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(Bloomberg) — Telefónica SA is looking to cut sponsorship of a road cycling team in the sport’s premier championship as part of a broad review of marketing spending, according to people familiar with the matter.
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The Spanish carrier is seeking to either sell its sponsorship contract, which includes naming rights for the Movistar Team and runs through 2029, or to bring on other sponsors to shares costs, said the people, who asked not to be named as the matter isn’t public. The contract is worth about €25 million ($29 million) a year, the people said.
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Telefónica is shifting its marketing spending as part of widespread business review led by Executive Chairman Marc Murtra under a corporate plan presented late last year. The decision to sell the contract also comes against the backdrop of significant inflation in pro cycling budgets in recent years, as a number of big global brands and sovereign states entered the sport, either through sponsorships or by becoming team owners.
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Some of the brands that invest in the sport include energy drink producer Red Bull GmbH, retailer Lidl & Schwarz and sporting goods group Decathlon SA. Cycling has also attracted significant Middle Eastern investments, with state-backed projects such as UAE Team Emirates-XRG and Bahrain Victorious.
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Telefónica began sponsoring the Movistar team in 2011. At the time, much of the value of the partnership — through jersey exposure and brand awareness — was seen as tied to the company’s presence in Latin America as much as in Spain but that has changed with the sale of most Latin American operations, according to two of the people. Roughly 80% of the team’s revenues come from brand sponsorship, one person said.
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The carrier has mandated YouFirst, a consultancy, to advise on finding an buyer or co-sponsor, according to one of the people.
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The Movistar team is owned and managed by Abarca Sports, whose majority owners are team founders Eusebio Unzué and Francisco Fernández Maestre. Last year investment fund Quantum Pacific Management bought a 43% stake in Abarca. Eastern Pacific Shipping, a Quantum affiliate, became a sponsor.
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The team was among cycling’s best squads during the 2010s. It won the Giro d’Italia and Vuelta a España while spending four consecutive years atop the sport’s official team rankings.
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A press officer for Telefónica declined to comment.
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(Updates with advisor in sixth paragraph.)
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