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Spanish doping controversy ushers in Kazakh Oligarchs
By Staff
Date: 7/7/2006
Spanish doping controversy ushers in Kazakh Oligarchs

Spanish doping controversy ushers in Kazakh Oligarchs
The Kazakh economy rides a resource boom and so does cycling.  A solution to doping could potentially be influenced by the (sponsorship) market, siphoning revenue away from a corrupt culture...

By Onderarms Van Petgem

The Madrid civil guard doping investigation allegedly caught Spain's Manolo Saiz, red handed with 60 thousand Euros and a refrigerated cooler with blood bags in its recent raid. Saiz had majority ownership of Astana (nee Liberty Seguros), and thus such scandal should have placed its viability as a going concern in doubt, especially since 15 of the 29 riders have been implicated.

Riders can be replaced, however when a figurehead is tarnished to such a degree, selling a monogram of sponsorship from said organization is folly. A cycling trade team is basically a group of contracts and leases with only short term assets and liabilities. There is little real infrastructure, it is more of a "virtual organisation." However the organisation has a legacy and culture.

This is the fourth doping incident concerning this team in under one year, and it involves more that half the riding talent - albeit unproven. The Spanish arm of US financial giant, Liberty Mutual cancelled their headlining sponsorship and secondary sponsor Wurth delayed decision yet has just followed suit. This left a shortfall in revenue of nigh 10 million euros.

The announcement of the sponsorship cancellation by Liberty Seguros meant the team's participation in the Protour was in doubt because they no longer had the revenue required for the bank guarantee to the International Cycling Union. Cycling trade teams, similar to gyms, have a habit of going under, thus the liquidity provisions. No Protour, meant no Tour de France. The team had one of the favorites for this year's Tour, Kazakh Alexandre Vinokourov.

The new sponsor was solicited within a week, an unheard of case of serendipity when sponsorships of this magnitude need to signed off by company boards, and marketing strategies and budgets are planned years in advance - due diligence is a must. The new sponsor is a Kazakh consortium of 5 resource companies, under the Astana name. Astana is the capital of Kazakhstan, and the sponsorship was at the behest of Kazakhstan's Prime Minister Daniyal Akhmetov who is a personal friend of Vinokourov and the head of the national cycling federation.

This marketing vehicle is dubious because of the branding (read lack of), and the void of links to cycling, its fans, and its markets. The capital of Kazakhstan should not require a tourism advertisement, nor should it require a prestige sponsorship to lure investment. The most suspicious peculiarity is the source of financial capital, considering resource companies will be bidding, lobbying and tendering for concessions. This raises the question of conflict of interest and government malfeasance.

The Tour de France sought to deny their inclusion in an appeal to the Court of Arbitration for Sport which prompted media rhetoric from the Kazakh Prime Minister threatening French investments in Kazakhstan. Akhmetov never went to the Moscow Mining College to study Krushchev's brinkmanship 101. Astana did not ride the 2006 Tour though one wonders if there was a transnational gas pipeline delivery to France they may have.

The Astana consortium just bought out Saiz' shareholding. The Kazakh economy rides a resource boom and so does cycling. A solution to doping could potentially be influenced by the (sponsorship) market, siphoning revenue away from a corrupt culture, as money is an incentive in the complicated function of doping. This buyout is antithetical to that solution

The question needs to be asked why buy out Saiz from Active Bay, there are no real assets, it would be just assuming the liabilities on the leases. They have compensated Saiz to a degree, even if it was just leagal paper shuffling, and transferal of ownership so they inherited leases. The Protour license was the diamond. But they inherited a culture. This is the biggest long term liability.

A trade team has no infrastructure of magnitude so setting it up is easily achievable with the capital. A Protour license could be granted with evidence of financial muscle and lobbying as the UCI eye the Eastern bloc for the future - evidence is their Protour Tour of Poland sojourn.

The Kazakh economy rides a resource boom and so does cycling.

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