Monday, February 9, 2009

Tour de France team budgets, 1989-2008

Interesting post from Kadisco regarding Tour de France team budgets, 1989-2008

Interesting in the light of the fact that rider's salaries seemed to have fallen 40% over the last few years and that despite the globalsiation of cycling and the Armstrong effect cycling hasn't kept pace with other sports.

The March 1989 issue of VeloNews - reproduced on page 18 of the January 2009 issue - estimated budgets for some of the era’s leading teams: Cafe de Colombia, PDM, Panasonic, etc. In 2008 dollars, the average of the 9 teams on the list that contested the ‘89 Tour is $6.12 million. According to VeloNews’ 2008 Tour de France guide, last year’s average budget was $10.64 million. Presumably those are official numbers released by ASO.

Although the comparison between 1989 and 2008 dollars is pretty solid, there’s a lot of uncertainty in using that as a basis to compare a bunch of 1989 currencies to the 2008 Euro. But I can’t think of a better comparison, so let’s say that team budgets increased 74% in real terms between 1989 and 2008. There are some numbers out there for rider salaries in 1989 (New York Times) and 2008 (Wall Street Journal), but the I’d consider the reporting of those to be less accurate.

Here is some context. IEG estimated that 2007 global sponsorship spending totaled $37.9 billion, a 425% increase compared to 1989 spending, as estimated in a report conducted by Sponsorship Research International in 1998. Again, lots of uncertainty. It’s worth noting that both reports estimated sports sponsorships to be about 2/3 of total spending.

To be fair, there are major sponsorship outlets today - like the UFC and action sports - that barely existed in 1989. Market fragmentation and statistical uncertainties aside, I think it’s fair to say that cycling team budgets have not kept pace with the global sponsorship marketplace. But that might be a good thing. Despite the doping scandals, a $10 million price tag to access the global platform of the Tour de France remains saleable, even in the currrent economy. It’s a hard sell, but at least it’s possible. At $35 million, probably not.

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