Another year, another discussion on how teams should have more of a say on race radios, TV revenue sharing, globalization, etc. If you haven’t seen it, here’s the 2012 opening salvo by the AIGCP.
First of all, I fully agree with the principle that the teams have a bigger say. They provide the majority of the revenue, they run (together with the races) the biggest financial risks, they should get a fair share of the revenue and have some control over how the sport is run.
But they are deluding themselves if they think getting that share will help their finances. You see, all teams have a set of pretty fixed costs (travel, race participation, car park, etc) and the big variable is salaries (mostly the riders). So a team has a budget, covers those fixed costs and then decides how much of the remainder is spent on salaries and how much will be profit (or loss, as the case may be).
For these salaries, they all fish in the same pond. The salaries are what they are because that’s what all teams combined are willing to throw into that pond. The problem is that there are enough teams with an owner who doesn’t care about losing money or at least doesn’t mind barely breaking even. As long as enough owners are willing to spend all their available money and even more on salaries, other owners will be forced to do the same to stay competitive.
The idea that additional revenue will fix this is erroneous; whether the average available money per team is 10M or 20M is not the problem; that there are enough owners willing to spend 100% or even 150% of that money is the issue. Since these team owners have shown they are willing to spend all their revenue, they will also spend this extra TV money in an attempt to get this one special rider or another. There is no philosophical difference between spending all your revenue on salaries when it is 10 million or when it is 20 million, the issue is the attitude, not the amount.
The only way for teams to stop losing money is for them to work together, and sit down with a united front to negotiate a deal with governing bodies and riders to agree on some sort of salary cap. Not just in their own interest, but also in the interest of the riders, so that costs can be controlled and fat years provide a cushion for any lean years ahead.
Of course, you would think that with so few teams, an illegal kartel would form to accomplish this. But luckily the chance to win, which is always just one overpaid rider away, remains too tempting.