Bloomberg News

Tour de France Family Control Under Assault as Race Teams Rebel

June 11, 2012

Armstrong Led the Way in Trying to Get a Piece of the Tour

In yellow, Armstrong cycles past the Arc de Triomphe in Paris at the end of the 2005 Tour de France. His victory that year was the seventh and last of his unprecedented and still unmatched consecutive Tour winning streak. He later considered trying to buy into world's most prestigious cycling competition. Photographer: Alastair Miller/Bloomberg

It was day 16 of last year’s three- week-long Tour de France. The RadioShack team of elite cyclists had just completed a punishing 101-mile slog through Alpine foothills from Saint-Paul-Trois-Chateaux to Gap.

Among cycling enthusiasts, Gap is remembered as the dramatic scene of one of Lance Armstrong’s more acrobatic rides. During the 2003 Tour, another cyclist’s rear tire skidded on the melted tarmac in front of Armstrong, Bloomberg Markets magazine reports in its July issue.

To avoid a collision, the most successful U.S. Tour racer veered off-road, careening downhill through fields before rejoining the peloton -- and going on to win the race.

As rain fell on Gap last July, the manager who oversaw Armstrong’s unprecedented and unmatched 1999-to-2005 winning streak was trying to bring another messy race day to a close. Johan Bruyneel had already lost four team members to crashes or illness. He shepherded the remaining five, exhausted and wan looking, into the RadioShack team bus for massages and some food.

Tempers were fraying. Bruyneel bristled when a reporter brought up a sore subject: the relatively paltry sums the teams get from Amaury Sport Organization, owned by a family that has run the Tour since 1947.

The 50,000 euros ($63,000) or so his team would be getting from ASO wouldn’t even cover expenses for hotels, meals and gasoline, said the Belgian Bruyneel, then 46.

‘Take a Stand’

Bruyneel said the time had come for the riders, the stars of the show, to get a bigger chunk of ASO’s television revenue.

“You have to take a stand at some point,” he said. “It’s normal that someone who gets the biggest part of the cake doesn’t want to share it, but the riders and the teams are the key players.”

As cyclists geared up for the start of this year’s Tour on June 30, the rebellion that stirred in Gap last year continued to build against ASO, which owns the Tour and the Criterium du Dauphine and Paris-Nice events in France and has a 49 percent stake in the Vuelta a Espana, Spain’s biggest bike race.

ASO is a unit of Editions Philippe Amaury, whose chairman, a 71-year-old widow named Marie-Odile Amaury, is the little- known grande dame of the most prestigious cycling event in the world.

Amaury, who has run Editions since her husband, Philippe, died of cancer at age 66 in 2006, faces assaults on her family’s dominance of the Tour from two fronts.

Prize Money

Managers of some race teams -- including those sponsored by RadioShack Corp. (RSH:US) and Garmin Ltd. (GRMN:US) -- have become increasingly outspoken in their pursuit of ASO’s money.

The teams want a share of the TV rights, as well as more of a say in the management of the sport, says Jonathan Vaughters, president of the teams association, which is known by its French acronym, AIGCP.

Vaughters says cycling’s competition model should be brought in line with team sports that spread the winnings around, such as the National Football League in the U.S. and English soccer’s Premier League.

Under the current system, ASO hands 450,000 euros to the winning Tour rider, who traditionally shares it equally among his eight teammates. Riders get an additional 3 million euros or so in prize money spread out over the Tour.

A second challenge to ASO comes from an upstart championship format called World Series Cycling.

Rothschild & Sons

As in Formula One auto racing, the champion racer would be determined by a points system among riders participating in the world’s most competitive races: the Giro d’Italia, the Tour and the Vuelta a Espana as well as six one-day races across Europe and up to 10 new ones around the world.

A 12-page pitch to investors drawn up by London-based N.M. Rothschild & Sons Ltd. for the WSC promoter, Gifted Group Ltd., a London-based sports marketing company, projects an annual profit of 1.8 million euros per squad in 2017.

Bruyneel’s RadioShack Nissan Trek team, as it is now called, and two Spanish teams sponsored by telecommunications companies -- one by Movistar, the other by Euskaltel SA -- are among eight to 10 squads interested in joining the WSC scheme, according to Euskaltel team president Miguel Madariaga.

The initiatives by the team managers and WSC could in themselves change the face of world cycling, says Simon Chadwick, a professor of sports business strategy at Coventry University in England.

Booming Market

“This is potentially a real change in the balance of power,” he says. “The teams are being driven by the marketplace instead of history.”

For an event with a limited following, the Tour draws a sizable audience: In 2009, 44 million TV viewers tuned in for a single mountain stage, helping to make the Tour the 12th-most- popular televised sports event that year, according to Initiative, a London-based media-buying agency.

Amid a booming market for TV sports rights, the Tour could be worth as much as $1 billion, says Conor O’Shea, a media analyst in Paris at Kepler Capital Markets SA.

ASO runs the Tour and reaps revenue from broadcasters such as France Televisions SA and Comcast Corp. (CMCSA:US)’s NBC. Pat McQuaid, president of Aigle, Switzerland-based Union Cycliste Internationale, world cycling’s ruling body, says ASO’s TV deals are worth about 30 million euros a year.

Editions Philippe Amaury Managing Director Philippe Carli declined to give a figure. AIGCP’s Vaughters, who is also manager of the Garmin team, is convinced that ASO’s take is higher than 30 million euros.

‘Big Number’

“I think it’s a lot more than that,” Vaughters says. “I’ve heard all kinds of numbers.”

The Tour’s commercial potential has attracted suitors in the past.

Armstrong says that in 2006, he and about a dozen of his team’s backers discussed buying the Tour while meeting in a private room at Spago restaurant in Palo Alto, California.

He says he raised the subject again in March 2010 in Murcia, Spain, with Arnaud Lagardere, chief executive officer of media company Lagardere SCA (MMB), which owns 25 percent of Editions. Armstrong says the talks went nowhere because of the cost of a controlling stake in Editions, which he estimated at as much as $1 billion.

“It would need a big number for the Amaury family to be interested in selling,” Armstrong says.

Culottes and Sweaters

The first Tour, in 1903, was dreamed up by staffers at L’Auto, a newspaper, to boost circulation.

Photographs from the time show competitors in culottes and woolen sweaters, with some carrying limp, spare inner tubes over their shoulders as they rode.

The first winner was Maurice Garin, a former chimney sweep. The race caught the public’s imagination, with villagers dragging hay bales to the roadside to get a better view.

The Tour was suspended during World War II. Afterward, Emilien Amaury, Philippe’s father, started L’Equipe newspaper, which took over running the Tour.

Marie-Odile married Philippe in 1969. After he took control of the family business in 1983, she became a director of its only -- and now defunct -- radio station, Le Poste Parisien.

At the same time, they were raising their two children. She joined the Editions board in 1990 and became No. 2 to her husband.

Meanwhile, the Tour was gaining a more international audience.

Doping Scandals

In 1986, Californian-born Greg LeMond became the first non- European winner, garnering the commercially attractive U.S. audience, which doubled to an average daily viewership of 1.2 million during the Armstrong years.

This year, the 22 teams scheduled to compete come from 12 countries.

Today, even after the doping scandals that besmirched the event and stripped American Floyd Landis and Spaniard Alberto Contador of their winning titles in 2006 and 2010, the Tour is a more valuable asset for the Amaury family than the newspaper titles the Tour was originally designed to promote.

Marie-Odile Amaury, who drives a Peugeot 407 and favors prim, tasteful clothing, hardly ever gives interviews, and she declined to grant one for this article.

“I am naturally rather reserved,” she said in an interview with Le Point magazine in March 2010. “I don’t consider myself a public personality.”

‘Not Flash’

UCI’s McQuaid, who lives in Switzerland, says that when Amaury meets him for lunch in Paris, it’s at an ordinary brasserie.

“She is not flash at all,” he says.

Nor is Amaury’s business style, Carli says. ASO’s expansion under her leadership has been mostly cautious and focused on its historical strengths, such as the purchase of Spain’s Vuelta.

“We have a real savoir-faire to organize cycling races,” Carli says. “We believe we have to focus on this savoir- faire.”

That hasn’t prevented ASO from delving into other sports. It runs the Dakar off-road automobile endurance race and the Paris marathon.

ASO is more profitable than the Amaury family’s other interests, such as Le Parisien and L’Equipe newspapers and a 28 percent stake in B.E.S. SAS, the French unit of online betting company Bwin.Party Digital Entertainment Plc. (BPTY)

ASO had total revenue of 147 million euros in 2010. It recorded an average annual net income of 30 million euros in the six years through 2010, according to the unit’s financial reports.

Family Enterprise

The Amaury family owns 75 percent of Editions, which had sales of 671 million euros in 2011.

All signs suggest that Editions will remain a family enterprise.

Amaury appointed her son, Jean-Etienne, 35, chairman of ASO in 2008. He has an MBA from Stanford Graduate School of Business and began his career developing new media at the London office of Bloomberg News for five years through 2004.

His sister, Aurore, a lawyer who turns 38 on July 8, is also on ASO’s board.

As steeped in Tour history as she is, Marie-Odile Amaury is moving with the times.

In March, wearing a tweed coat and reading glasses, she appeared before a panel of French TV regulators and invoked her family’s rich sporting heritage before getting approval, a few weeks later, to set up a digital channel for the L’Equipe brand.

Crown Jewel

As cycling’s landscape evolves under pressure from challengers such as WSC and as the teams that will whiz across TV screens this summer eye a new business model, Amaury may have to move again to protect her assets.

Whatever she does, if it involves the Tour, it will be done with her two children in mind and with a firm grip on cycling’s crown jewel, Carli says.

“If you discuss the Tour with the children, you can see their eyes shining,” he says. “It’s a legacy.”

Vaughters, 39, says the teams aren’t trying to stage a coup against the Amaury family. He says it’s important to work with ASO as well as McQuaid’s UCI to update the economics of competitive cycling.

“We need to convince them to see the advantages of reforming the system and the sport,” he says.

Vaughters says he tried to broach the subject of sharing TV revenue with Amaury at a cycling dinner last year. He says she referred him to her executives -- politely.

Getting what he wants could be as tricky as Armstrong’s wild descent into Gap all those years ago.

To contact the reporter on this story: Alex Duff in Madrid at aduff4@bloomberg.net.

To contact the editor responsible for this story: Laura Colby at lcolby@bloomberg.net


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  • GRMN
    (Garmin Ltd)
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