Wednesday, May 06, 2009

Financial turmoil in the cycling world!

WOW! Ok, so I am very biased on this. I get about 40 tweets a day from Team Astana members. So when there is talk that the Giro may be the team's the last race, I get scared.

Boulder Report » Blog Archive » Giro d’Italia 2009: Is This Team Astana’s Last Race?:
"...In the original Vinokourov deal, seven co-sponsors collaborated to support Astana, named for the country’s capital. The sponsors paid regular installments to the federation, which then bankrolled the team....

Membership, of course, has responsibilities along with privileges, including the posting of a guarantee of 25 percent of rider and staff salaries (or 975,000 Swiss francs, whichever is larger) to an escrow account held by the UCI, and annual audits by Ernst and Young, the UCI’s independent accounting firm. In the event that a team’s riders go unpaid for a certain amount of time, the escrow account can be tapped to cover the shortfall. But the UCI also reserves the right to suspend or withdraw racing licenses for such financial difficulties.

And that appears to be precisely what is happening.

According to, only three of the eight original sponsors have paid....The reasons are not firmly known but, it’s assumed that the financial crisis and, particularly, the collapse in commodities prices in late 2008 are partly to blame. Kazakhstan is a resource-intensive economy and many of the sponsors rely on revenues from oil, natural gas and mining, three sectors that were hit with incredible speed and ferocity by the recession....According to sources within the federation, reported that the UCI has already drawn Astana’s $2 million bank guarantee reserve down to nothing."

Now what? The article (which while great for the biking crowd may a bit much for those looking for finance, suggests that if the funding collapses, look for Lance to lead a group of investors to launch their own team. (Maybe Nike?). But regardless, it would APPEAR the team would be allowed to bring the big names to the Tour. Stay tuned.

UPDATE 5/7/2009: Lance complains about lack of transparency and brief discussion of what LiveStrong can and can not do. From ESPN.

1 comment:

mapgirl said...

I wouldn't worry about it. Teams lose sponsors all the time. They will reconstitute with a new sponsor. Think 7-11 -> Motorola.