The marathon and triathlon worlds showcased two of their most sparkling events in the last week--the Chicago Marathon, and the Ironman Triathlon World Championships in Kona, Hawaii. Both glittered. Chicago featured a rare win by an American, Galen Rupp, and the second fastest marathon ever by a U.S. woman, the 2:20:57 (third place) recorded by Jordan Hasay. In Kona, Germany’s Patrick Lange set an Ironman Championship record, while Switzerland’s Daniela Ryf won her third straight title.
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Competitor Running will
Below the newspaper headlines, however, there are signs of strong cross-currents for both sports. The leading road-running and triathlon media--Runner’s World, Competitor Running, and Triathlete--have changed hands, or will shortly. Road race participation and running shoe sales have declined, and the world’s biggest endurance event organizer faces potential over-expansion woes. In a separate situation, California fires forced the weekend cancellation of the first big USA event by another eager player--Virgin Sports.
Multiple business-news stories have warned that Chinese conglomerate, Dalian Wanda, which owns both the World Triathlon Corporation (WTC, ie, all Ironman events) and the Rock n Roll Marathon franchise, is significantly over-leveraged. Asian banks are said to be eyeing Dalian carefully, and perhaps asking for the liquidation of some assets.
That could be one reason for Dalian’s abrupt sale on Thursday of the Competitor Group media properties. The new owner is Boulder-based Pocket Outdoor Media, whose principals owned many of the same properties a decade ago. Pocket CEO Felix Magowan says his company will continue to produce Velo News, Triathlon, and Women’s Running, and all their associated websites. It will also maintain the Competitor Running web site, but will cease publishing Competitor Running magazine. “The minute we stop the production and distribution of Competitor magazine, we get a huge positive delta in our business,” he says. “Competitor lost forty percent of its advertising in the last two years after it contracted out its ad sales.”
Pocket will also carry on with Velo Press books. Magowan says the book operation, which he launched 20 years ago, is “an unappreciated little jewel” that has become the country’s leading publisher of running and bicycling titles.
Runner’s World’s owner, Rodale Inc., of Emmaus, Pennsylvania, announced in June that it was seeking a buyer. In late September, the New York Post reported that Hearst, a large, diversified New York City media company, was the likely new owner. The deal has not been confirmed. Since both Rodale and Hearst are private companies, few details have emerged.
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Nike, normally immune, has declined 15 percent in the last two months, and recently held a 40-percent off flash sale that one analyst called “unprecedented.” Under Armour stock has also declined 50 percent in a year. Adidas has bucked the trend, apparently riding a rise in popularity among teens. Its stock has risen almost 25 percent in a year.
Dalian Wanda, owned by China’s second richest man, Wang Jianlin, bought the Rock n Roll Marathon race series four months ago. Just two years earlier, it had acquired the World Triathlon Corporation (WTC), which owns the Ironman Triathlon events. In business circles, Dalian is often described as “the company that wants to be the Disney World and ESPN of China.”
In recent months, press reports have indicated that Dalian might have undertaken too-large a shopping spree. It has supposedly bought more than $20 billion in new ventures since early 2016. The company may now face debt pressures, and was refused bank loans for a $1 billion purchase of Dick Clark Productions.
Endurance sport insiders also believe that Dalian might have overpaid for the World Triathlon Corporation, which it reportedly bought from an investment group for $650 million in 2015. In 2008, the prior owners had picked up the WTC for about $85 million.
The Rock n Roll races were the first big series in the U.S. to end up in the hands of investment firms. Others have followed, hoping to climb onto an ever-rising wave. Previously road races were primarily organized by local running clubs, who invested little and expected little. They simply wanted to offer their members the occasional race experience.
Now, if the wave is breaking, a certain amount of industry chaos is inevitable. That’s what happens when market expansion loses its oomph.
Two years ago, Mary Wittenberg joined Virgin Sports after leaving her CEO position at New York Road Runners. According to the web site of Virgin Sports, owned by the internationally famous Richard Branson, the company hopes “to get millions of people moving through irresistible, inclusive and entertaining athletic events.”
The first big U.S. event of this kind was scheduled to be the Virgin Sport San Francisco Festival of Fitness on October 15 with a half marathon, other fitness activities, and appearances by Sara and Ryan Hall. Last Thursday, October 12, the weekend festival was cancelled, with organizers saying their didn’t want to threaten the health of attendees, or burden “valuable Bay Area first responders and resources that can better be used elsewhere.
Registered participants were assured that their fees would be refunded. In addition, Virgin Sports and ASICS each committed $25,000 to the Northern California coastal region of Red Cross. Wittenberg was also race director of the New York City Marathon in 2012 when it had to be cancelled due to Hurricane Sandy’s aftermath. The New York Road Runners held a Lloyds of London insurance policy for their marathon, and according to Insurance Journal received $15 million after Sandy. Virgin Sports may have carried similar protection. At any rate, the web site is already talking about another San Francisco event in 2018.
|Rock n Roll adds its first Chinese |
race in two weeks.
Even Dalian might find a bright new frontier in its home country where marathon races are growing at a China-like rate, from just over 100 in 2015 to nearly 400 last year. Dalian has also inked a 10-year agreement with the World Marathon Majors, apparently designed to create another major marathon in China during that decade. On October 28, with co-sponsorship from United Airlines, Dalian will hold the first Rock n Roll race in China. It will take place in Chengdu, a city of 14.5 million.
If Runner’s World ends up at Hearst, it will be owned by a company far bigger, and with more resources, than Rodale. Pocket CEO Magowan says his new properties are doing well on the Internet. He intends to focus at first on rebuilding magazine ad sales with an in-house staff. “We are not private equity buyers,” Magowan noted in a press release. “My partners and I see ourselves as long-term investors, and our goal is to improve the product across all platforms. We have ambitious growth plans, and want to restore these brands to their historical industry leadership positions as quickly as possible.”
Running shoe sales will do what running shoe sales have always done: follow the trends of the larger consumer audience.
In a period of flux, it seems likely that companies chasing after speculative endurance-event dollars may suffer. Those that focus on core participants should eventually prosper again, and grow even stronger.
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