The most dominant team in pro cycling runs on UAE money. What happens if that’s threatened?
Cor Vos
Last Saturday, UAE Team Emirates-XRG was a force at the front of Milan-San Remo, delivering Tadej Pogačar from a dangerous late-race crash back to the peloton and then off the front to notch an elusive win and check off his fourth career Monument, with only Paris-Roubaix to go.
But roughly 3,000 miles away, events unfold that are changing the course of history by the day. While pro cycling is far down the list of priorities in that regard, the widening war in the Middle East could profoundly affect the team’s future.
The conflict started by the US and Israel against Iran is now almost four weeks old, spiraling outward to other Gulf nations like the United Arab Emirates, and further to Lebanon, and shows no signs of immediate resolution. At first glance, that seems like very bad news for the UAE and, by extension, the pro cycling team that bears its name. From the very first days of the war, the Emirates have been pounded by Iranian missiles and drones – more than 2,000 of them total, at latest count. Iran is getting hit even worse by the US and Israel, but has still largely managed to close the Strait of Hormuz, where roughly 20% of the world’s oil supplies transit. That includes much of the UAE’s production, which has historically been the fountain of its wealth.
The first, unambiguously very bad effect of all this is the deaths of over 2,000 people, primarily in Iran and Lebanon but also other Gulf countries and Israel; the displacement of millions of refugees; and the damage to the homes, businesses, and civic, religious, and cultural treasures that have been damaged and destroyed. There is also the risk of the war widening further, and of setting off a global inflationary event and economic downturn that would strain governments and put many people out of work. Before we think of anything trivial like sports, let’s keep all that in mind first.
For pro cycling, the sudden onslaught of war also conjures the worst fears of the early days of COVID-19, when the sport faced the possibility of sponsors invoking force majeure clauses to sever financial commitments to teams. That largely didn’t happen, thankfully, but the Iran war is already the largest global oil supply shock in history and directly affects several key backers of the sport. The war could threaten several WorldTour teams, including Bahrain Victorious, Jayco-AlUla and Decathlon-CMA CGM, whose new second-line title sponsor is a shipping and logistics firm that has shut down all cargo booking in the entire Middle East region, even avoiding the Suez Canal.
But perhaps no team is more exposed than Pogačar’s. If the UAE, which through various entities provides substantially all of the team’s reported €55-€60 million annual budget, exited those sponsorship arrangements, it would be pretty much the instant heat death of what is currently the most dominant team in men’s pro cycling. (Sponsors often pay teams in installments, rather than up-front for an entire season.)
On second glance, though, maybe in a sporting context things are better than they look for the UAE team. Its lead sponsors are the UAE itself, but also the Emirates airline and, starting last year, an Emirati-based natural gas/chemicals company called XRG. Substantial other support comes from First Abu Dhabi bank, the tech-focused holding company G42, supply chain and logistics firm ADQ, mobile communications company Etisalat, and IHC, yet another holding company that has businesses in agriculture to mining, real estate to renewables. All are Emirati and have sovereign backing, but only XRG is tightly tied to petrochemicals, and even then it’s building an international portfolio of resources.
They’re also all part of the Emirates’ decades-long plan to diversify its formerly natural resource-dependent sovereign wealth into a wide variety of other industries, both domestically and abroad. Today, oil and gas accounts for roughly 30% of the UAE’s gross domestic product – a lot, but a far cry from the reported 85% of GDP that the sector represented just 15 years ago. That diversification drive is the same reason so many Emirati enterprises are involved in global sports like football, Formula 1, and pro cycling.
So, the war is a humanitarian and ecological disaster but other than that, Mrs. Lincoln, how was the play bike race? But let’s take a third glance.
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