't always show up in metrics on a spreadsheet. I think for these events, since you are borrowing roads which is the stadium, you have to have the governmental support. That seems to be what is saving Georgia -- the government sees the value and is stepping in to save the race. That is what is saved Philly -- losing the championships and the title sponsor in the same year!
"When you take a big event and show the government that you are going to showcase their state, city or town, which cycling does beautifully, it makes it possible. That is what is the best selling point of this sport. Then you need to find civically minded sponsors -- that is the formula."
Robin Morton said that while having governmental support is a key, she is still sold on the major sponsor plan for her race, instead of finding smaller sponsors. "That sort of dilutes the benefits for the sponsors, but maybe that is the new way to go. The City of Austin is still committed and we are pitching a new title sponsor this month.
Too much, too soon?
Another event, the Tour of Utah, recently announced it was postponing until 2008. However, unlike many of the other races, this race has a title sponsor in the Larry H. Miller Group, which is widely successful in promoting events throughout the state and owns the Utah Jazz NBA basketball team. This race is an example of an existing race that upgraded itself to UCI status when the company bought it from its previous owner Jason Preston. Greg Miller, chairman of the race, said that lack of time was a factor leading to the postponement.
"We came on as title sponsor in 2006, and there were some issues, political and administrative, that I was uncomfortable with. When Jason came back and asked if we were going to sponsor in 2007, I said no unless he would address to the issues I was concerned with. That evolved into Jason giving up ownership and turning the race into a non-profit called the Utah Cycling Partnership that owns the race, and I am the chairman of the board as well as the point of contact for the title sponsor."
"The challenge I had is that I am so busy with my regular job was to hire an executive director and a few staff, as well as the board, to take us through the running of the race this year. But the efforts relative to assembling the marketing packages to potential sponsors... there was a lot of energy and effort into it, but we probably missed the mark in terms of the amount of money we were asking, and our timing relative to corporate budget cycles."
Miller said that his approach to signing sponsors for 2008 will be similar to what is being done in Georgia this year. "My intent is to pull back and rethink the way we do that. I want to ask more sponsors for less to share the load. I think securing big money from sponsors for a cycling event is a difficult thing to do. The companies that are in a position to sponsor at a high level have run their businesses well to be in that position. They spend their marketing dollars efficiently to make the company stronger.
"It's hard to sell high-dollar cycling sponsorships and justify them on a cost-per-point basis, which is how these companies look at it. I think the key to sponsoring these events is to have [small companies] as a title and presenting sponsor, at least for the Tour of Utah with our community support. These small companies are willing to support the event more than the cost-per point basis to support an event in their community."
On the flip side, Threshold Sports' David Chauner said that a race like the Philadelphia International is run with as few major sponsors as necessary. "We don't want the companies to be part of an alphabet soup but to have the name recognition." He said that the biggest issue is working against the mainstream sports in America. "We are competing against the big, more established sports that have value in their packages. Our problem is that our sports seems to have less value to a sponsor than say golf does. To have a senior golf tournament at a local private club with a some live TV on cable, you'll have to spend four million dollars, at least. For four million, we can run two whole events in two major cities, right downtown with live TV, and huge crowds."
"I remember in San Francisco the final year, turning to the CEO and partners of Barclays and asking how it compares to their golf sponsorship, and they said loved it - seeing the crowds stay the entire time, and their employees having fun. I said to them we would like to measured by the same metrics as their golf tournament!"
Schedule double bind
One of the recurring themes from the race promoters is the issue of time -- specifically the double bind that a promoter is placed in by virtue of the UCI scheduling requirements. "Part of the problem is you have a lot of potential sponsor leads and a venue on board, but you don't have the sponsor contract inked," explained Morton. "But you have to have it on the calendar by June 1 the year before the event. So we are all in the same position -- most promoters are pretty sure the event is going to happen, but what do we do? Have the title sponsor inked and maybe not get the date that we want? It's hard to even find a place on the American calendar now!"
Chauner agreed. "There is always a chicken and egg problem. For us, we need the critical mass funding before we go ahead with it, which covers 50 to 70 percent of your budget. But for us, with an event in place, you are not going to cancel the event without a full sponsor -- you want to keep the momentum going. And sponsors always seem to want sign at the last minute."
The momentum effect is seemingly what drove the promoters of the Tour de Georgia to make the call for sponsor help. "We're so dangerously close to the event, and the cities, the teams, the spectators would be devastated," Aronhalt said at the time. "To Medalist, an event cancellation is not in our realm of possibilities."
Fortunately for cycling fans in Georgia, the US and even abroad, the call was answered. The question now is, will the call be answered for the other races?