A sports investor company owned by Saudi Arabia's Public Investment Fund (PIF) has emerged as a frontrunner to back the new One Cycling reform project that hopes to revolutionise professional cycling, according to a report by the Reuters news agency and sources contacted by Cyclingnews.
Reuters suggested that SRJ Sports Investments has begun exclusive negotiations about a potential investment of around €250 million ($270 million) after a bidding process run by consulting firm EY on behalf of a select group of leading teams.
However, one source told Cyclingnews that only eight teams appear ready to become shareholders in the final project, with other leading teams not happy with the terms of the possible deal, including a risk of having to pay back funds if the project fails to generate significant new revenue.
SRJ Sports Investments, with the company suggesting SRJ should be pronounced ‘surge’, was created last year to “invest in acquiring and creating new sports events IP (Intellectual Property), commercial rights of popular and prominent sports competitions and hosting major global events in Saudi Arabia.
“These investments are expected to deliver financial returns and localise partnerships domestically and in the MENA (Middle East and North Africa) region.
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It is not clear what SRJ Sports Investments would secure for its $270 million investment.
In similar deals, other sports have given up an equity stake in a new private company created to run a major sports competition, while others have agreed to share television rights income for 20 years.
The teams involved in the One Cycling project have few assets or revenue streams outside their team sponsorship, which is mostly spent on rider salaries. In theory, the new project would try to generate new revenues and perhaps increase the monetization of cycling fans.
The AlUla region of Saudi Arabia sponsors the Jayco AlUla team and has created the AlUla Tour with Tour de France organiser ASO but if the deal between SRJ Sports Investments and the One Cycling owners is successful, it would be a significant step-up in the involvement of Saudi Arabian funds in professional cycling.
Sports is one of the pillars of the Saudi Arabian government's Vision 2030 economic diversification plan as the gulf nation moves away from traditional oil revenues. Critics have called the strategy a form of sports washing as Saudi Arabia looks to gloss over its human rights record.
Saudi Arabia's Public Investment Fund (PIF) has already invested huge amounts in football, golf, motorsports and martial arts, often via disruptive strategies as seen with the launch of the LIV golf project.
According to Reuters, SRJ could finalise commercial aspects of a cycling deal during the next two months after beating rival investors in an auction bid process. However, the news agency also said a source “cautioned a deal may not be sealed and talks are ongoing.”
According to a number of reports in recent months, the Visma-Lease a Bike, EF Education-Easypost, Lidl-Trek, Ineos Grenadiers, Bora-Hansgrohe and Soudal-QuickStep teams are the driving forces behind the One Cycling project and have been trying to convince other teams and key race organisers to join them.
"This idea is being explored, as many more ideas are being explored to come up with a sustainable business model for cycling in the future," Visma-Lease a Bike told Reuters.
However, Reuters reported that Tour de France organiser ASO, which also controls the Vuelta and other races, and Giro d’Italia organiser RCS Sport are currently not part of the project. Neither responded when asked by Reuters to comment.
Tomas Van Den Spiegel, the CEO of Flanders Classic, the company that organises a number of the cobbled classics and the cyclocross World Cup is said to be involved.
UCI President David Lappartient has hinted he is in favour of some kind of reform project but recently avoided specific questions about One Cycling from Cyclingnews.
Reuters revealed last October that consulting firm EY was acting on behalf of a number of teams to drive forward the One Cycling project and find investors.
Cycling teams have always relied on sponsorship to fund their teams, while race organisers control television and other revenue. An increase in team budgets have left some teams desperate to find new funds and so create a new business model for the wider good of the sport. Similar projects have been discussed over the years but have never come to fruition, often due to obstruction from the UCI or major race organisers.
However, an external investment of €250 million ($270 million) could be a game changer, even if it remains unclear how Sports Investments SRJ and the other shareholders in the project would change professional cycling and secure a return on their investment.
