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.
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.
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.