Bob Stapleton is cycling’s new dynamo

July's world showcase event for cycling, the Tour de France, put much of the focus on the return of seven-time Tour winner Lance Armstrong. The future of the sport, however, is in the hands of another American. Bob Stapleton is the owner of Team Columbia Highroad and he is taking professional cycling by the handlebars.

Bob Stapleton has a very enviable lifestyle. The 51-year-old sold his telecommunications company for US$50 billion to Deutsche Telekom in 2002 and, since then, has divided his time between his California home, Australia, Qatar and the finer parts of Europe. Yet Stapleton is not the man of leisure that his fortune might afford him. Far from it. In fact, Stapleton tours the world with his cycling team, Team Columbia Highroad. A real innovator – possibly even a visionary – Stapleton entered men’s cycling in 2006, created his team and has very quickly moulded it into arguably the greatest cycling team in the world.

As the owner and manager of a professional road cycling team, Stapleton is unique. Not only is he an American in a field dominated by Europeans, but he is also a businessman in a job ordinarily filled by an ex-cyclist. In fact, when asked if he can think of another team manager with a non-cycling background, Stapleton ponders for a while before answering: “I actually can’t think of another…actually, there’s one other – the guy who runs Team Rabobank now. He’s a banker,” Stapleton chuckles. “I don’t know if that’s a really handy skill right now, I’m not sure.”

Stapleton came into cycling when the sport was at its nadir. Drugs scandals had riddled cycling for some years but, in 2006, the situation was akin to an infestation. Team T-Mobile, funded by Deutsche Telekom since its foundation in 1991, was all but crippled by the fallout of a Spanish doping investigation codenamed Operacion Puerto. Jan Ullrich, one of the most celebrated cyclists in the sport’s history, and a T-Mobile rider to boot, had been implicated in the scandal. The T-Mobile name had been completely tarnished and the decision to withdraw completely from the sport was an easy one.

Deutsche Telekom had turned to Stapleton when they had wanted to buy into the wireless telecommunications market in America. And they turned to him again when they needed to overhaul their cycling team. Four years previously, in 2002, Stapleton had negotiated the sale of his American telecommunications company, Voicestream Wireless, to Deutsche Telekom. By the end of the negotiations, Stapleton had not only become a billionaire, but he had also become a cycling nut. Telekom installed Stapleton to oversee the two-year period of transition as the company became T-Mobile USA; they also gave him the keys to his own cycling team.

“We started a women’s team that ran parallel to the men’s,” Stapleton explains. “It was operated with the US Cycling Federation and it was focussed on American girls and getting them into the Olympics. But that really connected me more to the athletes and I realised that these were very deserving athletes in a sport that wasn’t widely followed but I thought deserved good support. When I left the company in 2004, I took over the management team myself. I actually ran it out of the house – my wife and I and another guy.”

By 2005, Stapleton’s T-Mobile funded (and branded) women’s team was the most successful in the world. Stapleton was planning to find independent sponsorship for the team but had an agreement with his German backers that would see them bridge him for one more year. Stapleton takes up the story: “Then, in 2006, I said, ‘you know what, I’m going to take this on and look for sponsorship but you should really keep this and you should support it internationally. It should be a platform for all your countries and markets; it’s really inexpensive and it’s supporting women’s sports. And you’re already spending dramatically more than this, why not figure this is in?’ They said ‘Ok, but we want you to look at all of our sports marketing efforts and give us some guidance.’ They were spending a lot of money at the time on sports, and on cycling in particular. So, when Operacion Puerto broke in 2006, it was really a bombshell for their team. They had multiple athletes involved and they were deciding whether they were going to stay in the sport at all. And they asked me if I would take over the whole programme because they wanted a manager that they knew and trusted. And I agreed to do that.”

Telekom had seen that Stapleton’s first few years in cycling had been an unmitigated success; hardly surprising given his business track record. The young Stapleton graduated with an MBA in chemistry from the University of California. He started his professional life working in various hi-tech companies across his home state before, in his late twenties, spotting a gap in the market that would change his life. Stapleton explains, “The wireless business was on the horizon in the mid-80s and I saw a chance to get into a business that was potentially going to change the way people communicate and that was wide open – a business that a young guy could get into and hopefully build a big career.” And what a career it was.

In 1989, Stapleton joined a mid-size telecommunications firm intent on tapping into the budding wireless market. That company was Voicestream. When Stapleton joined the company, it had about 80 employees. By the time he sold it in 2002, it was a nationwide company with a staff of over 23,000. A very affable man, Stapleton jokes that his time at Voicestream “carried me through to my grey hair,” but he clearly relished building the company from the ground up. “It was an exciting time at every level,” Stapleton explains. “Revolutionary technology, very rapid change. We were a challenging brand; we were a young, aggressive company competing against telephone companies. Our whole method of business was about understanding everything the competition was doing and finding ways to beat them – move faster, quicker, smarter, better marketing and better execution. It was also important for us to partner with handset manufacturers, relevant technology companies, so that we could build a better service offering.”
Clearly, Stapleton has a fiercely competitive streak coursing through him. Naturally, the way he built his business has been – and will continue to be – the way he has built his cycling team. The parallels between the two organisations – Voicestream Wireless and Team Columbia Highroad – are readily acknowledged by the man himself: “At Voicestream, we went out and we found the best people in the market – a marketer from Pepsi; we hired information systems from American Express; we hired the best customer service, the best technology people that we could find from many different companies, and we brought them in and focussed them on a common mission of being the market leader in wireless in the United States. And our cycling team is built along the same lines.”

When Telekom put Stapleton in complete charge of its cycling programme in 2006, it wanted a complete departure from its old, drug-tainted image. "Bob Stapleton represented a clean break from the 'old school' cycling mentality," confirmed Hamid Akhavan, chief executive of Bonn-based T-Mobile International. And Stapleton himself had a complete overhaul in mind. “There was just too much history, too much bad news in the sport for them [T-Mobile]. By that time, I wanted to make a break myself. So, I think we kind of mutually agreed that they didn’t want to stay in the sport and I didn’t want to carry the baggage of that programme around on my back.”

Stapleton officially took control of the T-Mobile team in November of 2006, but he had been working feverishly for months beforehand to come up with a restructuring blueprint that would turn the team around. Stapleton’s goals were fourfold: to completely reposition the team’s brand as one of the cleanest in the sport; to find a (legal) competitive advantage; to put in place a brand new management scheme; and to build revenue through sponsorship acquisition.
Stapleton set about making root and branch changes. He set up the Highroad Sports name for the team and put his own branding all over it.

Under the guidance of sporting director Rolf Aldag, a respected former cyclist, new management personnel were brought in from across the globe to work with a raft of new riders. Over a very short space of time, the team was almost completely turned over. Indeed, since November 2006, the team has hired something like 30 new riders alone.

“I think, for me, they [T-Mobile] left for the legacy of the team that I inherited and tried to fix,” Stapleton explains. “And we actually made pretty sweeping changes. I think the team last year bears almost no resemblance to the Telekom team and I’m actually really proud of the way it all worked out. We kept some of the quality in the team but the vast majority of the personnel is different. Total staff is now about 75 people, of which 26 are male athletes and 11 are female. So, it’s about half-half on athletes and staff. It’s really built around the group’s commitment to the goal of success and constant improvement. It’s very non-hierarchical. It’s very hard to do everything on your own. That’s the way we managed our business in Voicestream; it was impossible for me to know all the details of the technology and the best way to do billing and customer care and finance and all the sales. So, it took us a few months, maybe as much as a year, to really get into that working environment. And now, the net effect is that our sport director is the guy who is at each race running the competition. They’re very empowered. They’re making decisions; they’re running the show. They’re not calling me or somebody else to ask them what to do. They’re very effective managers. That system is very different from what’s typical in the sport.”

Stapleton’s management system may have taken some getting used to – cycling teams have traditionally been run by one team manager, usually an ex-pro, who makes all the decisions himself – but it has since proved a breath of fresh air. “Basically, the way it works is we’re non-hierarchical,” Stapleton reiterates. “And that’s one thing I do think is different: it’s not built around what one guy thinks based on his limited experience as a rider or something else, it’s really eight managers from five different countries that all bring different experience and exposure they’ve had in and around the sport. For example, our Italian manager knows the Italian races, he knows the Italian riders. He helps us recruit from all the Italian riders. Everybody brings their skill to the party and we all sit around the table and I make sure we make good decisions and that we’re pushing as hard as we can in order to be…” – and here the old Voicestream mantra takes over – “…better, faster, smarter than the other teams.”

The non-hierarchical nature of the team extends to the athletes as well. Stapleton is keen to point out that, although British rider Mark Cavendish grabs most of the headlines [the sprinter is a household name across Europe], the emphasis is very much on the team over the individual. Once again, this is a philosophy that differs from what is traditional in cycling – big names like Jan Ullrich and Lance Armstrong have, in the past, dominated their teams, with the ambitions of all their teammates necessarily limited to cycling for the star. Stapleton accepts that the ruthless nature of cycling will always be there. It will always be a sport of stars and water carriers. But he is doing his best to create a level playing field at Team Columbia Highroad – principally to maintain the flow of top talent to the team. Wages in road cycling range from around €2 million in salary and bonuses for the top riders, to a minimum annual stipend of €45,000.

“What we try and do is pay a little more on the base and have incentives that cover the team’s performance, not so much for individual performance,” Stapleton explains. “And we respect and reward our athletes for their contribution to the team, not just one individual.”

Coming from such a hi-tech background, technological advancements were always going to play a key role in any Stapleton sporting masterplan. Although the team’s operations centre is based in Belgium, Stapleton is keen to emphasise that Team Columbia Highroad is very much a virtual company. A lot of travelling is involved and, obviously, the man who spent 25 years at the forefront of mobile telecommunications in America has ensured that every member of his team is Blackberry equipped. “Everybody is a Skype customer,” Stapleton says. “We do regular conference calls and then we meet face to face at races many times a year. The first step is ‘how are people doing?’, ‘What can we do individually to improve them?’ and ‘What do we see on the market in terms of talent that could fit into our team?’”
The ‘talent’ he refers to not only applies to athletes, but technical partners as well. He was quick to introduce revolutionary bikes – custom built by Giant in Taiwan – with sensors that constantly and accurately measured an athletes’ condition enabling coaches to make quicker, better decisions as to who should take a leading role in any given race. Stapleton was particularly proud to unveil a new time trial bike at this year’s Giro d’Italia. The bike is Team Columbia Highroad’s most hi-tech to date and was built using Formula One engineering – a sport for which Stapleton has deep admiration.

“It’s got the best materials and science we could bring from our bike partner [currently US-based company Scott],” he says. “We do that with the wheels, we do that with the fabric of the clothing and on the helmet designs and on the computer systems that measure all the athletes’ individual performances and record every heartbeat and every pedal stroke. You know, every aspect of the team’s materials and methods are intended to be best in class and we’re constantly working to gain incremental advantages from our equipment and methods. We’re very good at product development.”

What Stapleton also seems to be good at is sponsorship acquisition. Yearly budgets for international cycling teams range from €3 million to €15 million. Team Columbia Highroad’s budget is “stable at around €10 million.” Stapleton himself was fully funding the team until 2008 when, just days before the start of the Tour de France, he was able to secure American sportswear company Columbia as a title sponsor. The deal runs to 2010 and is believed to cover half the team’s annual budget. Stapleton believes it his team’s truly international image – his athletes represent 20 different countries – that attracted Columbia.

“We market ourselves as an international team,” he says, “and we’re particularly attractive to international sponsors – people who want to do business in multiple countries. And that’s where Columbia came in. They are an American company. They’ve been in business since 1938 but they do business in 74 countries and they want to build their brand in Europe. They found a manager who understood what they needed to do from a marketing perspective, from a business background, but they also got a property that was relevant to a certain customer segment in the US – a very attractive one that could deliver a lot of name recognition and brand value across Europe. And that was the perfect foot for their marketing objectives. I think I started talking to them in April and we finally concluded a deal in early June, just in time to re-kit and rebrand the team for the Tour. And they got a huge, immediate windfall.”

Indeed, the sheer amount of exposure that cycling gets – the staggering number of television hours – ensured that Columbia’s investment was returned to them many times over. Sophisticated brand analysis technology confirms that Stapleton’s team generated €60 million worth of brand value for Columbia in last year’s Tour de France alone. Over the whole season – the cycling season runs from January to October with up to seventeen events per month – the team generated €100 million worth of brand value. The team won a total of 85 races last year, comprehensively ahead of their closest rivals, Team Garmin-Slipstream, who won just eight. This year, as the leading team, Stapleton believes the extra media attention will see the team generate €130 million worth of brand value for Columbia this year.

Of course, personally, money is no longer an issue for Stapleton. Alongside his role with Team Columbia Highroad, he does still do some venture capital work and advises one or two investment banking firms “just because it’s personally interesting and I like to stay connected.” As far as the team is concerned, Stapleton asserts that money “is very secondary. The business does have to eat what it kills though,” he laughs.

To that extent, Stapleton is openly touting for a secondary title sponsorship deal. He is already in talks with Columbia about extending their current deal to 2012. “But, at the same time,” he says, “I want to stay very strong financially, so we’re actually out looking now for a big sponsor. It’s Columbia Highroad but Highroad translates to ‘for rent.’ I’m very confident that I can find a compatible sponsor. There is a trick to that for sure – that is the complication. But I think we can deliver so much value that we can meet multiple, key sponsors’ objectives and I have lots of visibility that I can provide my partner. And you can look at our kits, I mean Highroad is heavily branded; there’s lots of inventory there for visual space and I do have basically half the name. And I think, once you’re a name sponsor, you’re getting top-drawer visibility and you get that constant aural recognition of your team, and that’s very valuable.

“The team’s got to be funded enough to be competitive,” he continues, “and it has to be able to raise enough money to be competitive. I’ve backed the team so far but it’s got to definitely get to where it can live by its own means. I think we’re pretty close right now – I’d like to see that happen over the next year or two. But, at the same time, we have to be strong enough that we’re competitive. This is not something I want to do to be a marginal team or a marginal business. I want it to be a self-funding strong and dominant force in the sport. We’ve been able to do that so far but I’d like to extend that run so that, in 2012, 2014, we’re a team that people recognise.”

Stapleton is unabashed about his ambition to transform Team Columbia Highroad into a truly global sporting franchise. He cites Formula One teams, European soccer clubs and National Football League (NFL) franchises as examples he studies closely, hoping to emulate them one day with his cycling team. “There are some maverick guys out there: he’s old and cold now but Al Davis [the legendary veteran owner of NFL side Oakland Raiders] was a huge maverick. Every sport has got one or two guys who are doing something very different with their team, their organisation and their marketing. So, I like to study that and I like to see what’s working and what’s effective and try and find a way to incorporate that into our team.”

Every inch the maverick himself, Stapleton is adamant that in cycling, he has found a sport so swollen with commercial potential that he’d be foolish to walk away anytime soon. “There is a clear opportunity for cycling to become a major world sport,” he says, “based on the fact that it’s a primary recreation for many people. It’s heavily watched on television and it’s so relatively under-marketed that it could become a major sport. We’re probably – more than any other team – more active with the UCI [world cycling’s governing body, the International Cycling Union] and the major race organisers to try and make that happen. But that commercial side is definitely an area for progress; there’s clearly a lot of work to be done.”

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