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 AT HOME WITH JONATHAN VAUGHTERS: PART 2

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Speaking from his century-old Craftsman-style home in Denver, Slipstream Sports CEO Jonathan Vaughters covered a lot of ground in the first part of this interview last week. He talked about the reasons for the merger between his Garmin-Sharp team and Team Cannondale; the out-of-balance $40 million-a-year budgets of several rival squads; the persisting shadow of doping hanging over the sport; how his earning an MBA has affected his views on the business side of team sustainability; the backstory to David Millar’s omission from the 2014 Tour de France; and the reasons why the top dozen pro teams got together to form the Avignon Group, now incorporated as Velon. In this second and final part of the interview, I first asked Vaughters about this new alliance among leading UCI WorldTour teams.

John Wilcockson/Yuzuru Sunada

What is the premise of the Avignon Group [Velon]?

If you want to boil it down, it’s the beginnings of a league. Not a league that goes and makes its own events, but in essence it’s the beginnings of a league. In the simplest terms, the National Football League is a company and each team within the NFL is a franchise of that company. In cycling right now, all the teams are separate companies. And there is no umbrella organization. It doesn’t exist. The UCI is a regulatory body, ASO is a race organizer, and there is no league…. So, to me, whether it ends up being truly something like the NFL, Avignon Group [Velon] is a first step toward there being a league where the teams are all contractually governed by the business precepts of an overall organization and become franchises of that organization.

What would you like the relationship to be between Avignon Group [Velon], your team and ASO—which, as owner of the Tour de France, has the biggest revenues in the sport?

ASO has a very successful business model—chapeau to them for that. I think the distribution of that [revenue] has not been equitable. While I’m a capitalist at heart, if you look at the most successful pro sport business models they’re all very socialistic when it comes down to it, with equal distribution. At the end of the day, everyone wants to see the best game possible, and the way you get the best game possible is when everybody [each team] is on an equal footing.

So with ASO, [for anyone] to horn in and try to take what they have—historically it is what it is—I think you’re spinning your wheels a little bit. But look at what does the sport look like in 10 years, what are the new revenue sources, what are we doing in the sport? And looking at that—using on-bike telemetry TV, on-bike cameras, new sources of media—who owns that? In a way, I think it’s the job of Avignon Group [Velon] to draw a line in the sand, and say, “From this point onward, we are going to work and we are going to use the collective rights of all the WorldTour teams to negotiate equitable distribution of revenues from hereon forward.”

So it’s not taking anything away from ASO; it’s saying, “Hey, let’s work together to build up this platform where our sport is far more interesting to new viewers, to casual viewers, to current viewers…. That the coverage is more interesting, has more depth, more opportunities for partnership sponsorships, and so on. Let’s work together on that and let’s split it equally. Let’s be business partners.” I think that’s essentially the job of Avignon [Velon].

And the UCI?

The UCI needs to intercede a little bit to ensure everything fits within the regulations, and that the regulations allow for these new media-type applications. In a way, they can be an intermediary, but the UCI need not try to do this, they don’t need to be part of the creative or the execution of this. They need to govern the sport. If the cameras start falling off and causing crashes, the UCI should deal with that issue. But to me they need to be a governing body that is not involved in the commercialization of the sport. Now, of course, should they take their fees for governing the sport and if there’s an overall jump in profitability, should they share in that? Of course. Because they’re the governing body of the sport. But I don’t see that their role should be overly active.

The UCI appointed the Cycling Independent Reform Commission (CIRC) to investigate pro cycling’s dismal record of doping in the 1990s and 2000s and allegations of wrongdoing within the UCI in those decades. The three-man commission is due to make its report in January. What would you like to see come out of that?

I think a lot of people wanted tearful confessions…but the CIRC, for me, their objective is somewhat on the lines of the Mitchell Report [the 2007 investigation into the use of steroids in Major League Baseball]. The Mitchell Report was a little bit dry; it wasn’t maybe as explosive as people wanted it to be. But what it did do is basically draw an overarching report on: This is what happened, here’s where we are now, and here’s where we should go with some recommendations to go forward. It’s an information-gathering body that needs to give clear recommendations of where to go forward.

Have you spoken to the CIRC?

I haven’t. I’ve been in touch with them quite a bit, but we haven’t sat down—just because of timing and logistics. They’re in Europe and I haven’t traveled a lot to Europe this year. But I think they maybe coming to the U.S. soon…. So we’ll see if we can get it arranged.

VTDF

If all the things that should happen do happen, how would you like to see the sport in 10 years’ time?

If there’s one overall thing that everyone should focus on in the sport or for the next 10 years, on a lot of the issues in cycling, everything from anti-doping…everyone is quick to want to try to change the immediate appearance. So, use this house [we’re sitting in] as an example. You come into a 100-year-old house, and you say you want to restore it…. The first thing is, the curtains don’t look nice, so I’m gonna put in new curtains. Okay, you’ve fixed one visible problem for the short term. But if the foundations are crumbling and the brickwork hasn’t been done, all the boring stuff, the foundational stuff that no one can see, that no one’s really excited about, that there is no blood on the streets over, that’s the stuff. If that fundamentally changes the symptoms that we’re seeing, doping being the most obvious one, all of that starts to fall off.

You’ve got to have a well-built foundation to get to that point, and the well-built foundation is quite simply that we move away from this environment where team managers or teams in general say, “Okay, I’ve got a two-year contract and who knows whether we’ll even make it through those two years, and who knows what’s going to happen, so I’m going to scrape as much money off that as I possibly can and I’m gonna be chintzy with anti-doping testing and I’m gonna be chintzy with athletes’ salaries, and whatever.” It’s almost like the robber [baron] mentality, a con man mentality. And they should just do it differently. Unfortunately, the way the sport’s set up it’s very difficult to do it any differently than that.… It’s set up in a way where everything is: What have you done for me lately, what results did we get yesterday or today, what sponsor do you have right now, how much money do you have right now? All of those things….

We’ve got to get to a point where teams don’t need more money, the teams need stable money, and they need equitable existence, meaning the teams are all functioning like the NFL where everyone’s starting out with the same number of chess pieces. There’s a stability, and there’s a known value, so that you’re creating a sponsorship market, so the sponsors know that if I’m buying X, I’m getting Y. And with that foundation, if stability and sustainability come with the system where the teams have a permanent position in the sport where there is more of a marketplace for sponsorship as opposed to professional begging for sponsorship, then, all of a sudden, the money you can spend on anti-doping is greater because it’s more stable. You see it as a long-term investment as opposed to a tax.

The money you can spend on an athlete pension fund, which…. One of the biggest causes of doping, that people don’t see, is the underlying effect, is that the guy who’s thinking, “My career could be five years long, whatever, and I’m going to do whatever it takes to make as much money in those five years because I don’t have a college degree, I don’t have a high school degree, I don’t have any fallback…. You know, I’m gonna do what it takes because it could be that when I’m 28, 30, 35, whatever it is, that I’m done, and I don’t have any real way to make the house payments for the rest of my life.” And so take that away. Have a real pension plan in place. Create a work environment where the athletes, the mechanics, the soigneurs, the doctors and the directors are not thinking, “Well, this team might blow up next week so I need to win these races, or have this reputation, so I can jump over to this team….”

Cycling is like a bunch of frogs on lily pads. Everyone’s waiting for the lily pad to sink and they’re jumping to the next one. And as long as that’s the case you’re going to continue to have the symptoms that everyone despises in the sport—doping obviously being the No. 1—the sort-of general slight wink-nudge attitude that cycling’s always had. And if you want that to go away then it really becomes a collaborative effort between the UCI, ASO and the teams to develop a league, for lack of a better word, that has an infrastructure—I’m not saying more money, but a similar amount of money that’s just stable for the long term and people understand fundamentally that their job is safe and that the only way they make their job un-safe is by doing something unethical. Ten years ago, certainly, the attitude was the way I make my job safe is by doing something unethical. You’ve got to reverse that equation.

People say, “Well, athletes act out of greed….” Yes, there were a few athletes in the height of the doping era that made a lot of money and they maybe doped out of greed, but the vast, vast, vast, vast majority doped so that they could maybe make enough money by the time they were 32 years old and retired from cycling, they could live a couple of years without a job until they could figure out how they could work in the local butcher’s shop for the rest of their life…. To me, that’s not greed.

VP2

Going back to the 100-year-old house analogy, if you’ve got these strong foundations and you’ve got this stability, isn’t that a formula for growing the sport?

With a stronger foundation, you’re gonna have a higher peak, right? Of course. At the end of the day, from a business perspective, from a marketing perspective, how do you want to grow the sport? The first thing to do to grow the sport is to end the controversial problems, just have five or 10 years of where things are going smoothly. And going smoothly doesn’t mean you never get a positive test, because there’s effective enforcement. If you want to have no crime in the city, have no police force, and there’s no crime—right?—because nobody’s reporting any crime. That’s silly….

But the overarching impression [has to be that] that this sport is being well looked after, well governed, that there’s cheating that’s being taken care of, there’s unethical behavior but it’s being removed. That’s the first thing you need to attract new investment dollars. First thing. Second, we want “investment” dollars but right now we have what I call “donation” dollars. It’s not an investment. Ninety-nine percent of the money in the world is not going to be “donated” to professional cycling.

If, conversely, it were seen as an investment, you open up the sport to private equity investments, more individual investment, whatever…. And you say, “Well, what are they investing in?” I’ll tell you what they’re investing in, and this is the key, key thing to long-term stability, is that…. Look, there’s a guy like my boss Doug Ellis. Does he have cash flow out of the team? No. But he would like something that was worth something. So when he’s, say, 73 years old and he says, I want to sell Slipstream Sports, or hand it on to my grandchildren, that it’s worth something. Every businessman’s dream is to build something that’s worth something, have equity in the organization.

And the only way to do that is to end this year-to-year selection, this fly-by-night mentality that surrounds the teams, and to have: These are the teams, these are the organizations in cycling. Slipstream Sports, that is a franchise of cycling and it will be in the sport for the next 100 years, or whatever it is, and that if you would like to invest in this organization, it will be worth something. You may not get a positive cash flow out of it [because] most pro sports have a cash flow a little bit in the red—at the end of the day, the owners get excited about a new athlete and so it goes to salary. And that’s fine. But at the end of the day, they actually have something that’s worth something.

And that brings in investment. And with investment comes responsibility—meaning those investors are going to want to know that the organization they’re buying into is an ethical organization that is not going to make them look bad, that’s not going to do anything stupid. With that responsibility comes a change in the thought process, so that’s why we want…why we want to get that foundation there so that people want to invest, and with that investment comes responsibility, and with that responsibility comes a higher bar in the ethos of the sport, and with that comes, you know, along with people feeling more secure with the whole job environment and pension plans and so on…and that is the final stage in eliminating all the symptoms of the cracked foundation that exists right now.

* * *

Vaughters’ vision for the future of pro cycling may sound somewhat utopian in the context of the sport’s still-antiquated structure; but with three important developments in the works—the forward thinking of the 11 founding teams in Velon, the upcoming meeting between the various stakeholders in the UCI WorldTour to discuss proposed dramatic changes to the size of pro teams and length of the calendar, and next year’s report from the Cycling Independent Reform Commission—the American team owner’s views might well be on the cusp of creating a modern, more dynamic formula for a traditional sport.