Market value of Cervelo & BMC

[Randall]

Does anyone have any idea of what Cervelo or BMC is worth...? It's
hard to tell because these are private companies. But I still find it
hard to believe they can afford to sponsor a pro team. Cervelo is no
longer a main sponsor however.

[Victor Kan]

On Jul 25, 1:07*am, Randall > wrote:
> Does anyone have any idea of what Cervelo or BMC is worth...? It's
> hard to tell because these are private companies. But I still find it
> hard to believe they can afford to sponsor a pro team. Cervelo is no
> longer a main sponsor however.

IIRC, BMC bikes and the team were co-founded by Andy Rihs who also co-
founded Phonak (which interestingly changed their corporate name in
2007), which has a 6.4B (US$) market cap:

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=882368

So I would guess that Rihs is comparable in wealth to Bob Stapleton
who owns Highroad and funded (or still funds?) the team out of his own
pocket.

[Ryan Cousineau]

On Jul 24, 10:07*pm, Randall > wrote:
> Does anyone have any idea of what Cervelo or BMC is worth...? It's
> hard to tell because these are private companies. But I still find it
> hard to believe they can afford to sponsor a pro team. Cervelo is no
> longer a main sponsor however.

As you said, Cervelo is no longer a title sponsor. I think we can
safely assume Garmin has deeper pockets.

http://lavamagazine.com/features/kona/bike-count#axzz1T9KLLD23

The 2010 Ironman bike count* found somewhere close to a million
dollars in Cervelos at the event. 468 bikes, more than 1/4 of the
total. USA Triathlon says they have 135k members, which is way higher
than I expected. So that argues that you're not crazy if you think
Cervelo has sold 30,000 bicycles just to American tri-geeks serious
enough to do at least a sprint Tri.

A little hand-waving suggests to me that their annual sales are
probably in the 10-50 thousand bikes, which is a big range, but only
one order of magnitude. Let's call that annual revenues in the $10-50
million range. I'm probably optimistic, though.

http://www.manta.com/c/mm46ggr/trek-usa

This profile of Trek says they're a company with revenues in the
$20-50 million range. I'm almost certain Cervelo isn't as big as Trek.
I'd assume then that 10,000 bicycles and $10 million annual revenue is
closer to the truth than $50 million.

Either figure is probably not enough to be the sponsor of a ProTour
team. They run in the range of $10 million annual budgets, I think.
($6M for a cheap team?) Title sponsor is probably most of that cost. I
don't think Cervelo could spend so much of its annual revenues on a
ProTour sponsorship, and they said as much when they "merged" with
Garmin. But also, the Cervelo Test Team was a Pro Continental team,
not full ProTour.

Conclusions: CEO/DS Vaughters is running a business on the same
revenue-scale as Cervelo co-founders Vroomen and White, though a very
different sort of company (Garmin-Cervelo has, in a way, 30 customers
(its sponsors), and maybe 5 of those are really crucial to its
existence).

Pro cycling teams are really big fundraising entities, more or less
acting as conduits of sponsor money towards rider salaries and racing
expenses. It's probably one of those businesses where you think that
one thing (bike racing) matters, and in fact your day-to-day business
turns out to be sponsor seduction.

Rihs' milkshake brings all the sponsors to the yard,

*I only follow this survey in search of tri-mocking fodder.

[Plano Dude]

On Jul 25, 6:30*am, Victor Kan > wrote:
> On Jul 25, 1:07*am, Randall > wrote:
>
> > Does anyone have any idea of what Cervelo or BMC is worth...? It's
> > hard to tell because these are private companies. But I still find it
> > hard to believe they can afford to sponsor a pro team. Cervelo is no
> > longer a main sponsor however.
>
> IIRC, BMC bikes and the team were co-founded by Andy Rihs who also co-
> founded Phonak (which interestingly changed their corporate name in
> 2007), which has a 6.4B (US$) market cap:
>
> http://investing.businessweek.com/research/stocks/snapshot/snapshot.a...
>
> So I would guess that Rihs is comparable in wealth to Bob Stapleton
> who owns Highroad and funded (or still funds?) the team out of his own
> pocket.

Highroad was formerly Telekom/T-Mobile, which IIRC, didn't want to be
on the jersey anymore after the 2007 season, when a rash of former and
current riders got caught or 'fessed to a wide rage of doping
excursions. As I recall the story, which differs from what is on Wiki,
is that T-Mobile was still under contract for somewhere in the $10M
range, maybe more, and that is what funded the team until Columbia
came on board at the '08 Tour. I'm not sure that Stapleton is out of
pocket for the team.

[Simply Fred]

Ryan Cousineau wrote:
> Either figure is probably not enough to be the sponsor of a ProTour
> team. They run in the range of $10 million annual budgets, I think.
> ($6M for a cheap team?)

A cheap team being one without a program presumably.

[Mike Jacoubowsky]

=============
This profile of Trek says they're a company with revenues in the
$20-50 million range. I'm almost certain Cervelo isn't as big as Trek.
I'd assume then that 10,000 bicycles and $10 million annual revenue is
closer to the truth than $50 million.
=============

Trek's revenues are closer to $800m than $50m. While it's not a public
company, that information is relatively common-knowledge and found in
press releases from the company.

--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com


"Ryan Cousineau" > wrote in message
...
On Jul 24, 10:07 pm, Randall > wrote:
> Does anyone have any idea of what Cervelo or BMC is worth...? It's
> hard to tell because these are private companies. But I still find it
> hard to believe they can afford to sponsor a pro team. Cervelo is no
> longer a main sponsor however.

As you said, Cervelo is no longer a title sponsor. I think we can
safely assume Garmin has deeper pockets.

http://lavamagazine.com/features/kona/bike-count#axzz1T9KLLD23

The 2010 Ironman bike count* found somewhere close to a million
dollars in Cervelos at the event. 468 bikes, more than 1/4 of the
total. USA Triathlon says they have 135k members, which is way higher
than I expected. So that argues that you're not crazy if you think
Cervelo has sold 30,000 bicycles just to American tri-geeks serious
enough to do at least a sprint Tri.

A little hand-waving suggests to me that their annual sales are
probably in the 10-50 thousand bikes, which is a big range, but only
one order of magnitude. Let's call that annual revenues in the $10-50
million range. I'm probably optimistic, though.

http://www.manta.com/c/mm46ggr/trek-usa

This profile of Trek says they're a company with revenues in the
$20-50 million range. I'm almost certain Cervelo isn't as big as Trek.
I'd assume then that 10,000 bicycles and $10 million annual revenue is
closer to the truth than $50 million.

Either figure is probably not enough to be the sponsor of a ProTour
team. They run in the range of $10 million annual budgets, I think.
($6M for a cheap team?) Title sponsor is probably most of that cost. I
don't think Cervelo could spend so much of its annual revenues on a
ProTour sponsorship, and they said as much when they "merged" with
Garmin. But also, the Cervelo Test Team was a Pro Continental team,
not full ProTour.

Conclusions: CEO/DS Vaughters is running a business on the same
revenue-scale as Cervelo co-founders Vroomen and White, though a very
different sort of company (Garmin-Cervelo has, in a way, 30 customers
(its sponsors), and maybe 5 of those are really crucial to its
existence).

Pro cycling teams are really big fundraising entities, more or less
acting as conduits of sponsor money towards rider salaries and racing
expenses. It's probably one of those businesses where you think that
one thing (bike racing) matters, and in fact your day-to-day business
turns out to be sponsor seduction.

Rihs' milkshake brings all the sponsors to the yard,

*I only follow this survey in search of tri-mocking fodder.

[RicodJour[_2_]]

On Jul 26, 3:45*pm, Ryan Cousineau > wrote:
>
> But I'm pretty pleased that my extrapolations from the Kona bike count
> pretty much nailed the size of Cervelo. Now to get my research
> abilities up to the level of my guessing abilities.

If your guessing abilities were better you would have guessed that
there's more money in your guessing abilities. Research wouldn't give
you that answer, and that's why research is a guess' bitch.

> Answering my own question, ProTour and Continental teams are like
> mayflies. In the last decade we've seen teams fold up with great
> regularity, sometimes in the middle of the season, sometimes nearly so
> (Coast/Bianchi being the most high-profile case of a team getting
> bailed out by a secondary sponsor, in that case so Jan could race the
> Tour).

I liked the way LANCE-era Astana ghosted out the logo until they'd
brought their sponsorship money payments up to date.

R

[Randall]

On Jul 25, 4:30*am, Victor Kan > wrote:
> On Jul 25, 1:07*am, Randall > wrote:
>
> > Does anyone have any idea of what Cervelo or BMC is worth...? It's
> > hard to tell because these are private companies. But I still find it
> > hard to believe they can afford to sponsor a pro team. Cervelo is no
> > longer a main sponsor howeve

I am really surprised that BMC does not have any other major sponsors
or other sponsors on the team clothing.


> IIRC, BMC bikes and the team were co-founded by Andy Rihs who also co-
> founded Phonak (which interestingly changed their corporate name in
> 2007), which has a 6.4B (US$) market cap:
>
> http://investing.businessweek.com/research/stocks/snapshot/snapshot.a...
>
> So I would guess that Rihs is comparable in wealth to Bob Stapleton
> who owns Highroad and funded (or still funds?) the team out of his own
> pocket.

[Ryan Cousineau]

On Jul 26, 10:05*pm, Randall > wrote:
> On Jul 25, 4:30*am, Victor Kan > wrote:
>
> > On Jul 25, 1:07*am, Randall > wrote:
>
> > > Does anyone have any idea of what Cervelo or BMC is worth...? It's
> > > hard to tell because these are private companies. But I still find it
> > > hard to believe they can afford to sponsor a pro team. Cervelo is no
> > > longer a main sponsor howeve
>
> I am really surprised that BMC does not *have any other major sponsors
> or other sponsors on the team clothing.
>
>
>
> > IIRC, BMC bikes and the team were co-founded by Andy Rihs who also co-
> > founded Phonak (which interestingly changed their corporate name in
> > 2007), which has a 6.4B (US$) market cap:
>
> >http://investing.businessweek.com/research/stocks/snapshot/snapshot.a...
>
> > So I would guess that Rihs is comparable in wealth to Bob Stapleton
> > who owns Highroad and funded (or still funds?) the team out of his own
> > pocket.

Probably. BMC appears to be a semi-hobby for Rihs, whose bread and
butter is either real estate or his founder's stake in Phonak, a
pretty big player in the hearing aid industry. The only other sponsor
marks on the BMC jersey are for Hincapie's clothing (the jersey
makers) and a French resort that has a Michelin starred restaurant.

More of a Vib Gourmand type, myself,