Will more sponsors pull the plug ? - "For a smart company, this is the time to get in

[cyclingheroes]

Will more sponsors pull the plug ? - "For a smart company, this is the time to get in"
http://www.cyclingheroes.info/id1018.html

Rabobank considered to leave the sport...

 

[Frigo's Luggage]

Smart companies won't get in no matter what the price. Why would anyone pay good money and face a very real risk having their name tarnished by scandel? Armstrong, Floyd, Ulrich, Basso, Hamilton and company have set the sport back thirty years. The Belgian riders that were making $35k will be lucky to make $20k. For them, this is no longer a professional sport. Barely semi-pro.

 

[cyclingheroes]

Smart companies won't get in no matter what the price. Why would anyone pay good money and face a very real risk having their name tarnished by scandel? Armstrong, Floyd, Ulrich, Basso, Hamilton and company have set the sport back thirty years. The Belgian riders that were making $35k will be lucky to make $20k. For them, this is no longer a professional sport. Barely semi-pro.

In terms of return of investment cycling is still a bargain... The Festina scandal did not harm the company, their CEO once said that 1999 was their best year. Even Andy Rhiis said that Phonak had its best year in 2006. He quit with Phonak but is back with BMC (which he also owns), BMC has a pro continental staus now.

 

[buckybux]

I both teach marketing and do marketing consulting on the side. I could NEVER recommend a sponship that had the potential of negative publicity. Only way I would even consider it is if the team had extra controls on doping, and even then I would be really afraid of the collateral damage from other teams. Bottom line, too risky to chance.

The article sounds like a lot of "marketing spin" to me. It is like the local Real Estate agents telling me now is a good time to buy. The housing (in the US) market is going to get worse, and so are the cycling doping scandals. The time for opportunity is when you are at the bottom, not when you still have a ways to go down.

When the UCI starts doing a realistic amount of testing that catches the cheaters, then we will be at the bottom.

 

[Casa]

Actually now is a great time for a smart company to come in with a team that is serious about stopping doping. Get on board with a team with a solid, transparent anti-doping scheme and you come off looking like a clean upstanding company trying to help clean up a popular healthy sport. That's good pub.

 

[cyclingheroes]

The Festina figueres are not a marketing spin. The Phonak bucks are hard dollars, no spin.

I both teach marketing and do marketing consulting on the side. I could NEVER recommend a sponship that had the potential of negative publicity. Only way I would even consider it is if the team had extra controls on doping, and even then I would be really afraid of the collateral damage from other teams. Bottom line, too risky to chance.

The article sounds like a lot of "marketing spin" to me. It is like the local Real Estate agents telling me now is a good time to buy. The housing (in the US) market is going to get worse, and so are the cycling doping scandals. The time for opportunity is when you are at the bottom, not when you still have a ways to go down.

When the UCI starts doing a realistic amount of testing that catches the cheaters, then we will be at the bottom.

 

[Powerful Pete]

If you are a mainly European company selling to mainly European consumers, a pro-tour cycling sponsorship is a good way to spend some advertising Euros and get your company name for hours every day (at least for the classics and GTs) on Italian, French, Spanish, Belgian, Dutch, Danish, Swedish, Finnish, Norwegian and every so often German D) national TV networks. Heck, even the Brits got really excited about the TdF this year! And of course all of Eastern Europe. Never have problems picking up the Russian newsfeeds on Eurosport when I am travelling in FSU either.

We Euros continue to go to races in throngs and worship the pro riders. No problemo.

 

[Crankyfeet]

Good to see you again PP.

Has the cost of sponsorship come down a lot over the last couple of years to make it a bargain? I don't see that wages have dramatically dropped, but there are extra costs to running any anti-doping program from within.

Also, CH, we don't know how Festina's and Phonak's results would have gone had the doping **** not happened. And we don't know how much the positive effects were only due to the scandal publicity, and that once that wore off, the effects may have been negative.

Also, the environment is unstable. But that can be an opportunity as CH says, as long as there is something you are getting at a bargain compared to normal times. What is the bargain? Less sponsorship $$$ required? The ability to get a pro tour license? The ability to get invited by ASO to the TdF?

Also, if you run a team platform of anti-doping, you may receive positive publicity for that, but it may be offset by the fact that your team doesn't win anything.

 

[cyclingheroes]

I know from the inside that there are teams that are asking less money from potential new sponsors. I believe at pro-tour level TM was the first team who started to pay less to the team (I believe it went down from 18 to 12 million euros after Ludwig Cycling GmbH stopped and Stapleton's High Road took over).

Good to see you again PP.

Has the cost of sponsorship come down a lot over the last couple of years to make it a bargain? I don't see that wages have dramatically dropped, but there are extra costs to running any anti-doping program from within.

Also, CH, we don't know how Festina's and Phonak's results would have gone had the doping **** not happened. And we don't know how much the positive effects were only due to the scandal publicity, and that once that wore off, the effects may have been negative.

Also, the environment is unstable. But that can be an opportunity as CH says, as long as there is something you are getting at a bargain compared to normal times. What is the bargain? Less sponsorship $$$ required? The ability to get a pro tour license? The ability to get invited by ASO to the TdF?

Also, if you run a team platform of anti-doping, you may receive positive publicity for that, but it may be offset by the fact that your team doesn't win anything.

 

[limerickman]

I've a copy of Cycle Sport October 1998 - in it, they discuss the impact of the Festina debacle with the marketing manager of Festina - as opposed to the marketing manager of the Festina Cycling team.
The corporate guy says "we have seen no adverse impact on the sales on our product following the 1998 TDF".
Asked if it was too soon to judge (in Oct 1998) the impact of the fallout from July (1998), the marketing guy says "for sure, the company did receive very adverse publicity.However, the quality of our products ensure that they're always competitive in the marketplace and we have worked hard to retain brand loyalty".
Asked if the scandal would have an impact on Festina's long term commitment to the sport, their marketing said "we are currently reviewing our operations and commitment to the sport".

Read in to that what you will.

History shows that Festina walked away from their sponsorship of the team.

If I recall correctly, Festina were also the offocial sponsors of timekeeping for the TDF as well at that time.
I'm right in saying that they walked away from this sponsorship too???

 

[classic1]

I've a copy of Cycle Sport October 1998 - in it, they discuss the impact of the Festina debacle with the marketing manager of Festina - as opposed to the marketing manager of the Festina Cycling team.
The corporate guy says "we have seen no adverse impact on the sales on our product following the 1998 TDF".
Asked if it was too soon to judge (in Oct 1998) the impact of the fallout from July (1998), the marketing guy says "for sure, the company did receive very adverse publicity.However, the quality of our products ensure that they're always competitive in the marketplace and we have worked hard to retain brand loyalty".
Asked if the scandal would have an impact on Festina's long term commitment to the sport, their marketing said "we are currently reviewing our operations and commitment to the sport".

Read in to that what you will.

History shows that Festina walked away from their sponsorship of the team.

If I recall correctly, Festina were also the offocial sponsors of timekeeping for the TDF as well at that time.
I'm right in saying that they walked away from this sponsorship too???

'Walked away' is overstating it. Festina continued sponsoring a team until the end of 2001 (after starting sponsorship in the 1980's under their Spanish name 'Lotus') and are still official timekeeper at the Tour.

 

[limerickman]

'Walked away' is overstating it. Festina continued sponsoring a team until the end of 2001 (after starting sponsorship in the 1980's under their Spanish name 'Lotus') and are still official timekeeper at the Tour.

Was it as late as 2001?
Didn't realise that.

Thanks for the update.

And the info about Lotus :

 

[Tim Lamkin]

Smart business would run as far and as fast as they could..... from not so Pro...... cycling

 

[thunder]

In terms of return of investment cycling is still a bargain... The Festina scandal did not harm the company, their CEO once said that 1999 was their best year. Even Andy Rhiis said that Phonak had its best year in 2006. He quit with Phonak but is back with BMC (which he also owns), BMC has a pro continental staus now.

yeah.

But you measure the ROI in more than brand recognition, and profits. Festina had profits rise, let us assume, everything being equal, that is, profits rose because of the cycling sponsorship (not that profits would have been higher, w/o scandal)

Companies do not like scandal for many other reasons. Even if it raises recognition and progits.

The profits woul have to be much higher to counterweigh the other ambiguous factors that the scandal brings. Unmeasurable, not considered material in the board rooms. Whether it is employee morale, independent measures of due diligence and corruption, facilitating future relationships in corporate field with that legacy liability.

Short term profits and brand recognition, are not the only metrics.

BTW, this is not a rebuttal to heroes, more a continuation of the dialogue. Ofcourse, much is assumed by all here (and heroes is across this more than most others, more so than me)

 

[jhuskey]

If you want to sponsor a sports team ,why not cycling? Like soccer,baseball,football are clean.
It is just a matter of time before they are all scandalized and the majority of the populace are uncaring of what is going on. Joe Public regards such items as a passing blurb in the paper or on the news.

As far a previous sponsors such as Phonak ,I believe he still sponsors the BMC team just to keep his hand in cycling.CH can correct me if I am wrong.
So again,why not?

 

[cyclingheroes]

If you want to sponsor a sports team ,why not cycling? Like soccer,baseball,football are clean.
It is just a matter of time before they are all scandalized and the majority of the populace are uncaring of what is going on. Joe Public regards such items as a passing blurb in the paper or on the news.

As far a previous sponsors such as Phonak ,I believe he still sponsors the BMC team just to keep his hand in cycling.CH can correct me if I am wrong.
So again,why not?

Yes Rhiis (Phonak) is still sponsoring cycling, he owns Phonak and BMC. I have spoken more than once with him and he isn't planning to leave the sport.

Here is the list with TdF sponsors, like mentioned in an earlier post of classic1, Festina is among the official sponsors:
http://www.letour.fr/2008/TDF/COURSE/us/partenaires.html

 

[cyclingheroes]

Holczer did not found a new sponsor yet...

Hans-Michael Holczer: "The value of what we have achieved is higher than ever before."
http://www.cyclingheroes.info/id1025.html