Mathieu Baert from the sports department of Everest was contacted by the Nieuwsblad and the Gentenaar to explain the possible takeover by Aqua Blue Sport of Sniper Cycling Team.
Sniper Cycling team is Wout Van Aert’s team and is sponsored by Veranda’s Willems and Crelan.
The process and the consequences of a possible takeover will be discussed in more detail.
The article appeared on August 2, 2018 in the Newspaper and the people of Ghent and enjoys a lot of attention in the cycling world.
Read the article below:
What a takeover of a team like Sniper Cycling Team involves
A professional cycling team is not simply a squad of riders. It is a legal entity that holds a licence, a set of employment contracts, sponsorship agreements, equipment contracts and, usually, debt. A takeover therefore has to deal with each of those layers separately, and the order in which they are handled decides whether the deal works at all.
The licence sits at the heart of the deal
Registration at the level at which the team races is granted by the international federation to one specific entity, against conditions on financial guarantees, on the number of riders under contract and on the structure behind the team. A licence is not an asset that can be handed over like a team car. Whether it survives the transaction depends on how the transaction is built. A purchase of the shares in the existing entity leaves the licence holder intact, while a purchase of assets out of that entity generally does not, and the buyer then faces a fresh application against the ordinary criteria.
Rider and staff contracts
Riders and staff are engaged by the entity, not by the sponsor whose name appears on the jersey. Where the entity survives the transaction, those contracts continue on their existing terms, including their end dates and their salary guarantees. Where the activity moves to a different entity, the rules on the transfer of an undertaking may come into play, and the question of who owes the salary for the coming season becomes the central one in the negotiation.
For a rider the practical point is narrow but important. Read whether your contract is with the entity being sold or with something else, and check whether it contains a clause dealing with a change of control. That clause decides whether you may leave, whether you must stay, and on what notice.
Sponsors and naming rights
Sponsorship contracts usually run with the entity and frequently carry their own change-of-control clause, which lets the sponsor review or end the agreement once the team passes into other hands. Since sponsorship is what funds the financial guarantee behind the licence, a sponsor that walks away can undo the transaction after it has been signed. The sequence therefore matters: the guarantees have to be secured before the licence application comes to rest on them.
Due diligence before signature
Check the running commitments before the price is agreed: contracts with riders and staff and their end dates, outstanding salary and social security, equipment and vehicle leases, the terms of every sponsorship agreement, and any dispute that is already running. In a sport where the season is fixed, timing is part of the value. A team that changes hands too late in the calendar can lose riders it has already paid for, because the window to register them has closed.
What a rider should watch during a takeover
Ask in writing which entity will hold your contract after the transaction, and whether that entity will hold the licence. Ask when the registration for the coming season is filed, because your right to race depends on it. Check whether salary already earned has been paid in full, since arrears rarely improve once a team changes hands. Where a change-of-control clause exists, note the period within which it can be invoked, because it is usually short. A rider who puts these questions before signing an extension stands in a far stronger position than one who puts them after the season has started.