Business of Sports: Cycling's hot mess

Business of Sports is exclusively for Bloomberg.com subscribers. As a loyal reader, you're receiving a complimentary trial. If you'd like to continue receiving Business of Sports, and gain unlimited digital access to all of Bloomberg.com, we invite you to subscribe now at the special rate of $129 for your first year (usually $299).
Learn more

Welcome to the Business of Sports newsletter, where this week we look at how bike maker Bianchi plans to make money, what the co-owner of Santini — the maker of the Tour de France's famed yellow jersey — thinks about the cycling industry, and reveal the latest on the cycling super league. We also chat with Aaron Kless , the Chief Executive Officer of Andalusian Credit Partners about how not to get trapped by the vanity play.

Also, given we go on and on about how easy it is to lose money in football, here's a story about a bunch of American firefighters and prison officers look set to make a profit from their English investment in Ipswich FC.

As always, send us any feedback, tips or ideas here. If you aren't yet signed up to receive this newsletter, you can do so here.

Dreaming of Money in Cycling

The Tour de France is coming to a close, with Tadej Pogacar on his way to his fourth title — as long as no diseased cows get in the way. On Sunday, he'll battle up Montmartre in an iconic new finish to the race, inspired by the success of last year's Olympics when thousands of flag-waving spectators packed the cobbled streets. It's a great idea.

Behind the scenes, cycling is a hot mess. From struggling teams and collapsing retailers to shifting consumer habits, the industry is reckoning with a botched post-pandemic business model.

To break it down, we look at the state of professional cycling, talk to the new CEO of a famous bike brand and chat to the family owner of a bike clothing brand, in an attempt to understand a bit more about the cycling industrial complex.

The Professionals:
We've written before about how the organizers behind the Tour de France make a lot of money.

Groupe Amaury, the family firm that owns the race, boosted revenue 7% to about €588 million ($640 million) in revenue in 2023, according to the latest available figures. Amaury Sport Organization, which oversees the Tour de France, has historically represented about half of the group's revenue.

But the companies behind the scenes in cycling seem to have the same business model as the Premier League: rely on big pockets of capital to prop up money-losing teams. The biggest cycling teams that compete in France and other UCI WorldTour events cost up to €50 million a year to run. They have to constantly find new sponsors to keep the show on the road. The winner of the Tour de France makes €500,000. It doesn't add up.

It also doesn't help that, outside of the big tours, cycling fails to break through into a crowded sporting calendar. Even the Tour de France is reportedly facing a small decline in viewers.

The pack of riders during the AlUla Tour cycling race in Saudi Arabia on Jan. 31, 2025. Photographer: Loic Venance/AFP/Getty Images

Which is probably why OneCycle, the Saudi-backed cycling league funded by a number of WorldTour teams, is still plotting how to revamp the sport. But rather than do it alone, the sports arm of the Saudi sovereign wealth fund is looking to bring on other investors to build a $300 million war chest to create a new league, according to people familiar with the situation.

The big sell is to get some of the best sports investors onboard to help teams make money. Better revenue sharing, better broadcast rights, better global sponsorship packages, etc. The success of this new league could also trickle down to help cycling brands improve their margins – in theory.

The plans have been rumbling on for about a year, but the UCI – the organization in charge of the sport – doesn't want to share, as they've made clear to us previously.

Which is fine, but perhaps not sustainable. Look at it this way. Nike and Adidas spent millions on supplying and sponsoring football clubs, but they make far more selling jerseys, football boots and trainers. Cycling manufacturers do not. Most of them lose money. Even the best ones.

This is nothing new. But there is a strong argument that a profitable professional sport will help struggling bike brands. Imagine supplying and part owning a team that actually makes money?

The Bike Maker:
After a career working for brands such as Maserati and Alfa Romeo, Alberto Cavaggioni took the top job at Bianchi in March. The 140-year-old Italian bike maker – owned by a Swedish conglomerate – is undergoing a revamp, after completing a new factory last year, bringing new products to market and looking to expand outside Europe.

Bianchi sponsors the Arkéa-B&B Hotels team in the WorldTour, a marketing move intended to drive sales of its high-end racing bikes.

"If you want to sell more road racing bikes, you need to be part of the WorldTour," Cavaggioni said. "And you need to win."

Bianchi also sells products for gravel biking and e-bikes, and has begun increasingly looking to work with athletes in different sports to sell products. Its next hurdle is to ramp up its global presence, without producing more inventory than the market needs. Expanding in markets such as the US and Japan are on the list, Cavaggioni said.

"We need to manage the lifecycle of the product," said Cavaggioni, "And more people need to fall in love with what we bring to market."

One of Cavaggioni's first problems was dealing with inventory. Numerous bike retailers have gone bust in recent years after stocking up on large inventories during a pandemic-fueled boom and then having trouble selling them.

"The biggest issue we are all facing is the fact that dealers carry a lot of inventory," said Cavaggioni. "All the original equipment manufacturers have been discounting to sell out stock, and this has polluted the market."

Bianchi made €124 million in revenue last year, up about 3% from the previous year. Cavaggioni declined to comment on the company's profitability. Nonetheless, the company is hiring and slowly ramping up production.

Bianchi is a famous brand. Others are not so lucky. In the US, 68 bike brands closed last year. Meanwhile, teams and brands are still hunting for billionaire bakers.

The Clothing Brand:
Unsurprisingly, the makers of biking gear are also struggling. The troubles of Rapha – once the darling of the industry, have been well documented. Other, smaller brands such as Velovixen, a kit company specializing in womenswear, and Milltag, have also gone bust in recent years.

"The fact that the industry is struggling is mostly the industry's fault," said Monica Santini, chief executive officer of Santini. "Covid was a fantastic time for cycling, where growth was unimaginable. People thought growth was a normality."

Slovenian rider Tadej Pogacar celebrates on the podium. Photographer: Anne-Christine Poujoylat/AFP

Based in Bergamo, Italy, and founded in 1965, Santini is the official apparel partner of ASO, the organizer of the Tour de France and other races. It produces the Tour's iconic leader jerseys, including the yellow jersey worn by the overall race-leader. The riders are even fitted the night before, with Santini seamstresses fitting and altering the skinsuits used for the time-trials. One of these suits costs about €900.

Unlike many bike firms, Santini turns a profit, earning €100,000 last year off revenues of about €25 million, according to a spokesperson. That's up from 2023 when it generated sales of €23 million and a similar profit margin.

Monica Santini, daughter of the company's founder, emphasized that, unlike many competitors, the company has maintained in-house production based in Italy. This approach results in a significantly shorter supply chain, with 80% to 90% of products manufactured locally. This helps it manage orders for its products without worrying about inventory. Nobody wants a shipping container full of unwanted cycling bibs making its way from Asia.

It's also one of the few major brands that has remained family owned. "We had so many possibilities to open up to capital," Santini said. "We never agreed to anything so far because we didn't see a good project. To sell a company for the sake of the money is not in our DNA."

Perhaps unsurprisingly, Santini was diplomatic when asked about her thoughts on whether a cycling superleague would upend the sport.

"If there is a change in the industry — and it becomes bigger — it might be good for some people to seize the opportunity," she said. "But I hope we don't lose the soul of the sport."

ICYMI

President Donald Trump signed an executive order that calls for then end to "pay-to-play" payments in college sports.
Liverpool Football Club owner Fenway Sports Group remains committed to the team long term, according to the club's Chief Executive Officer Billy Hogan said, adding that its recent spending spree should put speculation about its future ownership to bed.
NFL star Bobby Wagner has purchased a minority stake in the WNBA's Seattle Storm. The team now has a valuation of $325 million. That's up from a reported $130 million in 2024.
Trump is playing golf in Scotland. Why can't you (if your budget is big enough)?
A local developer has assumed full ownership of the Oakland-Alameda County Coliseum, paving the way for the revitalization of the deteriorating California complex and a proposal to spend $5 billion transforming the 112-acre complex.
There's one big flaw in Trump's distracting threat to hold up a deal for the NFL's Washington Commanders to build a new stadium unless the team changes its name. The deal is already done.

Credit Loves Sports, Too

Hey, it's James. Sports has mostly been an equity story, but credit investors are also jumping in. US billionaires are hungry for deals and sovereign wealth may be the last buyer standing as deal size balloons.

Andalusian Sports Partners has advised on high-profile sales of stakes in Everton F.C., the Tampa Bay Lightning and the Philadelphia Eagles. It's backed by Appaloosa Management founder David Tepper and has a private debt arm, Andalusian Credit Partners. The latter's Chief Executive Officer, Aaron Kless, joined the Bloomberg Intelligence Credit Edge podcast to discuss how not to get trapped by the vanity play.

Aaron Kless, chief executive officer of Andalusian Credit Partners, says sovereign wealth funds are only getting more interested in buying sports franchises. Source: Bloomberg TV

US investors are all over foreign sports. Has that trend peaked?

The US invasion into other markets is just getting started. Cricket is a really hot one. Everyone wants to talk about the Indian Premier League and how that's remaking cricket.

I've had the opportunity to spend some time with Premiership Rugby over in the UK, and they're going to do some interesting things. You're going to see some US people with money trying to buy those teams because there's going to be some teams for sale.

There's other interesting — we call them emerging — sports. Whether it's SailGP, which is a professional sailing league that's quite international. There's a horseracing league — believe it or not — that's being launched.

What's the credit opportunity?

We're focused on what we call sports-adjacent businesses. Think services businesses whose end markets are professional sports. Generally speaking, sports have been quite recession resilient. And when they have taken dips, they've come back fast.

Obviously, professional sports are primarily about media rights and media contracts. Amateur and youth sports are more about engagement, fan engagement and participation. So those are separate dynamics, but they sort of feed off of the same spirit.

What's new?

There's a lot of technology being introduced. It can be things like ticketing, finance, player health and safety. The less esoteric stuff is concession and catering, parking and security, production, equipment, apparel. And then also all the things that are taking place around IP and IP rights management. Not just at the professional amateur and youth level, but now at the collegiate level.

What's the next big sports deal?

There are going to be more announcements around these NFL minority deals. You'll see other major league teams in the US trade. And I think really the big one is going to be something around collegiate sports. One of the big league conferences did hire an investment bank to go out and run a full process. So that's going to happen.

Will investors accept less return because they love the sports?

That's always a danger when you're doing sports, media and entertainment investing, but it's a bigger danger for the equity investors. At the end of the day, we're credit investors. We stick to our knitting, we focus on fundamentals, which is for us, cash flow, structure, downside protection. We're not getting caught up in the vanity play of it.

Do you worry about demand when it's so expensive to be a fan?

I don't, to be honest. There aren't a lot of products that you can lend to that are really built around multigenerational passion.

At some point, there will be a breaking point where the tickets will be too expensive, you know, the hot dog or the popcorn will be too expensive. But I think we're far away from that.

Who are the new investors?

A lot of the largest sovereign wealth funds are interested in getting deeper into sports investing. Following them have been some of the larger pension systems.

Why do you expect sovereign wealth interest in sports to grow?

There aren't that many other people who can afford to buy an $8 billion team. They're going to become the last buyer standing. That's the pull.

The push is that internationalization of the brands and the internationalization of the activities — bringing the NBA to China, bringing the NBA to Europe, bringing a higher level of soccer or football to the Middle East. Huge underserved markets with populations that are really clamoring for access.

Look at India Premier League Cricket — you can really create some very significant media contracts where maybe it wasn't obvious that they would've existed previously. Sovereign wealth funds are here to stay in sports.

Does your platform need to grow to accommodate demand?

Yes, for sure. We see a lot of opportunities around things like stadium financing and adjacent real estate financing. That's not what we do. We're not real estate investors, but it could make a lot of sense at some point when we're ready for it to bring on a team and capital that knows how to do that.

We're senior lenders, but we see a huge amount of opportunities in sports in what I would call solution capital. Lower in the capital structure, more junior opportunities across adjacent businesses, emerging leagues and international as well.

(Editor's note: the interview has been edited and condensed for clarity.)