Sponsors rewarded for keeping faith in road racing
Cycling sponsors can enjoy great value for money if they are willing to trust that the sport is finally leaving its dark doping days behind.
Before the start of the 100th edition of the Tour de France on Saturday, cycling has been boosted by news that US consumer electronics company Belkin will sponsor the former Rabobank team until 2015.
The Dutch bank pulled out last year when cycling was reeling from the downfall of American rider Lance Armstrong, stripped of his seven Tour de France titles after admitting to doping.
However, a feared rush for the exits by sponsors has failed to materialise. The deal with California-based Belkin shows that companies still want to buy into a sport offering wide exposure to an affluent audience for a modest price.
"If they look at the fundamentals of the sport, they are really strong. More and more people are taking up cycling," said Lars Seier Christensen, chief executive of Saxo Bank, the Danish company which sponsors the Saxo-Tinkoff team.
"It's a much better deal than other sports - the doping problem instituted a discount in the pricing."
Sponsors are the main source of revenue for most teams taking part in events like the Tour.
Road races do not charge admission fees for the hundreds of thousands of fans who line the route, and event organisers tend to keep the bulk of television revenues for themselves in the absence of a standard formula for sharing them with the teams.
Tour teams could operate on an annual budget of under 15 million euros, Christensen said. The leading teams were spending only around 25 million, he said, noting that sum would buy only one top football player.
Despite the importance of sponsors, cycling does not market itself as slickly as other sports.
"Formula One and football are more glamorous and are sold more professionally," said Ulrich Lacher, a director of sports marketing research company REPUCOM.
Those sports have well-established methods to help sponsors receive maximum exposure for their brands - a process known as activation.
"In cycling this has to be driven by the sponsor and although the activation opportunities exist, they are more difficult to implement," added Lacher.
Cycling can also learn from sports like Formula One by giving TV viewers more of an inside view on races through greater use of features such as audio and data feeds.
"In terms of media distribution, cycling is improving but still faces some challenges like conveying the effort, the pain and the tactics amongst riders," said Ioris Francini, head of global sales and acquisitions for sports marketing firm IMG.
IMG took over as the international distributor for the Giro d'Italia race this year. The number of broadcasters taking the Giro and hours screened had doubled over 2012, Francini said, a sign of the sport's global appeal.
British pay television company BSkyB has enjoyed spectacular returns since it launched its professional team in 2010.
"Having our brand on our shirts is a huge benefit," said Tricia Thompson, director of cycling at BSkyB. The exposure also helps the Sky brand in Italy and Germany where the British company has sister channels.
Another obvious benefit for the top cycling sponsors is that they can get naming rights for teams as well as having their brands displayed on team kit.
Sky's launch of a professional team complemented its efforts to get more Britons on their bikes. It is part of the company's attempt to show itself as having a positive effect on British sport after buying live TV rights to Premier League soccer, Formula One and English Test cricket.
"We invest in sport. We are and have been involved in transforming a lot of UK sport," said Thompson.
She says other companies are keen to emulate Sky's success.
"There are definitely a lot more brands interested in getting involved in cycling. It's on a lot more people's radars.
A lot of brands can see the potential now."