Inside the war over the Tour de France, and how it may change pro cycling forever

On one side of the conflict is the UCI, the governing body of world cycling, based in Switzerland. Its aims include globalizing pro cycling and making the sport financially sustainable. Its president, Brian Cookson, has been involved in cycling at many levels for decades. He's halfway through his first four-year term in office.

His objectives, according to the UCI website, are "to rebuild trust in the UCI, transform the way anti-doping is dealt with, grow the sport globally, develop women's cycling, overhaul elite road cycling and strengthen cycling's credibility and influence within the Olympic Movement."

On the other side is the ASO, a private, closely held French company that owns the Tour de France, the world's premier bicycle race, the Paris Marathon, the Dakar Rally, Paris-Roubaix, the Tour of Spain, and other events. The ASO is part of the French media group Éditions Philippe Amaury, which publishes the sports daily L'Equipe and the newspaper Le Parisien. ASO's president is Jean-Étienne Amaury. He holds an MBA from Stanford and previously worked at Bloomberg.

The chief issue in the current conflict has to do with racing licenses and what they mean both to the races and to the teams.

As it is, each of the 18 teams in the WorldTour, pro cycling's highest level, gets a one-year license and automatic entry to the Tour de France. In its reforms, the UCI aimed to extend the licenses to three years. It hoped that by granting teams longer licenses and three automatic Tour invites, it would help them become more successful in attracting longer-term sponsors. That, many say, would help the sport as a whole become more financially stable, since sponsoring a pro cycling team for one year is seen as a high-risk business proposition — especially if that team is not guaranteed a start in the world's premier bicycle race.

A majority of the teams voted in favor of the reforms.

At least three top teams will be shut out of the 2017 Tour de France.

However, the ASO ultimately rejected the UCI reforms, characterizing the WorldTour as a "closed sport system" and arguing that three-year licenses would compromise the quality of its races by failing to uphold the "sporting criterion" and make races such as the Tour less competitive. The ASO thinks teams should have to prove their worth every year in a more "open" sport with no auto invites.

So the ASO registered all its races, notably the Tour, as "Hors Classe" (HC), and not in the top-tier WorldTour. By doing so, the ASO ensures that the Tour stays within a promotion-regulation system, whereby, in theory, the best teams rise to the top and the worst drop out, similar to the system used in European football. In actuality, it means that every year a few teams get relegated down to pro cycling's second division (Pro Continental) and a few teams get moved up to the first division (WorldTour). And, very importantly, it means that the ASO gets to invite whichever teams it wants to its races.

The catch, as VeloNews reports, is that "HC fields cannot comprise more than 70 percent WorldTour teams. In a 22-team field, that means no more than 15 WT teams, so at least three top teams will be shut out of the 2017 Tour de France. But ASO could invite even fewer ...

"Teams will no longer be able to guarantee a highly valuable Tour spot to sponsors, potentially making them less stable, particularly those near the bottom of the current WorldTour. Riders suffer from unstable teams that are prone to collapse or other financial difficulties. ASO is openly mocking the UCI’s WorldTour system."

This week UCI President Brian Cookson spoke with Business Insider about the ASO's power play and why it's so concerning. Following are excerpts from that conversation.

"What we're trying to achieve is to give the teams some greater sustainability," Cookson said in a phone interview. "We don't want to go as far as giving permanent franchises to teams — we don't think that's right for our sport — but we do acknowledge the need to give a greater level of predictability to the current scenario to allow some financial sustainability for the teams ... But the ASO has a different point of view, and one understands that, but I guess it's fair to say that the ASO don't want anything they perceive to weaken their position.

The ASO don't want anything they perceive to weaken their position.

"Professional cycling is a small cake at the moment," Cookson added. "The ASO have by far the bigger share of it in terms of the profits. But what we want for everyone is to have a bigger cake so that everyone has a bigger slice of that cake.

"So nobody is wanting to damage ASO or its assets or its properties. They do a great job with their races — the Tour de France is a fantastic race and always probably will be the jewel in the crown of professional cycling.

"However, we have to find ways of internationalizing and broadening and strengthening the economy of professional cycling whilst at the same time clearly we need to defend the heritage of professional cycling ... the great events, the grand tours, the classics and monuments. These will always be the mainstay of professional cycling but there's room and there's a need for cycling to grow around those existing heritage assets."

A source at the ASO told Business Insider that, unlike the UCI, the ASO does not see cycling like Formula 1 or other sports with a "closed league."

"We are very attached to the possibility for good teams to go to the top level and for some bad teams to go back in the level two," the ASO source said, referring to the current promotion-regulation system. "For us, the thing is, a three-year license would be a way to block some teams. If you allow the three-year license, you avoid [letting] people go to the top level, and that’s not good for us. It’s not good for cycling, and it’s not good for the teams.

A three-year license would be a way to block some teams.

"We understand the argument of people saying it will secure the sponsors and everything, but for ASO and in our opposing view, it is way better to allow teams to upgrade, and if there’s no possibility to upgrade, there won’t be any sponsors at all for teams on level two or level three. So we don't really see why we need to change it."

Asked if it were possible for the two sides to reach a compromise and agree to a two-year license, the ASO source said he was "not sure" about that happening.

"There will be negotiations, for sure, because everyone thinks it’s not a good solution to put the Tour de France in the HC category," he added. "So yeah, people from ASO and UCI will see each other again and will talk again. There are people who are pro-ASO and pro-UCI, and there are good arguments on both sides.

"For now, though, we have made a decision, and it is impossible to go back. But I don't know of any meeting planned. But, so far, we stay by this."

Steve Maxwell and Joe Harris at The Outer Line say that if the ASO actually carries out its threat to pull the Tour and its other races from the WorldTour in 2017, there will be big losers. In brief, here are three of them:

Other race organizers. "If ASO essentially turns the Tour de France into an invitation-only event, the world’s top teams will be forced to cater to ASO’s demands and whimsies in the hope of a Tour invite."

The teams. "The Tour is the primary event where sponsors can earn a return on their investment, and by removing an objective means of evaluating who should attend and who shouldn’t, ASO dilutes the value that a team might present sponsors ... in cycling – which has zero shared revenue – this system is not really promotion or relegation; it is promotion or death."

The riders. "They will be the ones most hurt ... Fewer WorldTour teams would be able to attend the Tour de France, and this would force downsizing across the landscape. The instability created here will force some teams to reduce headcount ... Other teams will simply disappear, because their sponsor contracts require that they race in the Tour."

You can read the full post at The Outer Line >>

Cookson explained to Business Insider that the UCI reforms are meant to help all involved, including the ASO.

"There are greater possibilities and ambitions with the organizers and teams to want to be part of the WorldTour," Cookson said. "I think if the ASO were a little more relaxed about what they perceive as threats to the current position they would see the potential and the benefits for everyone, including themselves, absolutely.

In cash terms, in profit terms, ASO are way ahead of anybody else.

"I don't want to attack ASO in any way. I think that they are a good company. Like any other part of the private sector, their driver is to make profits for their owners, shareholders, and family, or whatever, and one understands that. Our job as the international federation and governing body is to develop the sport in a way that is beneficial to everyone, all of the stakeholders, and that is what we are trying to do.

"Now, in doing that, we don't want to damage or challenge anybody who is currently involved professional cycling and making a success of it. Of course we don't want to do that. But we have to make sure that we move forward in a way that benefits everyone without damaging those existing assets, but equally at the same time we've got to — having spent more than two years discussing, trying to reach consensus, trying with absolute good will on all sides — find something that works for everybody, and we've come up with such proposals that we believe do that. And one of the stakeholders is, perhaps understandably, nervous about change because they are happy with the situation as it is."

There is no revenue sharing in pro cycling as there is in most other sports, including MLB, NFL, and NBA. Teams operate almost entirely on sponsorship deals, which even in the best of times can come and go suddenly.

For years, debates have carried on about how to fix cycling's precarious sponsorship-only model and to introduce revenue sharing, notably the profit earned from selling TV rights, which make the ASO tens of millions of euros each year. As Daam Van Reeth, a researcher in sports economics, writes in "The Economics of Professional Road Cycling":

Because non-sponsorship income is very limited, team managers have a hard time to balance the budget. Cycling teams do not have their own stadium, and although millions of people watch races such as the Tour de France or the Tour of Flanders from the roadside, there are typically no ticket sales. As a result, cycling teams have become increasingly interested in receiving a share of the TV deals cycling event organizers make ...

... professional road cycling remains one of the only sports where the right holders of the event, the race organizers, pocket all television rights and do not give teams any share of TV money. This may seem very strange to an outsider, as Simon Chadwick, professor of sports business strategy, explains: "It's very, very unusual that the Tour de France doesn't share its revenue with the constituent parts of its brand. They're adhering to a model that was first introduced a century ago" (Duff 2011).

When Business Insider asked the ASO for comment regarding the potential for future revenue sharing with teams, a source there said: "As for profit sharing, we never say 'We don't want to do that.' It doesn't mean we don't want to do it. We just never say anything about it."

It's difficult to overestimate how big the Tour de France is and how critical the three-week event is to the sport, teams, riders, stakeholders, sponsors, and fans.

While the Tour attracts 10-15 million on-site spectators — significant when compared to the FIFA World Cup (3.1 million people in Germany 2006 and 3.2 million in South Africa 2010) — the money is made from selling TV rights, as Wladimir Andreff notes:

Over 100 TV channels in 190 countries now broadcast the Tour de France, with live broadcast in 60 countries (www.aso.fr). Consequently, the Tour de France TV rights revenues have increased significantly over the years ... global broadcasting rights for the Tour de France probably amount to about €50 million a year.

According to the most recent data from Bloomberg, the ASO reported revenue of 179.9 million euros and profit of 36.1 million euros in 2013.

"Let's be clear: The ASO is, in effect, the only entity that is making substantial profits out of professional cycling," Cookson told Business Insider. "Everybody else is either investing in, or putting money into, professional cycling, like the team owners and sponsors, and getting whatever return they wish to have, whether it's in terms of press coverage, media coverage, column inches, or a public image of a country or of a sponsor.

"But in cash terms, in profit terms, ASO are way ahead of anybody else, whether it's another race organizer or a team sponsor. People are not making profits out of professional cycling, except ASO, by a long way, and perhaps ICF, and perhaps one or two others are kind of breaking even, from what one gathers.

The only people who think that it's a threat to them are ASO.

"You don't have to go very far down the list of major events before you get to events that are essentially run by volunteers out of their enthusiasm and commitment and bring in sponsors to try and make those things work. I've been there myself. I've been an organizer on a volunteer basis of a stage race over in the UK in my earlier days. But even quite major events are run on that basis.

"We've got to try to find ways of making our sport more professional at every level. That should not be seen as a threat to those who are successful at the moment. So far as I can see the only people who think that it's a threat to them are ASO. Everyone else thinks the proposals are a good balance ... ASO at the moment don't hold that view. But I'm hopeful that with continued dialogue we can get to a solution."

Business Insider also spoke with one of the current WorldTour team managers, Jonathan Vaughters of the US-based Cannondale Pro Cycling Team, which races in the Tour de France. He is a former pro cyclist and holds an MBA from the Daniels College of Business at the University of Colorado.

For years Vaughters has been a proponent of reforms in pro cycling, especially when it comes to the business and organizational sides of the sport. He spoke at length with Business Insider this past week, reaffirming his belief that the current sporting model in pro cycling doesn't work. Following are excerpts from that conversation.

"I don't think there's anyone opposing the reforms other than the ASO," he said in a phone interview. "When they lost the vote they effectively said, 'OK, fine, then we're not going to put our races in the WorldTour anymore.'"

In Vaughters' view, the ASO sees the UCI reforms as an encroachment on its territory. And as for the ASO's point about the "sporting criterion," Vaughters said that argument is "bunk." "It's a nice way to couch maintaining your dominant position," he said.

I don’t think a single race organizer should have the power to deem two or three companies insolvent just because.

"What we should be asking for is, 'Hey, we’re giving you the greatest actors in the world to perform on your stage. You know, we all need to share the spoils of this together.' That’s what we should be asking for. But even we know that, as regards the Tour de France and ASO, we have to play a more timid role.

"So all of a sudden the reforms don’t even ask for that. The reforms are simply asking for a three-year runway of guaranteed participation in the Tour de France so that we can guarantee our sponsors, supporters, and investors at least three years of runway to build our programs.

"Could we get three as opposed to one? That’s the major issue, literally the linchpin issue that’s preventing this whole thing from moving, is three years versus one year. And those reforms that passed through are 10% or 20% of what the teams really should be asking for.

"Unfortunately, we compromised far more than ASO, and it still wasn’t enough. They want more compromise. They want it to be a situation where promotion and relegation is an annual thing and that if your team doesn’t perform then you and your team are kicked out of the WorldTour. And unfortunately, in a sponsorship-only revenue business proposition, that is a horrible, horrible thing, because every year, one or two teams will be losing all their riders, losing all the jobs, losing their sponsorships, and going out of business.

"If you have a system where you have 18 teams, two or three are getting kicked out of the bottom every single year, you are deeming some teams every single year insolvent. I don’t think a single race organizer should have the power to deem two or three companies insolvent just because."

"I'm speaking hypothetically here," Vaughters said, "but I think in ASO's mind they're zooming forward, like, 'Oh, this is a battle point.' If you keep everything in a stable promotion-relegation context, then the two or three teams that kicked out the bottom, do those teams still have the possibility of doing the Tour de France? Sure they do — by invitation only. So then those teams have to go beg and squabble.

All teams are at risk of getting booted out — even the best teams.

"But cycling is a sport that is a quick-changing environment. The No. 1-ranked team in the world in 2010, HTC, doesn't even exist anymore. To say the best teams are always the best teams, well, no, not really. OmegaPharma-Quick-Step, one of the best teams in the world, a few years ago they were ranked last in the WorldTour. So this stuff flips around fast, as in the NFL.

"So basically all teams are at risk of getting booted out — even the best teams. They have a few accidents, a few sicknesses, a few injuries, and they risk getting booted. So that always keeps ASO in this dominant position, like, 'You'd better be nice to us, because if not, you know, you might be the one who gets kicked out next year, and if that happens, we're not giving you the invitation.' They know it leaves teams on the back foot in negotiations. That's why it's easy to couch it and say, 'Well, this is how other European leagues function, so we're going to do it this way too.'"

The ASO claims that it wants a more "open" model than the "closed" one the UCI is offering, one similar to that of European football, where the best teams rise and the worst get kicked out. But Vaughters says there is a critical flaw in this argument.

"If you get dropped down to the second division in the English Premier League," Vaughters told Business Insider, "you get a big payment that is divided up equally from the TV rights. And that payment is so that you can get back up on your feet and get back into the first division. Maybe a promotion-relegation system works in a situation like that, but no one is proposing that in cycling, because quite frankly there isn't the money to do such a thing, except with ASO.

If you lose your position in the Tour de France, you lose your naming rights, you lose your sponsor. It's effectively declaring you insolvent.

"ASO would have to be the one to step forward and say, 'OK, fine, if you're relegated you get a 10 million euro payment, which would be about the degree of it, because you'd have to accommodate for the loss of the naming-rights sponsor. That I've never seen on the table. This is why you can't say cycling is like other sports, because in a sponsorship-revenue-only proposition, you don't have this parachute payment.

"If you lose your position in the Tour de France, you lose your naming rights, you lose your sponsor. It's effectively declaring you insolvent. That makes the ASO argument kind of bunk. So it's an invitation, a how-nice-have-you-been-to-us-lately, do we agree with your philosophy and the riders on your team, your nationality. It's all these biased, subjective things that go into that. All that makes a sponsorship-only business proposition so difficult. You have no guarantees in a situation like that."

"I think the underlying issue that keeps this from moving in a positive direction any more quickly, in that we are a broken record from five years ago," Vaughters told Business Insider, "is that there is a deep-seated fear in cycling amongst team managers, amongst riders, amongst any of us in the athletic side of the equation, because we have seen over and over again, when push comes to shove, ASO is basically able to bulldoze everyone by the simple fact that, if you aren’t invited to the Tour de France, your sponsorship prospects decrease enormously.

If you aren’t invited to the Tour de France, your sponsorship prospects decrease enormously.

"The riders are aware of that, the managers are aware of that, everybody is aware of that, so there's this timidity and this fear — everyone’s walking around on eggshells — because this is already an incredibly unstable business proposition.

"Teams are an unstable business proposition because of the sponsorship-only revenue model. So if you all of a sudden are adding on top of that, that the Tour de France may or may not invite you, you just increased your instability even more.

"Everyone else — riders, teams, governing bodies — agreed that these are the best steps to take, and ASO just flatly disagreed. And the first reaction from the riders’ union was, 'We agreed with the reforms as long as everyone agreed first.' So that goes to show you — like, what does that mean? So OK, we’re not going to step out of line at all, until everyone else agrees first. That embodies how afraid they are of ASO."

"This whole imbroglio between the UCI and ASO began at the end of 2004 when UCI attempted to co-opt the entire sport of bicycle racing by creating the ProTour, now called the WorldTour," said Rick Vosper, a cycling-industry veteran of 30 years, in a recent episode of "The Spokesmen Cycling Roundtable Podcast."

"They said, we, the UCI, are going to define who is a high-end racing team and who isn't. Prior to that, whatever teams there were out there, went to whatever events they could get invited to. So this is the UCI's attempt — and it's been for 16 years now — to enforce hegemony around the entire sport, around what was really a free-form thing called bicycle racing. You like it, you don't like it — that's irrelevant. But these are the historical facts.

The one bike race that everybody on the planet watches is the Tour de France ... You control that, you control everything.

"And since 2005, when the season began, the UCI has been butting heads with ASO to see who's going to determine who actually controls the power here, and to some extent the UCI says, well, we've got all the racers and the teams. And the ASO says, fine for you, we've got all the events. And it may be that this tension is not unhealthy. It's entirely possible this is the best thing.

"If you talk to the riders, you actually go into the pro peloton and talk to the riders, a lot of them are not big UCI fans. Remember, the UCI was founded as the riders' union and its job was to protect the interests of the riders. Instead, many people will say, the UCI chose to emulate the Formula One school of very closed racing where everything was controlled by the company behind it. In the case of Formula One, it's Formula One. In the case of bike racing, it's the UCI. So for my money, this is a drama that's been going on for a decade, and just now coming to a head," Vosper said.

"It's rooted very deeply in the UCI and its present incarnation. It's all about power. Who's got it, and who's going to control it. But there is this tension ... the one bike race that everybody on the planet watches is the Tour de France. That's the jewel in the crown. You control that, you control everything. And when the ASO says, we're going to invite whatever teams we want, who might or might not be UCI teams, that's a big darn deal.

"The Tour de France ultimately will win. It's just a question of, what are they really after? They don't want to shut down the whole thing. They're interested in more money, control, whatever it is. And they will absolutely get it. Because at the end of the day, they have what everybody wants, which is the most prestigious bike race in the world."

Amaury and Vaughters have some key things in common. In addition to being among the most influential people in pro cycling, they are close in age and both hold advanced business degrees. But when it comes to growing the sport of cycling, the two appear at odds.

"I have had conversations with him, and I like Jean-Étienne a lot," Vaughters told Business Insider. "I think he's an extremely intelligent guy. And we've talked about the same exact topics we're talking about. My feeling is he has some influences around him that are more old-school influences, and people who are much more 20th-century influences that come from before he came into the CEO position of ASO, and I think those influences aren't allowing him to sort of make decisions based on more modern education.

"I'm speculating a little, and it's confusing to me as well. It's like, the teams aren't asking for your money. They're just asking to survive, for stability."

A source familiar with the ASO, the UCI, and the Tour de France told Business Insider that, in his opinion, the ASO is "trying to make a public event more private" and that it is "all about milking the cow. I used to really like ASO, and for years I thought they were right in protecting their position, but now I just think they are greedy."

Another person, with inside knowledge of the ASO-UCI negotiations, told Business Insider that the ASO "just wants to keep its monopoly organization of events and it doesn't want strong teams" and that the current organization of teams is "not fair as it puts teams at risk" given the fickle nature of the sponsorship-only business model.

Among the infighting between the ASO and the UCI, there's Velon, a group that, according to its website, "wants to create a new economic future for the sport."

Velon is a joint business venture of 11 UCI WorldTour teams. One of its aims is to create new revenue streams for teams.

When asked for comment, a Velon spokesman said that as regards classifying races, it was a decision for the race organizers and the UCI. But it did send a statement, excerpted below:

Velon exists to make cycling better. As regards the UCI Reform, Velon’s teams supports the AIGCP position, which backs the UCI, as we said in September, we support these aims: we believe that Reform offers a balanced framework for collaboration between stakeholders, and we remain committed to strive for a fairer, cleaner sport and build a future that fans, sponsors, riders, media and teams can all trust and believe in.

Ultimately, three things need to happen to stabilize pro cycling, Vaughters said:

"First, and most important, you need permanent franchises for the teams so that they can not only sell sponsors on the fact that there’s stability but also sell it to investors that there’s value in the fact that we own a franchise. When sponsorship money is a bit tight, you sell a little equity to investors to get you back on your feet, until sponsorship money isn’t tight. This is how businesses work, and it’s how we stabilize the sport in a sponsorship-revenue-driven business proposition.

"Second, there has to be financial fairness legislated into the sport, whether that’s an agreement amongst the teams or something the UCI tries to implement. Every sport that has moved its audience level up and up and up — the NFL is the best example — uses a financial-fairness model. The easy word to say on this is “salary caps,” but everyone gets panicked when you say salary caps, because it’s not really salary caps but budget caps. It’s simply saying that in every team we’re playing chess out on the field or on the road.

There has to be financial fairness legislated into the sport.

"Every team starts with the same number of chess pieces. How you decide to implement and use your pawns versus your bishops versus your queens, that’s up to you, but everyone starts with the same number of pieces. And that’s what financial fairness is about. It fundamentally drives competitiveness. It’s not the same team winning all the races in any given year. It flip-flops around year to year. It increases audience levels as the sport becomes more competitive and more unpredictable, and smaller-market teams are able to be at the top as well. NFL is a perfect example. Without any financial fairness, any TV rights get burned up immediately in bidding wars for just the top few athletes, and that does nothing for the stability of the sport.

"This third thing — and only after the first two things have occurred — is you look at whether or not we partition up media rights to financially stabilize the sport. But if you don’t have the first two things in place, the third is useless."

"No one wants another war in cycling," Cookson said. "We've been down that road too many times in the past. I was elected to be a president who seeks consensus. I promised that I would listen and take account of everyone's point of view. We've done that for two years now. We had what we think are a good set of proposals. I've got the back of the UCI management committee right behind me. We have most of the stakeholders throughout the sport.

"But we have to more forward," he added, "and we've got to defend the assets that people have got. And nobody wants to threaten those. We'll keep talking. I'll keep talking. I'm very hopeful we'll find a way forward and that ASO's events will be back in the WorldTour by 2017. We haven't broken off diplomatic relations or anything like that. We're still talking."

On Tuesday, the day after talking to Business Insider, Cookson traveled to Australia to visit the first WorldTour race of the new season, the Santos Tour Down Under, where he said he would likely meet with the ASO's Christian Prudhomme, the race director of the Tour de France.

He is hopeful that he, the UCI, Prudhomme, and the ASO will all come to some agreement between now and 2017. But with the ASO in a position of power and the precarious business of bicycle racing in a holding pattern, the cycling world is left wondering what a compromise would even look like.