When looking to professional cycling, it's near standard practice to see a team sponsor appear for a few seasons and then disappear from cycling altogether. Katusha is one team that believes this has to change and is looking to lead the way.
Katusha is making a concerted effort to re-brand itself. The team is now a Swiss-registered outfit aiming to become truly international, and have secured a co-naming sponsor (Alpecin) for 2017. Not content to rest on their laurels, Katusha has created 'the Katusha Project', a financial sustainability business model that is aiming to revolutionize how professional cycling teams are run in order to guarantee their longevity and provide fans a team to support for decades.
The team was on the campaign trail while in Australia for the summer of cycling. They invited CyclingTips to spend an entire day with them at the Tour Down Under to see the inner workings of a professional cycling team, they attended social events like the VTWO CarPark Climb despite racing on Willunga Hill only hours prior, and provided multiple opportunities for fans to join them for social rides during the summer. However, Katusha's fresh approach to fan interaction and accessibility is far from the whole story.
We caught up with Alexis Schoeb, Katusha Group President and a vital cog in the Katusha Project, to better understand their sustainable business model and what the future of professional cycling could look like as a result. Watch the video above to see how Katusha plans to change professional cycling.
BikeExchange Blog: What is the usual model for a professional cycling team?
Alexis Schoeb: The usual business model for a cycling team is to have one big owner putting a lot of money into the team, or to have one or two major sponsors that finance the entire team. In other words, the team has no other sources of revenue and has to rely on the sponsor.
So how does Katusha differ from that traditional model?
Everyone realizes this business model doesn't work, a lot of teams are dying or changing names every two or three years, and it's difficult for the public to follow a team for years as you can in other sports. And so we have decided to change our business model by creating other sources of revenue.
What are those other sources of income?
We have three major businesses that we are developing. The first one being a clothing/apparel company which is going pretty well after starting in April 2016. We have a full range of clothing for men and women, performance collection, commuter collection, with more than 100 products already. The amazing part is if you do an apparel company for cycling, it might be pretty hard to enter the market, but the specificity of the Katusha apparel company is backed by a complete pro team, and so we have our own laboratories trying to develop some specific equipment with amazing riders. To give you an example, we are developing a new aero kit with Tony Martin (current UCI World Time Trial Champion), and when you have the world champion telling you what's good and what's not good, it's usually quite good advice.
In addition to the clothing business we have a travel company that has been created this year, and again, the idea is to use the team, use the experience we have with the race but also with the training and competing, and most importantly to bring some people to the race and the team.
And the cafe is the final business and is the link between all of it, because before the ride, after the ride, everybody, from professional to amateur, likes to go into a cafe and have a nice pastry and flat white or cappuccino. We want to bring people together and we are trying to create a big community in cycling, and we want people, cyclists or not, to come into a cafe and enjoy their time.
What are you trying to achieve with this new business model?
The business model is quite simple, the team needs additional sources of revenue in order to make sure it has a long life. We do not want to rely on one or two big sponsors, we prefer first to have several sponsors, and also to have our own source of revenue. And at the end of the day, when we bring a sponsor on board, we want the sponsor to bring us a little more than just money. It could be activation, visibility, publicity and we too are giving a little bit more than a cycling team to the sponsor because we have cafes, clothing, and travel. So it's what we call the 360-degree model.
So how important are sponsors to a team?
The sport will always need sponsors, and cycling is an amazing platform for sponsors, probably one of the best international sports you can imagine, however, we need to improve the system. Two examples which are really sad, last year we lost two really big teams, which were IAM Cycling, the Swiss team, and the big Tinkoff team, and we lost these teams because the main sponsors simply decided to leave cycling. And this is the type of situation we should absolutely avoid in the future, so it means the teams need to have more sources of revenue, and not have to rely on one or two major sponsors and risk collapsing if the sponsor leaves.
What do you hope the future holds for Katusha?
In our best dream, we would like to have a team that is truly international. Whether you are from Australia, from Switzerland, from the US or Russia, you just really identify with what the team is doing, and I would like this team to stay for a very long period of time. I would like, as we have for football for instance, to have a team that is a family team, so the grandfather teaches the kids and the grandkids that the best thing for the family is the team. And you can have a team that stays for 20 - 30 years, that would be very good for cycling.