Framebuilders and sponsorship...a few questions

Hey guys,

As the cycling season begins to wind down and head into fall, I've been reviewing my sponsorship activity and trying to determine a level of commitment for next year.

Currently, I sponsor 4 racers, am involved with the promotion and running of 9 cross country and 5 kids races each season, and supply prizes in the form of Groovy Product (custom frame, multiple bars, cranks, Tees, etc...) and money for purchased prize table awards. All profits from promoting the races go right back into the community, by returning a portion of the profit to the local club who hosts the venue and paying the mortgage on Vulture's Knob, 128 acres of mountain bike trails/land we purchased to protect it from development. My involvement at this level has always been focused on growing the sport and encouraging family participation.

The last 5 years, my average annual expense at this level has hovered between 13-15 thousand.

From a business perspective, the costs far exceed any monetary gain, as I can count on one hand the retail sales I've made within the region due to my participation during this time period.

I'm struggling with finding a balance between business return and good will, as I want to continue to support the grass roots growth of cycling, but also recognize what a financial and time burden it can be.

So, perhaps to help me justify the expense, I'd like to hear from y'all ...

- What form of sponsorship do you engage in...sponsor racers, put on events, provide prizes, etc...?
- What is your annual expense or financial commitment?
- Do you see a resultant return on your investment?
- If you are not currently actively sponsoring the local scene at this time, what factors led to that decision?

Thanks all for the input,

rody

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Originally Posted by Rody

Hey guys,
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do you partner with anyone - financial sponsors, industry support, or similar atmo?

All the years I promoted and sponsored the cross races we never lost that much money. In the early years (1998-2000) I suspect the max loss for a race was about $1000. This number was deductible as an expense. Once the race got large enough and had a following the #'s would cover the cost of the race. Being UCI Cat 2 was the hardest part. As for prices I cashed in with distributors and suppliers every year and rarely if ever put out of pocket money into the prize table. Our race was always known for having some of the best prizes available. I did however come up with a way to prevent or not promote sandbagging. The top ten people of all the B races (now cat 3) got there numbers put in a hat and it was a lottery for the prizes. Often a Mavic Ksyrium wheelset was the best prize and it could go to the guy that got 10th place! Races need to not lose money and if they do then raise the price of the entry fee.

Sponsoring riders is a very slippery slop. Most (key word) people who want sponsorship have no vested interest in you and will jump ship once they feel they could do better. Unless they are WINNING the pro category I feel they should not get any hand outs. Some riders have a great personality and will bring people in your door because their great mood is contagious and they want to feel part of that experience. Most however are very stand offish and hurt you more than help. I have the advantage of using my employees as my "riders" since they do have something to gain with the success of the brand. Their job at the shop is important to them. I have stopped sponsoring all other riders. I can not give anything away and it just never worked out. I am more dedicated to the brand being a world wide thing over a local thing. The local market is easy to saturate. Plus my clients are mostly riding when the race is happening.

I think that is a big chunk of money and sounds like you need to remove the emotion from the equation and see it is a money pit that is not helping your bottom line. You can still help the local cycling scene without losing that kind of money.

My $.02

Thanks for the input guys.

For clarification, I am involved in two distinct areas of sponsorship; race promotions and individual racers.

In the vein of promoting races, we partner with national businesses as well as local bike shops to fund and provide some prizes. As "Groovy", I also supply prize table awards and end of season prizes. There is no "money lost", as profits are realized from the racing, but we choose to put it back into the local clubs and to secure the mortgage on the local trails we committed to keeping open by purchasing the property.

Individual racer sponsorship is another matter, as providing equipment, race entry fees, money for travel, etc... is my responsibility. I choose folks who I feel exhibit the same enthusiasm for the sport, have a desire to share and educate others, and represent the vibe I want my business to be about.

I think Drew knows me well enough to hit the crux of the issue...I am too emotionally involved in the sport as well as the business, so I need to strike a finer line towards the financial end.

A follow up question for Richard and Drew...for the individual racers you sponsor/equip, are you providing the bicycles and equipment gratis for your racers, do they pay a share of the costs, or does the arrangement differ dependent on each individual's relationship with you?

rody

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Originally Posted by Rody

I think Drew knows me well enough to hit the crux of the issue...I am too emotionally involved in the sport as well as the business, so I need to strike a finer line towards the financial end.

A follow up question for Richard and Drew...for the individual racers you sponsor/equip, are you providing the bicycles and equipment gratis for your racers, do they pay a share of the costs, or does the arrangement differ dependent on each individual's relationship with you?

rody

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You are the most passionate guy out there - have you ever asked for an IMBA grant for your trail work? Might be worth asking.
I know you asked E-R & Drew but I have known quite a few teams where at the end of the year you got the option of buying your bike for a very good price or giving it back to be sold as scratch & dent to cover costs. Just because they get to race your bike doesn't mean you have to *give* it to them.

Missed you at the reunion!!!!! Denise is right here & says "HI!" - Garro.

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Originally Posted by Rody

A follow up question for Richard and Drew...for the individual racers you sponsor/equip, are you providing the bicycles and equipment gratis for your racers, do they pay a share of the costs, or does the arrangement differ dependent on each individual's relationship with you?

rody

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we have only elite lever riders and they are fully supported for equipment, entry fees,
clothing, travel, and similar. ps no one keeps their bicycles. the team owns them atmo.

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Originally Posted by Rody

A follow up question for Richard and Drew...for the individual racers you sponsor/equip, are you providing the bicycles and equipment gratis for your racers, do they pay a share of the costs, or does the arrangement differ dependent on each individual's relationship with you?

rody

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Rody,
I no longer give anything away. It is all sold at no loss. Richard's Approach is the best but requires management of companies and time that I am not willing to dedicate anymore. Too many people did not respect the effort involved with managing a team that has sponsors, funding, etc. I love cyclo-cross and have put a ton of effort into the beginning years of the sport in the MidAtlantic area. I do not really love the direction the sport has gone but that is just me being a old(er) man. Having my employees of the bike shop being my local testers/riders has always been a win win situation for me. Outside that all the riders have their best interst in front of the brand. This is fine but I needed to understand that and realize it was a money pit. My biggest issue is paint since I pay Todd a premium. It is a huge loss for me to give paint jobs away. That is a big difference for you as a brand.

-Drew

Hi Rody,
I'm looking into co-sponsoring a small CX team next year. I'm thinking about offering the small core team frames at a wholesale price, and a lesser discount for the broader team who will have less involvement. Also discounted kits to complete the bikes for the core team - cost plus 10%, prepaid, ordered at one time. We will have a co-sponsor to put in cash to subsidize race entry fees and team clothing. I feel that with the number of riders I'll support and the pricing I'm working with it's a sustainable thing and will do some marketing. I'm not looking at a elite team like Richard, but perhaps down the road if some racers were at that level, had the need and my business could afford it, I'd provide deeper discounts. I'm also interested to see what people have done. I feel like I should be happy and satisfied with my choices on this matter at the end of the day, so should the racers and other sponsor. If we aren't happy, then we should not enter the agreement. Sounds like you are so enthusiastic that perhaps your sponsorship exceeds what makes sense for your business. Maybe scale it back a bit. Maybe have the sponsored riders put time in to the organization so you save your own time. Maybe have them pursue other supporting sponsorship to offset costs? It seems to me that generosity and enthusiasm is great, but we benefit from realizing when are decisions are more emotionally driven and maybe exceed what our business mind would do. It would be a shame to see your business suffer, everyone benefits from you sticking around, running a healthy, happy business.
Just some ideas and thinking outloud. I'm interested to see what other people say.

Best,
John Caletti

rody and others, I think one of the first things you need to look at is what do you consider any investment of this type as. At my shop I consider it advertising, so it goes in the advertising budget. The national average for a bike shop, is 2.8% of gross sales is used for advertising ( 2003 survey ). I then look at my website, adds, ride sponsorships, etc. etc. and what will my return be from each. The ones with highest return will get first prioity, and I work my way down the list until money runs out. 5 years ago I spent 7000 on ride support alone, and got almost 0 return, in the mean time ride support cost has gone up. So now I only support the rides that only ask from my time, and not my money. The riders who wear my jersey do because they want to, not because I ask. We will be putting together a small team next year, but they all will be doing it to support the shop not because they are looking for deals- although I will give them deals anyway.

The shops who do get a good turnaround from their sponsorships/ride/etc. have their hands in everything. they support 4 teams, 20 rides, 12 races, this kind of thing they have enough money to capitolize on it. The shops that only support a few things dont really get any return, it has been proven at the bike shop level time and time again. not saying you should look at how a bike shop handles things to make your decisions, just saying look at it from a business perspective as part of the decision process

I always support something in the cycling community as I feel if you want to profit from the community you should invest in the community. Just put that money into a catagory and decide how big that catagory is, then you can better decide how to spend it.

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Originally Posted by johncaletti

Hi Rody,
I'm not looking at a elite team like Richard, <cut>

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an FYI for some folks here - we have morphed into what we are after about 30 years of doing teams and have, along the way, done big rosters (of 10 or more), pro-am teams, developmental teams, U23 teams, single gender teams, junior teams, and combos in between. the full time 'cross thing is fairly recent and the decision to go that route is about 12 years old. as far as i am concerned there is absolutely NO reason to support a road team because the ROI is nonexistent atmo.