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Old 07-27-04, 12:53 PM   #1
Eureka
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Questions of the business of cycling

I am trying to understand a little more. I tried searches within but don't see any clear answers. So...

Who owns the team Lance rides for? Who actually pays the payroll? Where else do they get income from?

Do sponsors such as Berry, USPS, and now Discovery pay this organization a sponsorship fee to get their name out there? How much?

Does this run true for other teams? Say Phonak?

Is it successful for the actual owner? Is it worthwhile for the sponsor?

Where can I learn more?

Thanks, and sorry if this has been done before.
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Old 07-27-04, 01:19 PM   #2
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Postal is owned by Tailwind sports. They take care of all the mundane administrative details. USPS, Berry Floor and other companies pay to be a sponsor.

I'm not sure if teams like T-Mobile or Phonak are actually owned by another company or owned outright by the main sponsor.

I've always thought that a pro cycling team was a good deal for the sponsors. For 10 million you can run a team that will give your company a lot of exposure. Look at how many times the words United States Postal Service is seen on TV and on the covers of magazines and newspapers.

Last edited by Laggard; 07-27-04 at 01:25 PM.
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Old 07-27-04, 01:51 PM   #3
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Originally Posted by Laggard
I've always thought that a pro cycling team was a good deal for the sponsors. For 10 million you can run a team that will give your company a lot of exposure. Look at how many times the words United States Postal Service is seen on TV and on the covers of magazines and newspapers.
Confused??

It is not like I had never heard of the US Postal Service before the TdF??
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Old 07-27-04, 02:13 PM   #4
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Perhaps USPS is a bad example. I was never quite sure why they cared what Europeans knew about the Unites States post office.

Perhaps Berry Floor or Phonak is a better example. How many had heard of either one before they sponsored a team? How many have now?
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Old 07-27-04, 02:51 PM   #5
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Originally Posted by DnvrFox
Confused??

It is not like I had never heard of the US Postal Service before the TdF??
Yea but still it's not like you never hear of Coke either before the 400 thousand adds a day you see on tv, radio, billboards ect...

Advertising is a continual thing, consumers need to be reminded and the familiarity makes them comfortable. A cycling team imo especially a sucessfull one is a great deal for a sponsor and usps is foolish to drop them, but then this point has been discussed to exhaustion
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Old 07-27-04, 03:12 PM   #6
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i'm actually thinking of switching phone providers to t-mobile based on their sponsership. sounds silly, but having them sponser a pro-cycling team leaves a positive impression on me. advertising\sponsership does have real benefits, and can be very profitable for a company.
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Old 07-27-04, 03:16 PM   #7
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Originally Posted by jfmckenna
Yea but still it's not like you never hear of Coke either before the 400 thousand adds a day you see on tv, radio, billboards ect...

Advertising is a continual thing, consumers need to be reminded and the familiarity makes them comfortable. A cycling team imo especially a sucessfull one is a great deal for a sponsor and usps is foolish to drop them, but then this point has been discussed to exhaustion
Strange -

I don't drink coke, not before or after all their ads;

and, I use the postal service the same amount before and after their sponsorship of the TdF.

Am I an anomaly?
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Old 07-27-04, 03:18 PM   #8
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i wonder how much trek contributes anything financially to the team and to LA personally for his endorsements and advertising appearances. whatever it is, he has made this company shine. they are the real winner.

it doesn't seem plausable that USPS's sales have increased dramatically or anything due to sponsorship of the team.

there was a piece on NPR's morning edition last week about how lance and lance alone has brought trek into the limelight and caused them, in the eye of the public, to go from maker of average recreational bikes to high-end racing experts.

the trek exec interviewed said they've shifted their manufacturing focus almost entirely to the high end and that they can barely make enough carbon bikes to meet demand.

i don't remember the statistic, but apparantly they've shipped many more madones this summer than in previous years combined.
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Old 07-28-04, 09:46 AM   #9
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i read somewhere (sorry, i can't remember) that USPS sponsored a team specifically to raise awareness of their services in europe... i have no idea what they're selling to the europeans (maybe they act the same way as a fed-ex or ups there?), but that was their marketing strategy for a long while. sponsorship seems like a bargain when you compare it to what a major advertising campaign might cost to do the same thing. i don't know if it paid off for them, but it sure has paid off for trek! in any case, it's no longer their strategy.

as an aside, i bet that discovery took up the main sponsorship not because they wanted a bicycle racing team, but because they wanted lance. not only did they buy themselves a hero of a spokesman, but a someone to host their programs that is already loved (and hated, but always watched) by half the world.
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Old 07-28-04, 11:27 AM   #10
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So Tailwind owns the team, pays the bills and seeks sponsors to support it. I wonder what else Tailwind does and how they got into running/owning a cycling team. It's not like there was a team and Postal became the new sponsor. They must have a history of "putting things together": finding talent/directors/sponsors. Interesting business.
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Old 07-29-04, 05:21 AM   #11
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Originally Posted by Eureka
So Tailwind owns the team, pays the bills and seeks sponsors to support it. I wonder what else Tailwind does and how they got into running/owning a cycling team. It's not like there was a team and Postal became the new sponsor. They must have a history of "putting things together": finding talent/directors/sponsors. Interesting business.
Tailwind is owned by a gentleman named Thomas Weisel (that' the "Thomas Weisel Partners" you see on the Postal jerseys). Tom is a former champion cyclist and rides on the US Postal Masters Cycling Team (that he also owns and sponsors) that regularly competes at national level masters races.

There are sponsors that pay the bills to run the team. In addition, there are performance based sponsorships that kick in additional funds if they win the Tour, for example. That's why you hear Lance talk about the sponsors care about winning the Tour.

Lance got about $450,000 for winning the Tour and takes none of that, giving it to the team. His money comes from his contracts with Oakley, Nike, Giro etc. for winning the Tour.

Here's some info on the USPS Masters Team There are some real stud riders on this team, like Tom Doughty, John Howard, and Wayne Stetina. If you go to the bio section, you can read about Weisel.

BTW, they ride Serotta Ottrott's and their uniforms are done by Hincapie Sportswear.

Last edited by roadwarrior; 07-29-04 at 05:40 AM.
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Old 07-29-04, 06:59 AM   #12
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Quote:
Originally Posted by Laggard
Perhaps USPS is a bad example. I was never quite sure why they cared what Europeans knew about the Unites States post office.

Perhaps Berry Floor or Phonak is a better example. How many had heard of either one before they sponsored a team? How many have now?
USPS wanted to secure more marketshare in Europe competing with UPS and FedEX and felt cycling, due to its popularity in Europe was an excellent way to do that.
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Old 07-29-04, 10:47 AM   #13
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Originally Posted by roadwarrior
USPS wanted to secure more marketshare in Europe competing with UPS and FedEX and felt cycling, due to its popularity in Europe was an excellent way to do that.
Sponsorship of cycling teams is a form of advertising and in Europe, you get good bang for your buck due to the large number of fans. It can backfire, however with the sponsoring companies getting a negative image if the riders don't behave themselves (e.g. Festina, doping).

I think USPS sponsorship has helped the image of the Post office in the U.S. Being associated with a winner doesn't hurt and it's probably given employee morale a boost, since postal employees have generally been the butt of jokes ("going postal") rather than being tied to a positive image.

Trek is a big winner. Having spent a dozen years with two major bike companies, one goal that every company has is to establish credibility in the high end bike market. If the pro riders like your high-end equipment and win on it, it makes it easier to sell your lower price ranges as well. More importantly, there's more profit for companies if like Giro for example, a bigger percentage of their sales are the more expensive helmets. And lastly, while the recreational, novice sales may be affected by the economy or the next "hot thing" in recreation, cycling enthusiasts and frequent users will continue to buy whether the economy tanks or not, adding a degree of security to companies who are recognized as having the "cutting edge" equipment that high-end users want.

A good example of a company that has recently been able to do this is Giant. For years, this company was mainly known for nice bikes that were mainly bought by recreational riders. With sponsorship of cycling teams in the Euro pro peloton, their TCR carbon bikes have elevated the image of this company.
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