Today's exchange rate: 1 Gwin is worth 1 Loic, 1 Loris & 1 Iles.


Yesterday the news came out that the Lappiere Gravity team will now be called the Specialized Gravity team.  While this is great new for everyone in it, as Specialized picked up a whole team to represent them at the world cup level, including the current World Champion and Whistler's own Finn Iles, I really think the more interesting story is that Specialized feels that there is better value in the Gravity team than Aaron Gwin.  Setting up a world cup team is a huge expense for the average person to do.  Travel expenses alone to get to all of the stops on the calendar, can eat up the better part of the cost of a small car, and that is really just for one person & a mechanic.  Then think about the shipping costs, rental vehicles, accomodation & meals and the numbers start to climb pretty quick. 

What about bikes and parts budget? I would say they go through three bikes a season each.  One for practice at home, one race bike and a backup.  Tires for all bikes would last a couple weeks max, and depending on the track I have heard that some riders were going through a set of wheels a day. 

Plus rider salaries.

Now multiply that by three.

It ads up pretty quickly to a number that is quite large for the everyday man, but isn't too much for a company who's annual sales were estimated at $500 million in 2011. 

But to Specialized that was better value than re-signing Overall world cup champion Aaron Gwin.  I'm not trying to take anything away from what value Gwin believes he is worth, but there has been talk that he has been trying to float the largest contract in history for mountain biking.  In his press release he said that he has found a company that agreed with his value assesment and he has an agreement in principle for the 2016 season. 

Since most of the contracts aren't public, it is hard to get exact numbers, but there are lots of rumours about what the team budgets are.  Greg Minnaar is reportedly the current highest paid athlete in the $300k USD /yr range.  Peaty, although a favourite of the fans, is getting less as he is finishing up his career and Bryceland less than him.  So if you do the quick math, it would seem that Santa Cruz is in the $2 million range to run their DH program. 

Specialized Gravity Team, being based in Europe might end up being a little bit cheaper, but I would guess they would be in the $1.25-$1.5 million range.

So that leads me to ask, how much was Gwin asking for, and who is going to pay it?

It has to be a European brand, as Trek/Giant/Kona/Norco have teams/riders in place and Rocky Mountain isn't in the DH race game anymore.

So what European brands are large enough to have that kind of budget?

Rotwild, Canyon, Cube & YT come to mind, but in all honesty, I'm not completely up to speed on who all the players are on the other side of the world. 

Rotwild has richie and bunch of other guys, Canyon just signed Bearclaw and Fabien just retired from them. YT has Andreu, Zink and a couple others.  They are the smallest of those three, but also would have the largest to gain by signing a WC racer. 

Increased sales and brand awareness can cover the cost of the team, but it might not be in the first year as most of the new product will already be in the stores when the teams are annouced.  But if we look at margins on sales for manufacturers it could be anywhere from 20-45%.  So a $5000 bike gets into a store around $3800 at wholesale, if we take an average margin of 32% that means that the brand is making about $1200 a bike. To cover the cost of $1.5 million for a team, they would need to sell about 1250 bikes, which doesn't seem like too many if you are already selling 50,000 bikes a year or more. 

It will be interesting to see where Mr. Gwin ends up, as he has proven that he can win under almost any type of conditions or equipment.