COMPETITOR GROUP PULLS THE PLUG ON ELITE RACING

Less than two months ago former Elite Racing TV producer Rich Jayne made a well received presentation to the Competitor Group Inc. sales staff at their Mira Mesa corporate offices.  There Jayne outlined the costs and opportunities involved in presenting six of the company’s top half-marathons on TV and the internet as a showcase for CGI’s newly designed Half Marathon Grand Prix, a two year, 30-event series for professional and age-group runners culminating in a $240,000 payout to the pros.

Then even as the sales people were out hustling the idea (to a U.S. auto manufacturer as I understood it) three days ago, Poof!, CGI’s entire North American elite athlete program was terminated with extreme prejudice, including the professional Grand Prix and the invited elite field for upcoming 36th Rock ‘n’ Roll Philadelphia Half Marathon September 15th, an important final tune up for the fall major marathon season.

“Obviously my biggest concern is Philadelphia which takes place in just over 2 weeks time,” elite athlete coordinator Matt Turnbull wrote to athlete managers in the wake of the decision.  “I’m aware that some of you have already purchased airfares for athletes and these will be reimbursed in full. If your athlete(s) still want to compete for prize money they are welcome to travel and will be looked after accordingly, though any agreed appearance fees unfortunately will not be paid.  The European RnR Races will function as normal with Carlos Moia and Miguel Mostaza leading the elite athlete recruitment respectively.”

While ongoing contracts with athletes like Meb Keflizighi, Deena Kastor, Shalane Flanagan and Kara Goucher will be honored to their conclusion, this decision marks the practical end to Competitor Group’s nearly $1 million elite athlete program. It’s is a sad end to a long legacy of excellence and speed, and a telling sign of the health of pro running in America.

You can be sure that former Philly race director Mark Stewart didn’t think that when he handed the Philadelphia Distance Run to Elite Racing in 2005 that several years later it would end up on the ledger of private equity managers who would pull the plug on the event’s glittering history.  But the message is clear, CGI doesn’t believe having fast runners at their events drives registration or sponsorship, and in the end isn’t relevant to their brand.

Philly would have been the third domestic half-marathon in the Grand Prix series for 2013 (New Orleans and San Diego were included ex-post facto) with only the San Antonio race in December remaining this year. As such it makes you wonder what precipitated such an abrupt act?  It would have been more understandable to announce the program’s cessation beginning in 2014.  But even as the prestigious Philly Half loomed, and the CGI sales staff was actively seeking to find a sponsor for the GP and TV, the whole thing came tumbling down.

Perhaps a little history would be helpful.

 

Tim Murphy founded Elite Racing in San Diego in 1988.  Among his early events was the Carlsbad 5000, an event that would help transform the sport with its speed and age and gender specific races over a fan-friendly loop-style course.  At the time nobody thought people would sign up or travel to run a road  5K.  But with American mile legend Steve Scott setting the first of multiple world records on the sunny, seaside course, the event and Murphy’s rep were made.

One year later Ambrose Salmini, executive producer of ESPN’s Running & Racing, a 26-week series covering endurance sports, added Road Race of the Month to his stable.  I was brought on as host. In 1989 Race of the Month covered Carlsbad for the first time, and as a result of having ESPN on hand, Murphy signed an extra $40,000 in sponsorships.
Two years later Salmini Films sold Race of the Month to Murphy who used ESPN to build his business.  Along with producer Rich Jayne, I travelled the world covering the ever-expanding sport of road racing.  When Mike Long joined the team as elite athlete coordinator, the fun really began.

From Ireland to Indonesia, Kenya to Guatemala we scoured the globe and the States for the best races as the sport blossomed. Then in 1994 New Yorker Tracy Sundlun joined Murphy as a consultant, before coming on full-tme as his partner in 1997.  The following year they changed the face of the sport again, this time even more profoundly than with Carlsbad.

With the coming the Suzuki Rock ‘n’ Roll Marathon in San Diego in June 1998, the sport of running was introduced to the concept of fun along the way rather than simply speed from point A to point B.  Though the inaugural RnR Marathon had its difficulties gaining local support (traffic tie-ups, what else?) the formula of rock bands along the course and a major concert after the race proved to be wildly popular with runners.

 

Soon Rich Jayne and I were covering fewer outside events, and focusing on the growing list of Elite Racing produced races.  Eventually Elite Racing added Rock ‘n’ Roll events in Nashville, Phoenix, Virginia Beach, San Jose, and San Antonio. Through it all Murphy continued to emphasize elite competition even as he marketed  music and cheerleading to the masses and city officials.

Rock ‘n’ Roll was so successful that events everywhere began copying the formula, while outside investors began cueing up.  But when our beloved Mike Long died suddenly of a heart attack in July 2007, much of Tim’s enthusiasm for the business died with him.  No one who knew Mike felt any different.

Mike’s position was filled by England’s Matt Turnbull that fall.  Matt had come over from Nova Interntional, event managers of the Great North Run and other top fight road competitions in the U.K.  If there was a younger version of Mike Long lurking anywhere in the world, Matt Turnbull was he.

By December 2007 Falconhead Capital LLC out of New York came calling with their checkbook wide open, and purchased Elite Racing along with a group of other companies (Competitor Magazine, Velo News, Triathlete, Muddy Buddy, etc.) to form Competitor Group Inc.

So you see, what we now know as Competitor Group, which Falonhead Capital sold after five years to Celara Capital out of San Francisco in November 2012 for a mutiple of their own purchase price, is really part of the sport’s legacy.  But private equity is one kind of business, racing is another, and it seems fast money and fast racing aren’t all that compatible, especially the way fast racing has evolved.

What Effect Elsewhere?

Whether this decision will bear fruit or poison the CGI well, only time will tell.  The fear from the sport’s standpoint, however, is the potential cascading influence the CGI decision might have on other events.

As largest purveyor of endurance events In the world, CGI’s footprint makes quite an impression.  So if they see no value in elite competition, what happens if, say, the board of directors of the NYRR, fresh off the costly disaster of Hurricane Sandy in 2012, decides they could save quite a bit of money if they followed CGI’s lead? Why should we spend $3 — $4 million on various races when CGI has moved that money elsewhere for strategic reasons without any negative effect?

Having been on the inside with Elite Racing and then for a short time with CGI, I can tell you things changed markedly with the introduction of the equity managers. And that was to be expected. Private equity is about a short game for a long gain, while running is about the long haul for intangible results, hardly similar marching orders.

The instant the contractual obligations for TV were over, the TV wing of CGI was disbanded.  In that sense we were the canaries in this coal mine.  Why pay for top athletes if you aren’t going to leverage their presences by showing them to anyone but a few hundred on-site spectators?  I guess the CGI execs came to the same conclusion last Wednesday when they made their decision to drop the elite program.

But why so precipitous a move?  Two possible reasons suggest themselves.  First CGI prez Scott Dickey has never been a big fan of sport from a business standpoint.  He wasn’t onboard with Rich Jayne’s TV proposal, and when Falconhead Capital first bought Elite Racing, I was told that had they completed the purchase two or three months earlier, they would not have replaced Mike Long with Matt Turnbull as elite athlete coordinator.  And even when Turnbull did come on board, funding for the elite athlete program began a precipitous decline.  When Elite Racing staged six Rock ‘n’ Roll events, the elite athlete budget stood at $1.6 million.  Until Thursday with 30 events the budget sat at just under $1million.

Another potential reason for the quick guillotine is somebody needed money fast, and the elite athlete program was vulnerable – and not without cause. Let it be known that the fast runners of this world, and their agents and managers, are equally responsible  for helping kill the golden goose by refusing to increase their marketability over the years. All they have ever concentrated on is running fast, not making themselves available for marketing and sales.

But CGI is more than the Rock ‘n’ Roll series, and Calera Capital is partnered with 23 other businesses besides Competitor Group, including such well known names as Coldwell Banker Real Estate and First Republic Bank.  And just because Rock ‘n’ Roll is profitable doesn’t mean their revenue projections were on target.

“It’s an on-going problem for private equity,” said a friend with knowledge of the trade. “Maybe there was an interest payment coming soon, and they needed money for the bank payment. For them to slice it so cleanly, it was probably an economic or financial decision.”

Equity firms are heavily leveraged by banks who place enormous pressure on executives to hit goal numbers.  Who knows what forces were in play that led to this?  All that can be said is that if the elite racing program was running on all cylinders, someone else’s head would have felt the ax.

Notwithstanding, this has been coming for a long time.  When running was new in the 1970s and dominated by Americans, Europeans, and Austral-Asians, we had fans and heroes alike.  The athletes even attempted to put together their own tour via the Association of Road Race Athletes, an athletes’ union that tried to break the amateur code of Olympic sports.  They even staged several open races in 1981 that challenged the system, and eventually did force USATF and the IAAF to come to terms with professionalism.

But in the end the athletes couldn’t maintain a unified front, and rather than forcing a fully open sport, they opted to take a half step via a charade called TACTRUST that awarded the athletes money through the veil of ” training expenses”.  While the athletes got their money, the fig leaf configuration confused the general public who never fully understood how an amateur athlete could get paid and still go to the Olympics.

Soon the athletes became weary of the politics and went back to racing.  Race directors took over ARRA, and soon outlawed appearance money.  Without appearance fees to orchestrate and publicize race fields that might appeal to the public, open prize purses were offered, and soon an army of hungry Kenyan runners, whose ranks were replenished three times each year, descended on the American roads.

After twenty years-plus of this every-race-a-universe-unto-itself system, without any regulations to control access and eligibility to win money, without a circuit of events that could be molded and sold coherently, any economy of scale that might have taken the sport to the next level was squandered, and results are finally at hand.  The public has long since lost interest in the outcome of foot races.

Competitor Group isn’t to blame for the demise of elite racing (other than for the abrupt nature of the current decision), it is only the cold-eyed messenger.

END
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39 comments on “COMPETITOR GROUP PULLS THE PLUG ON ELITE RACING

  1. Mike Lundgren says:

    Toni, disappointing to say the least, and that is because you were a great part of why we wanted to tune in to all telecast races. Your insight, your commentary, and your wonderful way with words made for an enjoyable time watching a/the race/s. The hardest working athletes around may well be distance runners, and they are paid the very least. The “suits” are those that least deserve a six figure payout, especially those in private equity firms (but we already knew that from watching the last presidential campaign).
    I will have no interest in running in an overpriced R&R event. Our local clubs do a fantastic job, with passion and concern, and seek no greater profit than knowing they’ve earned a “well done” on the race at hand. I could easily say much more, but I think my point and my passion is clear.

    • Toni Reavis says:

      Mike, To each his own. Nog that there’s no place for CGI in the game. We just can’t depend on Private equity for the betterment of the sport. That’s not their game.

      Thanks for the considered reply.

      Toni

  2. Fred Geswein says:

    Another example of …banks…equity managers…shareholders…short-term profits…and the general public is, for the most part, unable to see through it and feels helpless to do anything about it. Fortunately, the rich get richer … plutocracy…oligarchy. Why do we still teach History, if we continually allow it to repeat itself? Thanks, Toni, for your insight.

  3. Stan Brajer says:

    So much for the 1/2 marathon series dude!

  4. Patrick Lynch says:

    Believe your last paragraph is prophetic.

  5. The reason the sport is in the death spiral is the same reason it was made obsolete 20 years ago. No regional to national cable TV coverage that airs on the same day as the race. No highlights on the now totally prolific sports news programs to continue the promotion of the athletes.
    When you rely on Ben Franklin style cold type printing press forms of media promotion…you die.
    And by the way 20 years ago I put races on the air as soon as 4 hours after the winners hit the finish lines – and used analog video technology. Here’s the proof: http://youtu.be/_z-yOOUkKao
    Toni, you’re the one killing the sport. Flowery words can’t compare to digital media technology getting the coverage of the event out at lightning fast speeds. There’s nothing to invest in so the investors pulled out. Just like I did twenty years ago.

  6. Anonymous says:

    Toni, after reading your post I thought it might be best that I reply publicly to clear the air a bit. Let me start by reinforcing my respect for you and all you have done for the sport. There are very few individuals that have dedicated so much energy, passion and hours to the sport of running like you Toni, and for that we all owe you a huge debt of gratitude.

    I was somewhat surprised to read your post today especially after yesterday’s public quote in the Runner’s World? For those that didn’t have a chance to read that piece Toni’s quote started with: “I don’t blame them,” Reavis told Runner’s World Newswire. For the full quote and story, here’s the link.

    http://www.runnersworld.com/races/rock-n-roll-series-significantly-lessens-elite-program

    I don’t fault you for reviewing our decision and for changing your mind after further reflection. But I do want to clear up a few things.

    “Poof” as you put it when referring to the overnight decision is a tad inaccurate. Our decision to no longer pay appearance fees for Elites in our North American RnR events was a difficult one to say the least. This is not a ‘practical end’ of our support of the sport, but it was a clear strategic acknowledgement of investing in elements that impact all 500,000 runners at RnR events not just the 50 or so at the front of the pack.

    Competitor Group is at it’s core a health and wellness company dedicated to promoting and enhancing an active lifestyle. Lifestyle is the key word, not Sport. Rock n Roll marathons have always been about the journey, the commitment, the personal dedication required to train and finish a half or full marathon. We’re not about how fast you complete the race, we’re about the fact that you showed up on the start line and the commitment one has made to complete the journey.

    We will always celebrate the achievements of the greatest athletes in the Sport and hold them up as inspiration for all of us to enjoy. We will do this through our media assets like Competitor mag, Competitor.com, Triathlete mag, Triathlete.com, Women’s Running mag, Women’s Running.com. We have more staff dedicated to reporting on the Sport than any company in the world other than Rodale. With regard to RnR, we will always welcome the elites, we are just not going to spend in excess of 7-figures annually to simply have them show up. It represents a disconnect from the brand and the very promise of participating in a RnR event. We’re going to reinvest those dollars into entertainment, the experience, more staff to execute more flawlessly, and in our continued efforts to increase participation.

    While we are the largest series in the world, we’re not the only ones who have taken this position. Of the 5 top marketshare properties in the U.S. (Competitor, Disney, NYRR, US Road Sports and Nike), only one of them, NYRR, has a significant investment in Elite Athletes at their races. So while our decision may disappoint, it certainly is not without precedent.

    With regard to TV component of your post, I want to remind you that it wasn’t until last year that NYRR and Mary were able to secure a national broadcast deal with ESPN after so many years of having a local ABC time buy. As you know, the media landscape has changed dramatically in the past five years, and while we continue to seek broadcast partners on a market by market basis (KLAS in Vegas, WRAL in Raleigh, etc), the ability to sell advertising in support of such broadcasts is difficult to say the least and a much more complicated process than the picture you are painting. I know you understand this intimately.

    While I understand that financial investors are always an easy target, I find the whole private equity discussion somewhat naive. You don’t have to look very far for great analogies to understand that increased public and private investment into a Sport can lead to tremendous growth for all. Private equity investment strategy is all about growth. You don’t cut your way to growth. Our decision to reinvest in other areas of the experience is a strategic decision and not one that we take lightly for a moment. You don’t have to look far, maybe start with the annual Running USA participation studies, to confirm the facts about RnR’s contributions to the sport and the growth of the industry. We have taken more risk, invested more dollars than anyone in the history of the industry and whether it is the highest percentage of female participation in the industry or the highest percentage of first timers joining the fun, I’m not sure it is valid to question our dedication or commitment to promoting running and growing participation.

    And by the way, let’s not forget that almost all of the industry’s dominate players operate as public equity or private equity operations: Active, Disney, Nike, Lifetime, World Triathlon Corp and Competitor. WIth outside investment industries grow, innovate and become more sophisticated. I don’t think Competitor needs to apologize or hide from this basic fundamental premise.

    With much respect,

    Scott Dickey
    President/CEO
    Competitor Group

    • Anonymous says:

      Scott,

      Your post makes several good points, but it does not refute the fact that as a direct result of your decision here, one of the most storied and celebrated road races around, the Philadelphia Distance Run, no longer has a place in the competitive running world. I believe I can speak for many when I say that we, as elite athletes and followers of the sporting component of running, have no axe to grind with large-scale events that are more about participation and inclusion than competitions. The RnR San Diego, as a newer event that has always been focused on the masses rather than the elites, is a wonderful event and should be credited for bringing more people into running than would have been without it. CGI should be lauded for its fitness and lifestyle innovations.

      However, I believe most would also agree with me that it is an affront to the competitive athletes you claim to respect when you buy up events with storied competitive histories and strip them of their competitive status. The Philadelphia Distance Run has (or had) no equal in U.S. running. It was a world-class event, run on a record-capable course, in a major America city. It is the decision to remove the competition from this type of event that will upset me and the thousands of other people who care about the competitive side of running in this country, and it is this type of decision that will cause me to discourage all of the less competitive runners with whom I interact regularly to seek events other than CGI races for their marathon and half-marathon completion targets.

      In sum, if you want to hold events for the masses that are about completion and not competition, please, do so and do it well. But don’t take away from us the few races actually still function as races rather than merely as events. Hold RnR events wherever you’d like, but don’t buy up races for the purpose of turning them into something other than races. The Philadelphia Distance Run will live on in our memories, and each time we think of it, we’ll remember that it was the greed of CGI that caused its death.

    • Ann says:

      I am writing because I am upset with this company’s practices as well. My sister and I have spent a small fortune on airfare and hotel to travel to Bermuda for the Tri Rock Bemuda series (another event sponsored by Competitor). This event was bought out from the SHe Rox Tri event by Competitor. However it seems as if they cancelled this event without notice. On August 24th I attended the Chicago Triathlon Expo where two representatives “sold me on the event” even claiming that it would sell out. I booked my hotel and airfare a week later. I have tried to contact Competitor on multiple occasions and no one has had the courtesy to respond. It is sad but clear that this company does not care about the little man or woman. Unfortunately I too feel the pain of Competitor’s practices.

      • V says:

        It’s a disgrace Ann to be sure.

      • Toni Reavis says:

        Ann,

        For a service-oriented business this is the worst possible outcome. They must be expanding so fast that they can’t keep up with customer service. Many of the best people from the Elite Racing days are now gone, and when you have less experienced people and more events and more pressure, these are the potential consequences. Word of mouth is the lifeblood of such companies. Not good.

  7. ken says:

    Toni, as a former agent of kenyan athletes I think it is a much a blame on the agents, since their
    runners show up,take the money and go home….they have no (for the most part) personalities,can barely speak the language in a literate manner,so the sponsors and the race benefit ZERO from their presence except with faster times ,which 90% of the other participants in the races could care less about.
    Back in the 70′s and 80′s where americans were getting good money from shoes companies and nice appearance fee’s they worked for this…running hard and then mingling with the other runners after the race…this adds alot…most foreign athletes dont care about anything but getting their money and getting back on a plane to the next city.
    I could see this coming some years ago,thats why i got out of the business.It doesnt surprise me at all..i put on races now and spend the majority of my money of nicer shirts for all the runners,better and food and beer……when only 10% of a field wins a prize,why spend so much money on them??

  8. dowgJoe says:

    Toni, thanks for looking at all sides of the issue. I’m surprised the desk of Mr. Dickey does not see how hard you worked to give both sides to this. As a runner I felt you made an unnecessarily strong attempt to defend the Competitor Group and it’s unfortunate Competitor Group does not recognize your due diligence.

  9. V says:

    I am surprised Mr Dickey left a glaring typo in his response. Maybe they cut back on the proof readers too? :)

    • Jenna Talia says:

      Well, if you’re critiquing grammar, then you might as well call out Toni’s gaffs too (‘cueing’?? Wtf?)

      • V says:

        It was a light hearted reply on a serious topic. Australians do that. Fact is if they honored their word and agreements that were already standing, commencing with a clean slate ethically on this new decision moving forward in 2014 I would have far more respect for them. The fact that the have removed integrity from the agenda is not impressive and not to be trusted.

  10. Candace says:

    Thank you Tony for your continued diligence and straight to the point writing as well as your stellar on camera commentary skills. May you continue with the good run. Until the next time we meet, Cheers, Candace Cable

  11. […] analyzed and maligned. Scott Dickey, CGI’s president and CEO responded on Sunday evening on Toni Reavis’s blog.   In his post, Dickey said that “Competitor Group is at it’s core a health and […]

  12. […] Competitor Group Pulls the Plug on Elite Racing, Tony Reavis […]

  13. […] News that the Competitor Group Inc. has slashed its North American elite athlete program to the bone has moved through the running industry like poop through a goose. Then late yesterday came news that the San Diego-based event management and media company has cancelled two of its 30 Rock `n` Roll events, one in St. Petersburg, Florida, the other in Pasadena, California, as both have underperformed in their second years of operation. […]

  14. Stan Brajer says:

    Dude, maybe this is the kick in the ass that has been needed for decades? Stan

  15. V says:

    No other sport let’s corporates ride on the back of them like we do… It’s time to take back the streets.

  16. […] In this excerpt from the archives of Runner’s Digest Radio, TAC TRUST administrator Alvin Chriss discusses the lessons the ARRA athletes learned on the road toward professionalizing their sport.  It is an eerily resonant message for every one of today’s runners who hope to earn a living from their sport, especially in light of last week’s Competitor Group, Inc.’s decision to eliminate elite athlete funding from their U.S. based events. […]

  17. […] in its Rock N’ Roll race series. (I assume you’re well aware of what happened; if not, educate yourself here.) The shock waves are still reverberating through professional running even now, and two weeks is a […]

  18. Dont blame me – I cant agree with that point of view.

  19. Ann says:

    I am writing because I am upset with this company’s practices as well. My sister and I have spent a small fortune on airfare and hotel to travel to Bermuda for the Tri Rock Bemuda series (another event sponsored by Competitor). This event was bought out from the SHe Rox Tri event by Competitor. She Rox was a small women’s only tri that gained traction with beginner women triathletes. However it seems as if they cancelled this event without notice. On August 24th I attended the Chicago Triathlon Expo where two representatives “sold me on the event” even claiming that it would sell out. I booked my hotel and airfare a week later. I have tried to contact Competitor on multiple occasions and no one has had the courtesy to respond. It is sad but clear that this company does not care about the little man or woman. Unfortunately I too feel the pain of Competitor’s practices

  20. […] to the Competitor Group’s decision to discontinue much of their elite athlete program at their Rock `n` Roll Series events in the […]

  21. […] it took Competitor Group’s two-by-four to the frontal lobe to get people’s attention, but now that CGI has eliminated appearance fees and (by running’s […]

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  25. […] COMPETITOR GROUP PULLS THE PLUG ON ELITE RACING […]

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  27. […] Wickens wrote to me in discussing his motivation.  “With all the chatter about the Competitor Group Inc.’s decision (to withdraw funding for elite competition in their Rock `n` Roll Series last September), and the […]

  28. […] error isn’t easy, but it can be cathartic.  In light of the strong, some might even say vehement, reaction to its decision last September to precipitously eliminate elite, competitive racing at its Rock `n` […]

  29. […] Steve Gintowt left the company as CEO and CFO in December 2013. The change in leadership followed a strong industry reaction to CGI’s precipitous reduction in its elite athlete program just two weeks prior to the Rock `n` Roll Philadelphia Half Marathon last September after […]

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