Millions Of Spectators And No Tickets: Unpicking The Tour de France Business Model
Although one of sport’s biggest mega-events has now come to an end (the World Cup), we are still only halfway through another – the Tour de France. Already, there are clear comparisons to be made between them. Just as the World Cup lost two of its biggest stars during the competition’s early stages (Spain and Italy), so too has the Tour de France, with Britain’s Chris Froome and Alberto Contador of Spain already gone from the race. In the end, football aristocracy still triumphed in Brazil as Germany ran out winners, the question is: will the likes of Vincenzo Nibali from Italy or Alejandro Valverde of Spain ensure the same happens in cycling’s premier annual event?
Comparisons between the cycling and football showcases do not end there. Both are short, sharp shots of sporting spectacle, during which they mesmerise fans, and grab the attention of the media, sponsors and host cities. The battle for eyeballs is intense, the television viewing figures immense: while around 1 billion are likely to have watched Sunday’s World Cup Final in Rio, the organisers claim some 3.5 billion people are likely to watch the Tour de France at some stage during its three-week duration. Both events truly are the pinnacle of global sport.
They share problems too, most notably corruption of the sporting ethic. In the World Cup’s case, alleged match-fixing seemingly appears to be a perpetual problem, while most of us are already aware of the constant battle the Tour de France has had with doping. There are “off-field/off-road” problems as well, particularly around ethics and governance. Now the World Cup is over, we can look forward to seeing the results of Michael Garcia’s FIFA investigation, and cycling faces such issues too. The Union Cycliste Internationale (UCI) is also currently carrying-out a similar investigation, while cycling faces several ongoing issues around ownership and governance of the sport.
And this is where the World Cup and the Tour de France start to deviate from one another. Notwithstanding deep concerns about FIFA’s ethics and governance standards, FIFA is at least represented by an elected board. The Tour de France is instead owned by the Amaury Sport Organisation (ASO – which is in turn part of the Amaury Group) and privately controlled by the Amaury family. The Amaury’s are also owners of French daily sports newspaper L’Equipe, and it is because of French newspaper publishing that the Tour first came into existence. Back in 1903, the editor of L’Auto newspaper, Henri Desgrange, decided to start a cycling race around France to boost sales of the new publication.
This helps to mark out one of the biggest differences between the Tour and the World Cup. For last Sunday’s World Cup Final, the minimum ticket price for an overseas fan was around £300. FIFA does very nicely from selling tickets too, generating more than $1 billion dollars in revenue. By comparison, the Tour earns nothing from ticketing; the event is run on public roads and was never designed to make money from tickets – it was intended to sell newspapers. At a time when many sports are growing commercially, there is a consequent financial hole for Amaury which has to be filled in other ways.
There are three principle sources of revenue for the Tour: through the sale of broadcasting rights, via the generation of sponsorship revenues, and by charging a fee to towns and cities that host the event. In Great Britain, following Bradley Wiggins’ TdF win in 2012 (when television audiences peaked at 3.6m/28.2%), ITV extended its agreement with Amaury until 2019. Likewise, America’s NBC network struck a deal with the race’s owners in 2012 to broadcast it until 2022. Audience figures show there is a reasonably strong and stable appetite for televised cycling. But it is difficult to know with any accuracy what broadcasters are paying for their deals with the ASO, but it seems the sums involved are not particularly large (certainly not compared to other sporting mega-events like the World Cup).
The advertising and sponsors “caravan” that precedes a stage each day has become a TdF institution, loved almost as much as the race itself. It has been estimated that more than 11m promotional items are handed out over the course of the event. Quite what sponsors pay to ASO is open to question, although it is believed that sponsorship of the four leaders’ jerseys generates around €6m. Otherwise, it seems that some of the deals are “in-kind” in nature. For example, Skoda gives the organisers 250 cars each year for the event. Yet the companies involved can expect a healthy return on their investments, one estimate being $5 for every $1 spent on sponsorship.
Last weekend’s start of the Tour in Leeds came in somewhere around the £4m mark, according to reports; the event’s “Grand Depart” always commands a premium. Typically, to become the starting point for an ordinary stage costs around €50,000; to become the finishing point for a stage is more likely to cost €80,000. When one considers that, for example, 2.5 million people are thought to have been in Yorkshire for the start of this year’s race, these are relatively small sums of money. Contrast this with the $13 billion the World Cup is estimated to have cost Brazil.
Overall, it is obvious that the TdF is nothing like the World Cup in its commercial and financial scale. Latest figures show that the Amaury Group generates about €170 million per year. Even this figure is rather generous as it includes revenues from the organisation’s other sporting properties (notably the Paris-Dakar motor rally). Indeed, after costs, Amaury could be making less than €40 million a year from the Tour. Such figures indeed indicate that, unlike the World Cup (which in Brazil is believed to have generated in excess of $4 billion dollars for FIFA) the Tour de France is small-scale, commercially under-developed and conservatively managed by ASO.
That said, there is something compelling, even romantic, about the Tour de France, which seems bound-up in French values of Liberté, Égalité, Fraternité. Here is a sporting mega-event that you do not have to pay to watch, can stand in a street and view, and that does not seem to have become the corporate mega-fest which FIFA has cultivated with the World Cup. Ironic really when you know the race was actually setup as a money-making venture in the first place (unlike the World Cup, which was not). One nevertheless gets the sense that the TdF and ASO need to do something more if the race is to retain its position as one of the world’s foremost sporting properties – because right now, in the sprint for the (commercial) finishing line, the TdF is lagging behind.