Top American Tour de France team says it'll have to shut down if it doesn't find $7 million in the next week
The most popular American cycling team, Cannondale-Drapac, was dealt a blow late last week when a promising sponsorship deal for 2018 fell apart, team boss Jonathan Vaughters has told Business Insider.
As a result, Vaughters says, the team is $7 million short for next year and will have to shut down in the next week or so unless it quickly finds a new sponsor or moneyed backer.
While the team is currently racing in the Vuelta a España and set to finish this season as planned, next year is suddenly in question. The team's riders would be without a team for 2018, and its staff members would be without a job.
Vaughters said the riders were freed from their contracts over the weekend and could look to ride for other teams. Yet he says he's hopeful that, somehow, the money will come.
"If some company or someone wants to come forward in the next week, then they can save the only team that sends Americans to the Tour de France," Vaughters said. "And if not, then by Christmas this year Slipstream Sports LLC would no longer exist as a company."
Slipstream Sports is the sports-management holding company that owns Cannondale-Drapac. Slipstream is owned by the New York-based private investor Doug Ellis. Cannondale is a US-based bicycle manufacturer and Drapac is an Australian-American real-estate firm.
Ellis and Vaughters started Slipstream in 2005 as a "clean team" whose stated mission was to compete at the highest level of the sport without doping.
Cannondale-Drapac was the only team at this year's Tour with American riders.
"It was a done deal - I mean, we had a contract," Vaughters said by phone from Colorado, where Cannondale-Drapac is based. "We were deciding on uniform design and how the bus was going to look. But the contract always had this clause that said, unless there was unanimous consensus at the board of directors meeting, the contract could be terminated. We always knew there was a risk, and in the end consensus was not unanimous."
The news has stunned cycling. Besides being one of the sport's most popular teams with stars like Taylor Phinney and Rigoberto Urán, Cannondale-Drapac had its best Tour de France this July after Urán won a key stage and finished second overall, less than a minute behind Chris Froome. Other highlights included a stage win at the Tour of California and the Giro d'Italia and a podium appearance at Paris-Roubaix. During the Tour the team announced it had landed a new sponsorship deal with the Verizon-owned digital-media company Oath. Also at the Tour, Vaughters told Business Insider he had "superstrong leads" for new sponsorship and was hopeful one of them would work out.
In May, Vaughters wrote an op-ed article in which he described pro cycling as the best sponsorship deal in sports that brands were missing out on.
Cannondale-Drapac has become known as cycling's "Moneyball" team, in reference to the baseball best-seller. His organization has an annual budget of about $15 million, about one-third that of Froome's Team Sky. That has meant he has had to find undervalued riders with untapped potential whom he can afford to sign and who could win races. Urán, the team's only million-dollar athlete entering the Tour this year, recently renewed with the team on a lucrative three-year contract, but now his future, like that of all the riders, is uncertain.
Sources told Cycling Weekly that the company that pulled out of the sponsorship deal with Cannondale-Drapac at the last minute was the online betting website Unibet, the cycling site reported on Sunday. Unibet had previously sponsored a cycling team; coincidentally, it was one of the first teams Urán had raced with when he moved to Europe, in 2007, the same year Ellis and Vaughters launched Team Slipstream.
'This is no crying wolf - we've got 10 days from today'
Vaughters said the team already had "$10 million locked up for next year, committed." That $10 million is made up of roughly a third from Cannondale, a third from Drapac, and a third from Oath, with "some odds and ends" making up the last million.
"But we can't do the team on $10 million," Vaughters said. "Our operational expense is $4 million, then your rider payroll is $10 million on its own. We needed at least $15 million or $16 million to get through, and we came up with $10 million. We needed that last $5 million, which would be the cheapest naming-rights sponsor in all of cycling. We needed that last $5 million, and it just fell through.
"This is no crying wolf - we've got 10 days from today," Vaughters said Friday, "to either do it or pull the pin. It doesn't mean we need a $7 million check or whatever by tomorrow. I mean, we're fine till the end of the year. But we just can't run anything in 2018.
"You know, people ask, 'Why don't you just keep looking for a sponsor all the way till November?' But the reason for that is it's not fair to the riders. So I just keep all these guys locked up, right? Then in November I come up with a goose egg, then it's, 'Oh, OK, sorry - you guys are released from your contract.' They'll be, like, 'Well, how am I going to find a job now in November? All the positions are tied up?' So to be fair to the athletes I have to call all this, you know, very soon."
The team said on its website over the weekend that it was setting up a public fundraiser so it could try to save its 2018 season. Vaughters told Business Insider in a follow-up call on Monday that he was exceedingly pleased with the initial interest from the public, in both financial and moral support.
Asked whether the team could run as a pro continental outfit - that is, one level below WorldTour, cycling's highest level - Vaughters said no, not really, because the team's other sponsorships are contingent on a WorldTour license.
"Unfortunately, you know, if you're a French team, you could do that, because you'll get invited to the Tour de France," he said. "It's like that new Vital team - it's like an $8 million budget. But they'll run a single program, not doing two races at the same time and all that. They won't be WorldTour, and they'll still get invited to the Tour de France, because they're French.
"Whereas if you're an American team, if we were a pro continental team, I don't think we'd get invited to the Tour. I mean, maybe if we had Rigo under contract - maybe. That might be the kicker, but you can't count on that. And all the sponsors who have to sign off on that maybe, maybe not ... well, you know.
"It just doesn't make any sense," Vaughters said. "We just had our best Tour de France ever. We really need somebody to step up."
Below are excerpts from an email that Vaughters sent on Friday.
Everyone:
Apologies for the mass email, but all of you on this list have either helped Slipstream Sports (Team Cannondale-Drapac) or have considered helping us out at one point or another. Thank you for that support; it's what has kept us going for over a decade.
However, unfortunately, I have some very bad news concerning the team. This morning we were notified by a very promising potential partner, that they would be unable to complete the deal, due to dissenting opinion on their board of directors. As a result, we were unable to finalize a naming rights sponsorship deal with them for 2018. Very disappointing, considering finishing 2nd in the Tour de France and winning stages in both the Tour de France and Giro d'Italia. Our being unable to finalize a naming rights deal means we will not be able to continue as a team in 2018 or in the future. Instead we will need to wind down and end Slipstream Sports LLC, if nothing changes in the current situation. [...]
This is also very sad news for all of you who have helped us in the fight against doping and for the rights of clean athletes. We were the team that index tested the biological passport. We were the first team to promote open and transparent conversation regards doping and how to prevent it. We were the first to be honest about the topic. And that now stands at risk of being lost. [...]
For over a decade, despite our shrinking athlete payroll and increased financial demands, we were able to take on, and often beat, teams with over $40MM at their disposal. We were, and still are, incredibly proud of being able to confront these financial Goliaths - and - occasionally show them that it isn't always the size of the dog in the fight, but the size of the fight in the dog. 2017 was our best year ever, coming very close to winning the largest race in the world with a rider no one would have given a 1/1000 chance of winning at the start.
Sadly, we are now in our last fight. And that's our fight for existence. If any of you can think of any solutions or any party that wants to financially rescue this team, we are ready and willing to keep on with the good fight, and find the next, unexpected, Tour de France winner. I've attached a small presentation for you to send on to any interested parties. We have about 10 days left before we have to definitively turn the lights off for good.
Thank you all for everything you've done. Thank you for taking the time to read this note. And thank you for giving this one last push.
JV