Some major deals in the works

[jeff darman]

http://www.slowtwitch.com/News/Triathlete_Magazine_slated_to_be_sold_in_blockbust er_private_equity_deal_158.html

The sport continues to change.

[pstewart]

It certainly does appear that we are entering an era of consolidation. The purchase of all of Elite's events by Falconhead Capital is the most visible part of it but it seems that other companies are seeking to extend their influence by gathering up events -- in my area this includes Corrigan Sports taking on the Frederick Marathon in addition to the Baltimore Marathon, or the Marine Corps Marathon starting a new half marathon in Fredericksburg, VA (which quickly filled its 5,000 runners). Obviously these groups are seeking to leverage their names, or the reputations of their events, beyond the event that got them started.

I believe this consolidation potentially has a significant impact on the sport. One person I spoke with called it the "Wal-Martization" of running, although usually the spin off events are priced more like Nordstrom.

How are people feeling about this trend?

[Trailrunnerdude]

I believe this consolidation potentially has a significant impact on the sport. One person I spoke with called it the "Wal-Martization" of running, although usually the spin off events are priced more like Nordstrom.

How are people feeling about this trend?

it's an interesting question. For me, it depends on the reasons behind this consolidation. If it's purely an attempt by 'event' companies to cash in on a trend that is growing in popularity, I'm not sure it's a good thing. On the other hand, if it's guided by a desire to promote the sport of running and put on well-organized, competitive races then I think it's a more positive development. Still, there could be some issues if these big players wind up squeezing out smaller races by staging races on the same weekends in the same metropolitan areas as some existing races.

[hillrunr]

As both a runner and organizer of one of those smaller races, to me it's all about what is in the minds of these buyers. If they are simply looking to build a world class series of events, great. However, if they are looking to turn a profit by squeezing out the small players, I think there will be a lot of losers.

A bit of concern comes to mind for me after an "incident" last year locally. A very popular and well-run 20K race organized by the local running club had to go head to head against a new half marathon held by a for profit company. The 20K took enough of a hit that the RD afterward was asking members of the club what he can do to keep the numbers up. Should he make it a half marathon, does he need to add amenities that would drive up the registration fee, what else can he do? The fact that he felt the need to explore the idea of removing the only locak 20K from the race calendar or add unnecessary amenities that would increase the registration fee of one of the relatively few very affordable races was disturbing to myself as a runner. The fact that such an established event was threatened by an incoming competitor in this was was even more disturbing to myself as a small-time organizer.

One thing that stands out to me, this anticipated purchase is going to be made by a private equity group. Private equity has a history of buying "underperforming" companies, "cutting the fat", then reselling for profit. If this is going to be the case this time and I realize that nobody but the private equity firm could know whether that is the case, what might happen to this high quality race management firm?

[JamesM]

I think we forget that for profit companies are just that, FOR PROFIT. As a general rule they are going best for their investors when making MAXIMUM profit.

This means that they will take dates that maximize profit, and will naturally compete with existing events for popular dates. (Thanksgiving, new years, or any month when the weather in that location is best.)

You should expect one or more for profit companies to come into your market when ever the conditions are best for a profitable race. You should expect them when your weather is just right, not too cold in the winter or too hot in the summer.

You should expect them to use the most profitable location possible. (Thank You for establishing the course.)

You have several choices:

Ignore them and hope they go away.
Decide that your club will not help them for free.
Relegate your club to picking up the unprofitable events.
Work with the event but only if they drop a few thousand dollars back into the local running community or clubs.


I don't know the answer, but maybe one way is to flush the for-profits out from flying under the false colors of charity events. (Maybe this has to be a legislative move.)

I don't like that you can go to a city and find that for-profit enterprises have been their first and burned through the good will and best locations.
I don't like the volunteer base bing seduced by the glitter of big events and then been burnt out when real local events ask for help.

The A in USATF does not stand for amateur. In the UK, the UK:Athletics association is founded on clubs and volunteers. (The first item on their menu is clubs and the last is Volunteers.)

For the health of running we need to decide if we are an amateur sport and maybe figure out a way to make the local clubs the focus of an inclusive system, rather than just being customers of entertainment companies.

[Trailrunnerdude]

For the health of running we need to decide if we are an amateur sport and maybe figure out a way to make the local clubs the focus of an inclusive system, rather than just being customers of entertainment companies.

This has already been decided - running is NOT an amateur sport and we are NOT going back to the days when we were governed by that awful AAU, which forced athletes to live off of foodstamps and out of cars.

Now, if we get to a point where event companies/private equity groups start taking over races and harming the sport, then the governing bodies and perhaps municipal/legislative authorities will need to step in to restore some order.

[hillrunr]

I think we forget that for profit companies are just that, FOR PROFIT. As a general rule they are going best for their investors when making MAXIMUM profit.

Obviously the case. I don't know if anyone is forgetting that. The question is how they are going about doing that and what the result is to the running community.


For the health of running we need to decide if we are an amateur sport and maybe figure out a way to make the local clubs the focus of an inclusive system, rather than just being customers of entertainment companies.

I think there's a difference between the amateur/pro debate (which has hopefully been put to rest) and the debate of whether it is better to have non-profits (usually clubs) or for profit companies running the races. I'm not going to suggest here that either is better than the other because each brings positives to the table. However, I'm not a fan of one (either) trying to take on a well established and well run event put on by the other. This is not the way to build goodwill within the community or to do the best thing for running itself.

[dfmonti]

How are people feeling about this trend?

Look at what happened with Devine Sports when they took over L.A., S.L.C., L.V. and the half in Chicago. The overhead they created with their central office wasn't sustainable based on the events which they managed (not enough economies of scale were achived), and they ended up stripping down their corporate office, including jetisoning the well-paid CEO. Their events still struggle financially, evidenced by the amount of time it has taken to pay elite athletes (as much as a year). I don't know if they have reached the point of stability yet; an agent I spoke to last week said the organizers couldn't tell them what the prize money offering for L.A. would be this year, even though the race is in less than two months.

Also, most not-for-profit races are managed by for-profit management companies. Some do a trememdous job, while other events which are run on essentially all-volunteer models (like Falmouth) do just as good a job. In our sport, there is enough passion for "heroic effort" models to be viable on a long-term basis.

Of course, the largest race organizer in the United States, New York Road Runners (60 events per year with over 300,000 entrants) is not-for-profit, but it is professional.

David Monti, Race Results Weekly

[Trailrunnerdude]

Look at what happened with Devine Sports when they took over L.A., S.L.C., L.V. and the half in Chicago. The overhead they created with their central office wasn't sustainable based on the events which they managed (not enough economies of scale were achived), and they ended up stripping down their corporate office, including jetisoning the well-paid CEO. Their events still struggle financially, evidenced by the amount of time it has taken to pay elite athletes (as much as a year). I don't know if they have reached the point of stability yet; an agent I spoke to last week said the organizers couldn't tell them what the prize money offering for L.A. would be this year, even though the race is in less than two months.

Also, most not-for-profit races are managed by for-profit management companies. Some do a trememdous job, while other events which are run on essentially all-volunteer models (like Falmouth) do just as good a job. In our sport, there is enough passion for "heroic effort" models to be viable on a long-term basis.

Of course, the largest race organizer in the United States, New York Road Runners (60 events per year with over 300,000 entrants) is not-for-profit, but it is professional.

David Monti, Race Results Weekly

Thanks for pointing this out. The case with Devine is remindful of the now defunct H2O Entertainment that decided to stage a spring marathon in DC. Thousands of runners lost their entry fees in that debacle.

Perhaps the most optimal situation is for races to be managed by non-profit entities that are professional. I believe this is the case with the Cherry Blossom Ten-miler.