Last month Colnago announced that its turnover had tripled in the three years since Abu Dhabi-based investors bought the company from founder Ernesto Colnago in 2020. In a press release, the brand revealed that its turnover for 2023 was €55 million ($60 million), citing as a reason not only its “clear positioning at the top of the drop-bar segment of the cycling market” but also “the opportunity to have two great teams in the WorldTour, both male and female … UAE Team Emirates and UAE Team ADQ raises the level of demand and stimulates us daily to improve our product.”
Exactly how much does having a team in the WorldTour raise demand for a brand’s bikes – and does having Tadej Pogačar on board raise demand even more? Is it even possible to track it?
As many commentators pointed when the Colnago released the news of its performance, it appeared to be bucking the trend in the bike industry, which is still struggling with the post-Covid crash that has seen most of the biggest players, including Shimano and Giant, report decreases. However, there’s an argument that Colnago’s pre-Abu Dhabi takeover turnover at $20 million was poor for a brand with such history and heritage, and that it should be turning over $100-150 million like rival WorldTour brands such as Pinarello, which was valued at $270 when owners L. Catterton sold the brand to billionaire Ivan Glasenberg last year.
Ernesto Colnago was Eddy Merckx’s framebuilder at Molteni in the 1970s, he worked with Enzo Ferrari to develop carbon-fibre for bicycle manufacturing in the 1980s and in the 1990s the Colnago C40 became the first carbon bike to win Paris-Roubaix and dominated the Classics with Mapei. In the 2000s Oscar Freire won two World Championships on a Colnago and Michael Rasmussen might have won the brand its first Tour de France in 2007 had he not been thrown out while in the yellow jersey after it emerged he had lied about his whereabouts before the race. In the 2010s Colnago sponsored French team Bouygues Telecom, which became Europcar, with Thomas Voeckler winning the polka-dot jersey in 2012 and riding a matching C59 – but from this point Team Sky would dominate the Grand Tours for the rest of the decade. Colnago didn’t sponsor a WorldTour team in 2015 or 2016 (UAE Team Emirates and Colnago took over from Lampre-Merida in 2017) and Pinarello’s boost may have come at Colnago’s expense.
So while it’s not in doubt that Colnago is undergoing a Manchester City-style transformation under its new UAE owners, how much of it is down to the Pogačar effect? If the 25-year-old Slovenian, who won Colnago’s first Tour de France in 2020, repeated it in 2021 and is targeting a Giro-Tour double this year, wasn’t on Colnago’s bikes, would the balance look as healthy as it does at this moment?
Colnago’s CEO Nicola Rosin told Rouleur: “We defined a very clear mission and strategy,” he says, referring to the restructuring of Colnago which took place after the 2020 takeover. Rosin himself was appointed CEO in 2021. “We are a company that decided to stay focused and vertical on a specific segment of bike: drop bar bicycles. I think this clear positioning is an ingredient of our success. We wanted to be the most desirable brand in cycling and we worked in this direction. I believe that now we are in a very good position on that.”
Rosin additionally attributes Colnago’s success to its new management team: "We created a great group of professional managers, with an excellent marketing and product marketing understanding.” And of the sponsored teams themselves: “We have two great teams: UAE Emirates and UAE ADQ. They are fundamental because of the visibility and to prove that products are top-athlete tested.” And Pogačar? “Of course, Tadej is another great ingredient of the success. He is an amazing personality, and he is winning but the equation is not so simple. You might have a great winning athlete but struggling with sales. So to summarise, I think you can understand that our success is a mix of different ingredients.”
The biggest and most obvious example of a Tour de France winner raising a brand’s profile – and turnover – is of course when Trek sponsored Lance Armstrong and US Postal Service. Armstrong became the first American to win the Tour for an American team on an American bike. We now know the full story about his win – more commonly written ‘win’ – but the seven Tours de France between 1999 and 2005 were a golden era for Trek. The brand reportedly saw its support of Armstrong initially as a human interest story: he was a former world champion recovering from testicular cancer and attempting, at the time against the odds, to come back to the top level of professional cycling. But later, according to Forbes, a Trek spokesperson compared the brand’s deal with Armstrong to “like putting a penny in a slot machine and having a million dollars pour out”. The Chicago Tribune reported that Trek’s turnover was $18 million pre-Armstrong, growing to about $400 million in 2002, $800 million by 2010 and reaching over a billion. Trek cut its ties with Armstrong in 2012 after he received a lifetime ban from the US Anti-Doping Agency which was upheld by the UCI and it was 2013 when he confessed to Oprah Winfrey that he had doped for all seven of his Tour wins.
So is Colnago’s Rosin playing down the Pogačar effect? What happens to a leading bike brand if it doesn’t sponsor a top cycling team with a Tour de France winner? Andrew Juskaitis is the global marketing manager for Giant, the world’s largest bicycle brand. Giant sells bikes for every type of cycling with sales “knocking on $3 billion including our manufacturing” [Giant makes bikes in its own factories for other brands]. So how important is it for Giant to have a team in the WorldTour and a Tour-winning rider? Jayco-Alula men's team ride Giant bikes while the women's team ride Liv, Giant's sister brand. “Sponsoring WorldTour teams is something we’ve done since 1996 – we launched the Giant TCR 28 years ago – and we’ve done it for two reasons. We truly do get positive feedback – or negative – from the team in developing what we consider to be world-class top-level racing bikes. The second thing is visibility and significance in the marketplace. In 2021, we skipped a year of sponsorship. The contracts didn’t come through in time, it had been very difficult during the pandemic and these contracts come down to the last minute, cents, dollars. But the one year when we were not involved in the WorldTour it directly affected our sales. So to answer your question succinctly, we cannot not sponsor a WorldTour team.”
Juskaitis warned at the outset that he would not be able to discuss actual figures, but it’s common knowledge that bike brands spend around $5 million on WorldTour team sponsorship. “It is very expensive,” agrees Juskaitis. “In terms of our total marketing budget it is a significant portion of it. It’s not F1 but in the bicycle world it’s as expensive as it gets. But we cannot sell the TCR certainly in Europe without having WorldTour team representation of that product. I can’t comment on the percentage slip in sales [in 2021] but I can say that that significance primarily comes from Europe.”
Does it make a difference to Giant whether it has a Tour de France winner? The brand hasn’t yet won the GC at the Tour, although it has won green and polka dot jerseys and the 2017 Giro d’Italia. “Number one it’s showing up to the start line. It can help to be at the top. When we won the Giro with Tom Dumoulin we saw a slight spike. But long term and big money, we have to be at the start line of the Grand Tours and fighting. If you’re not, it says you’re not being taken seriously. I can’t overstate it. It seems like an obvious thing but it’s not.”
Furthermore, says Juskaitis, “We also spend significant amounts on the mountain bike side of things and we can have arguments all day long about whether there’s any sort of return on investment in that. We like to think so, we like to try to win races on mountain bikes, but we have to justify that all the time to our higher-ups and it’s debatable. Even though sponsoring a WorldTour team on the road is the most expensive part of our marketing budget there’s no valid argument to quit it. We have to do it.”
From the world’s largest bicycle brand to professional cycling's newest name, Factor was just nine months old when it sponsored AG2R in 2017. It now sponsors Israel-Premier Tech. How has racing in the WorldTour worked out for Factor? Owner Rob Gitelis says: “We were pretty lucky with AG2R, we finished third at the Tour de France [with Romain Bardet] in the first nine months of being a bicycle company and then the following year second at Paris-Roubaix [with Silvan Dillier]. You'd think our company was too young at the time to see that effect, but obviously we’re only an eight-year-old company now and if we look at where we are now compared to every other brand that launched 8-10 years ago we’re way ahead of the curve and it probably relates to taking that very big risk of sponsoring AG2R.”
Is Gitelis willing to estimate how much sponsoring Israel-Premier Tech is worth to Factor? “It’s really difficult to put a clear ROI on what you get out of sponsorship. But what I can tell you is that we took a break between AG2R and Israel-Premier Tech just because we were at a place in our company’s growth where we had to take that little break and we sponsored Roompot. Ironically Wout van Aert was supposed to be there but he wasn’t. And we saw an immediate drop-off in our sales by not being in the WorldTour that year.”
Gitelis says a marketing spend of 10 per cent of revenue is the sweetspot. How much of that goes on team sponsorship? “On our two teams (Israel-Premier Tech and Human Powered Health) it’s by far the biggest part and it probably represents 70-75% of the total marketing spend.”
Perhaps it seems obvious that if a product is ridden by a famous racer then it’s likely to give the brand more racing credibility, but there’s more to it than that, says Gitelis. “We currently sell bikes in 52 different countries. There’s no other single marketing exercise that you can do that would reach all 52 of those countries. If you were to look at how much work it would take to go and do individual marketing in all 52 countries it would be an almost impossible feat, but by sponsoring a cycling team you’re basically touching every one of those countries."
Does Gitelis agree with Giant’s Andrew Juskaitis that it’s being on the start line at the WorldTour that matters and being on top of the podium or having a famous rider like Pogačar just creates temporary spikes in sales? “It’s hard to say because obviously selling a bike can be many months down the road, but we do see significant website traffic increases. Obviously when Stevie Willliams won Flèche Wallonne we saw a big spike in website traffic, so in many ways that’s a direct ROI. So I think having a famous bicycle racer does not move the needle. My answer would be winning bike races moves the needle. So the more hits you can get from consistently winning bike races, everyone is talking about your brand. Unfortunately in our sport at the moment it feels like there’s four or five guys who are winning everything, so if you’re not with one of those four or five guys then it’s a bit more like ‘play your luck’. We were super lucky that we launched the Ostro VAM and then Stevie Williams won on it at the Tour Down Under and then Flèche Wallonne, so we’ve been very lucky to still be one of those brands that is highlighted from race wins.”
So Colnago’s recent success is not down to a notional Pogačar effect? “I don’t think it’s necessarily Pogačar but it’s the races he wins. We can look at Vingegaard. He wins one important race a year but he’s not winning all year. So in the month of July he’s the man, but if we look at the entire calendar it would be Van Aert, Van der Poel and Pogačar. And then Pogačar is an exciting bike racer so I think that doesn’t hurt.”
From Factor’s point of view the spend with Israel-Premier Tech is worthwhile and sustainable? “There’s the expense of sponsoring the team and the equipment, but then there’s the actual activation costs. A lot of the time you need to spend quite a bit letting everybody know you have the team and getting the maximum out of it. It’s always a really hard justification for a brand. We ask ourselves, are we with the right team, are we getting the most out of it, what would happen if we stopped, but what you really get is that credibility that you get for racing at the highest level. In the sport at the moment, there are very few brands that are smaller like Factor, I don’t want to call us niche, but standalone at that level. It’s us and Wilier that are the only ones left so it gets harder and harder.”
Clearly both the bike industry and the world have moved on since Trek put a penny into the Armstrong slot machine and a million dollars came pouring out. It’s difficult to track the exact return on investment of WorldTour bike brand sponsorship – and brands don’t agree on exactly what it is about being in the WorldTour that sells bikes. However, they do agree that in the 2020s it takes more than just having an individual winner like Pogačar on your bikes, no matter how exciting and charismatic. As Nicola Rosin says, Colnago’s success is a mix of different ingredients but one thing is clear: whether you’re the biggest bike brand or the smallest, the oldest or the newest, you need to be in the WorldTour.
