What do we count as the biggest sporting day in Australia? Is it the AFL grand final? Maybe the NRL grand final? What about Melbourne Cup?
With the cycling caravan having well and truly left Australia after the end of the last Union Cycliste Internationale (UCI) sanctioned race, the Herald Sun Tour, there have been a number of recent announcements that made for interesting reading.
Firstly, Orica-Scott and Bahrain-Merida announced within days of each other the creation of official development teams. These development teams differ slightly, however they both provide a pathway to foster young Asian riders for the rigours of the World Tour.
These announcements came after a new partnership between the UCI and one of the largest sports and entertainment group not only in China but also in the world, the Wanda Group.
The partnership was a win for both parties, especially as the UCI had been looking at a number of options to get back into China.
The three agreements are starting to show the influence and importance of the Asian region.
A growing interest in sport
China’s rising middle class has fuelled interest in sport, and Chinese companies are scrambling to purchase sporting assets and talent.
The Wanda Group purchased the World Triathlon Corporation, the owners of the Ironman brand (August 2015). Six months earlier, Wanda also purchased Infront Sports and Media, a sports marketing company with significant interests in football, for approximately $1.2 billion. It also a large shareholder in Madrid’s second largest football team, Atlético Madrid.
Meanwhile, the Suning Commerce Group purchased a majority stake in an Italian football club, Internazionale FC, for $307 million and a Chinese consortium is currently doing due diligence to purchase AC Milan (Inter’s city neighbour).
Chinese Super League clubs have also been splashing out outrageous amounts of money on international players to turn China into a football superpower.
Now the focus is shifting to cycling
The Wanda Group has had a long interest in cycling, particularly in Europe. Since the purchase of Infront Sports and Media, Rumours have abounded of its interest in purchasing the three Grand Tours – Giro d’Italia, Tour de France and Vuelta a España – from their respective owners, RCS and Amaury Sport Organisation (ASO).
These rumours have been denied, however Wanda has shown a strong appetite for world-class sporting assets, as they already hold some of the marketing rights to the FIFA World Cup.
In addition, the Wanda Group has already purchased one WorldTour race, the Hamburg Cyclassics race, plus it operates the Velothon Gran Fondo events through its ownership of Lagardère Sports. In addition, it has entered into a ten-year partnership through a subsidiary in with Velon in November 2014 – Velon is a company owned by 11 WorldTour teams with the objective of generating an income stream from cycling.
One of the initiatives of the new partnership will involve building on the early success of bringing a direct feed into the living room by having on-board cameras on bikes.
Wanda’s influence and tentacles among the cycling elite continues to grow internationally.
A UCI sanctioned race and a training facility
The WorldTour footprint continues to spread globally with events across Europe, Middle East, Australia, Canada and the USA. But there is one missing link – China.
The most populous country and the largest economy in the world’s last WorldTour race, the Tour of Beijing, ceased running in 2014.
After four successive races, the UCI pulled the pin due to a lack of crowd participation and rider complaints about their safety and wellbeing due to the high levels of smog. Although there is another significant factor behind its demise – media reports suggested that the UCI was haemorrhaging funds promoting the race.
Strategically, the UCI need a way to get back into one of the fastest growing economy in the world. For cycling to succeed economically against other sporting codes for the fan’s dollar, especially under a sponsorship-driven revenue model, the UCI need the Chinese market to thrive.
Enter the Wanda Group and its partnership with the UCI.
The agreement results in the men’s peloton returning to China, with the Tour of Guangxi. It is set to run alongside a new women’s elite race with UCI Women’s WorldTour status from 2018.
Wanda would also build and fund a satellite UCI World Cycling Centre, where promising Chinese athletes would train on the 250m indoor track, a BMX track, and a road circuit. The most promising athletes would also get the opportunity to train at the UCI World Cycling Centre in Switzerland.
Wanda are now the most influential entity promoting competitive cycling in China. Importantly, it has a key role from grassroots to the pro-ranks.
However, concerns have been raised around this partnership.
Inrng, one of cycling’s credible independent newsfeeds, raised some issues with the UCI/Wanda Group alliance, particularly around the lack of transparency and the potential conflicts of interest.
What concessions did the Wanda Group receive to run the race and to fund and support the establishment of the UCI World Cycling Centre?
The establishment and on-going costs of the World Cycling Centre will be significant. The Wanda Group is a for profit organisation, therefore how will it make a return on its investment?
For starters, the UCI has given the Tour of Guangxi WorldTour status, even though the race has never been run before. Other new races, such as the Tour of Turkey, had many editions before they secured the holy grail of WorldTour status.
The next challenge facing organisers is securing WorldTour teams participation.
Under the governing rules for all new WorldTour events for 2017, including the Tour of Guangxi, WorldTour teams are not required to attend for their first two or three years.
The race organising body would have to go out and personally recruit the top teams to ride at their events.
A lack of interest among WorldTour teams had the Tour of Turkey organisers seeking UCI approval, which they eventually received, to hold the race in October when there was less competition for teams and their riders.
The Wanda Group faces similar barriers to secure the participation of WorldTour teams. It is at the tail end of the cycling season and after the last major race – the UCI Road World Championships. Riders face up to a 12-hour flight to get to the race, which is not exactly enticing!
But with 11 teams part of Velon, the Wanda Group is at a commercial advantage to secure the required number to attend.
Wanda also needs WorldTour teams to participate in the Tour of Guangxi to ensure TV revenue and sponsorship dollars to fund the race.
Enter the UCI to help guarantee some of the biggest riders to participate.
The UCI agreed to hold the UCI Gala, cycling’s end-of-season awards, after the Tour of Guangxi. If the top riders are going to be in China to receive their awards, then they might as well ride the event. I wonder how many giant pandas the Wanda Group will be bringing to Guangxi!
The UCI is prepared to throw the kitchen sink in order to achieve the goal of gaining a permanent presence in China. The nation is the strategic key to growing the UCI’s interests in the Asian region.
The Wanda Group is certainly now well placed to build on its portfolio of cycling assets in the country and elsewhere. The question is, will the group use its strength and vertically integrated model to extend its reach into Europe and other areas of the world?
With European countries stalling economically and companies reducing or reallocating their sponsorship dollars to other sports, the Wanda Group and other Chinese companies may have a larger role to play in the sport.
The other important recent issue was the establishment of two development teams.
Bahrain-Merida reached an official agreement for Team Colpack, an Italian under 23 team, to become its official development team. The agreement was not totally unexpected, given Merida was the Team Colpack’s bike sponsor last year and there was an existing personal relationship.
The agreement involves riders from Europe and Asia forming the basis of the development squad. Colpack provide a pathway to foster these young, talented riders and help them grow in a professional way and in the right environment. In return, Colpack gets continued access to Merida bikes, which is a significant saving.
Importantly, using the existing cycling infrastructure and framework of Team Colpack, young Asian and Bahraini (the sponsors and owners of the team) will grow more quickly, given they will be participating in all the top under-23 races in Europe.
Likewise, Greenedge Cycling – in collaboration with a number of parties, including the Chinese Cycling Association and Cycling Australia – announced that it would establish Mitchelton-Scott to race on the UCI Continental circuit as a Chinese-registered outfit.
“The addition of Mitchelton-Scott continues to support our ambitions to foster the development of young Australian riders and also extends our support to the Australasian region for whom we represent with the UCI,” said Gerry Ryan, the owner of Greenedge Cycling.
Shayne Bannan, Orica-Scott general manager, went on to say “For China, this is the first project of its kind and it’s also the evolution of Australia’s WorldTour Academy to enhance the pathway for local riders too.”
This is a strategic masterstroke by both teams. These partnerships will develop relationships and foster the talents of Asian riders as it prepares riders for the leap into professionalism.
Ten years ago, the number of Asian riders in the peloton was seemingly limited with Fumiyuki Beppu. With careful coaching and mentoring, these types of partnerships will see a growing line of Asian riders joining the peloton.
Importantly, the sport and grassroots participation will get a huge uplift if an Asian rider is successful in winning a Grand Tour stage. Who would forget the reaction in Eritrea when Daniel Teklehaimanot secured, and held, the polka dot jersey for a number of days at the Tour in 2015? Cycling participation in the African nation skyrocketed on the back of his success.
One could only imagine the reaction in Asia if one of their riders had similar success.
But these teams are not doing this out of the goodness of their heart. It is a business decision.
These teams are looking to gain access to Asian money at a time where the sport is reeling from lack of sponsorship. Only last year, three WorldTour teams folded due to main sponsors pulling out – IAM Cycling, Tinkoff-Saxo and Lampre-Merida (the team did reform as Team UAE Abu Dhabi in 2017). As for Orica-Scott, they will lose main sponsor Orica at the end of 2017.
Bahrain-Merida has Taiwanese bike manufacturer on-board as both a technical sponsor and a secondary sponsor. With the lack of sponsorship opportunities in Europe or Australia, Greenedge Cycling is no doubt hoping that a Chinese company will come on board.
Not unlike the Wanda Group and UCI partnership, these technical/financial partnerships between teams and sponsors are a win-win, particularly if it guarantees continued participation in the WorldTour.
It also shows the start of the global shift of influence moving to Asia, as more and more cycling teams are hoping to secure their long-term survival.
What does it mean for cycling?
Asia is becoming a more important region for most sporting organisations. It has a large population and is economically strong, which equals potential sponsorships.
Until 2009, cycling was dominated by the influence of Europe. The majority of races were located there, including all WorldTour races except the Tour Down Under. The UCI was located in Switzerland and all UCI Presidents were from European countries.
Fast forward eight years, and seven WorldTour races occur outside Europe as the sport becomes more global.
As part of this, Asia has grown more influential. Giant and Merida sponsor teams or provide bikes for WorldTour team or their feeder bodies. Shimano, from Japan, is one of the largest technical sponsors for a large number of teams. The Wanda Group provides sports marketing and media production for races, and effectively promotes two WorldTour races.
Last, but not least, there are now two UCI WorldTour races in Asia.
Europe may hold the power at board level, with the UCI presidency and the majority of members, but the Asian region is now playing a more important role.