The deal is now officially finalized: Red Bull is taking over the majority stake in the German cycling team Bora-hansgrohe. Ralph Denk’s team is probably doubling their budget. The industry is electrified.
The new name is a three-headed monster. In cycling, teams are named after their respective sponsors. These are usually more or less successful combinations of two company names. And now: Red Bull-Bora-hansgrohe. This is the name of the only World Tour team licensed in Germany. A chunk that the World Cycling Association’s regulations just allow: a maximum of three names are allowed.
Cycling is electrified
But the entry of the beverage manufacturer from Austria is of course much more than just a tapeworm word for the radio and TV commentators. At the end of last year it was announced that Red Bull would buy into Ralph Denk’s cycling team. “The deal has been finalized, there has been a lot of paperwork in the last few months,” explained Denk on Thursday (05/02/24) in Turin, where the Giro d’Italia starts on Saturday.
The industry is electrified. The investment of a billion-dollar global player with special marketing expertise fires the imagination in cycling, which is always struggling for revenue. The question arises: What effect does the entry of such a company have on this sport, which is still strongly rooted in its traditions?
Slipped into the financial midfield
For Ralph Denk’s team, this means, first of all, that they will move into the top class financially, on a par with teams like Ineos-Grenadiers and UAE. Their budget is estimated at around 50 million euros per season. The German team has so far had to make do with just under half.
For this promotion, Denk is now handing over 51 percent of the shares in his team’s operating company, RD Pro Cycling GmbH & Co. KG, to Red Bull. At what price is not known. Denk has also signed a sponsorship deal with the company, which is expected to amount to around 25 million euros per season. Denk himself receives a contract as managing director. He, his sports director Rolf Aldag and the team’s sports directors should retain sporting control.
Red Bull gets control
With the sale of the shares, his team will now become a “corporate project” of the company, such as the football clubs operated by Red Bull or the Formula 1 team. “They want control. And that’s completely okay for me,” says Denk on “Tourfunk” – the Sportschau cycling podcast. “For me it wasn’t important that I sell shares and thereby generate money, but the most important thing for me was that we are a top racing team financially and budget-wise in the future.”
Sportschau Tourfunk, January 29, 2024 7:49 p.m
That’s what has driven Denk throughout the years he’s led the team from third tier all the way to the World Tour since 2009. When the team signed then cycling superstar Peter Sagan for the 2017 season and was promoted to the World Tour, his team was also one of the strongest teams financially. But with the entry of mainly Arab state sponsors into cycling – for example the UAE and Bahrain-Victorious teams – the team has slipped into the middle field, says Denk.
With the two medium-sized German companies and Bora and hansgrohe, who went to their financial limits to support the team, a return to the top budget was not possible. Denk also sat down at a table with financially strong donors from Arabia in order to generate more money for his team. “But that didn’t feel right,” he says.
Emotional content for the media company
The fact that Denk was able to convince Red Bull to invest in cycling while keeping his existing sponsors on board is due to various factors. We have been working with the company for a long time. Denk had already approached Red Bull in 2019 to make his sport and his team attractive to them.
The company was not yet ready for the big bike at the time, but brought one of its athletes, the ski mountaineer Anton Palzer, into Denk’s team, who has been retraining as a professional cyclist at Bora-hansgrohe since the 2021 season. In addition, a joint scouting program was agreed upon. The team was also allowed to use the company’s performance center in Thalgau, Austria.
The fact that Red Bull is now making a bigger entry is probably mainly due to the fact that they expect emotional content for the company’s various media platforms. The streaming service Netflix’s documentary series about the Tour de France has attracted a younger audience.
Project becomes visible at the start of the Tour de France
After the broadcast before the start of the tour last year, Oliver Mintzlaff, the former CEO of the Bundesliga soccer club RB Leipzig and now the managing director of Red Bull GmbH responsible for sports projects, visited Denk’s team in France and got an idea of what it was like the appeal of the most important cycling race in the world.
It is therefore no coincidence that the company’s entry will only become visible with the start of the Tour de France at the end of June, when cycling receives the greatest attention worldwide. And not at the start of the Giro d’Italia this weekend. Only in the summer will the triple name become official and Red Bull will also be visible on the team’s jerseys.
However, the entry of the billion-dollar company is already arousing desire. According to Denk, he has already noticed that some of his drivers were expecting a “big pay increase”. And driver advisors have already approached him to offer him the services of the professional cyclists they support.
Needle in a haystack instead of a financial club
But you won’t swing the financial club through the peloton, promises Denk. “Buying the current drivers out of their contracts is not our approach,” says the team manager. “In the best case scenario, we will find the famous needle in the haystack in the next few years and develop him into a top driver, an iconic driver.” That’s why the creation of a U23 team that is intended to close the gap between the existing junior team and the World Tour team is part of the project.
The question remains what Red Bull expects from entering cycling in terms of additional content for its media company. The financial investment is likely to be significantly lower compared to football or Formula 1. However, cycling is also much harder to make money on.
The majority of the income from the sale of TV rights remains with the organizers such as ASO, which runs the Tour de France. This has been a point of contention between teams and race organizers for years. A Red Bull employee says they were surprised at how little of the tour stuck with the team.
This is unlikely to change in the future. So initially only the three-headed name monster remains with its advertising value for the company’s core product.