devashish_paul wrote:
Hang on...you're comparing AAPL market cap to GDP of Canada. You're need to compare market cap of AAPL to market cap of Canada. Anyway, back to the topic, I don't think who buys WTC materially changes our user experience. But the price for this very labour intensive biz model that scales only very manually is the big problem. They can't increase total revenue per race from racers that easily, so they have to find another way of increasing revenue per race through other mechanisms like sponsorship, tickets, licensing etc. It's like the facebook guys having to increase average revenue per user when user growth slows. At some point, you can only get so many users from so many races. So their market cap can only grow by increasing revenue off the same cost base. Unlike software, they can't add 100% margin incremental revenue unless they can generate that through sponsors and advertising....but watching triathlon is like watching paint dry and the fans are more or less the same people who already pay for race entries.
How do you expand advertising and sponsorship by winning over fans who are non racers? I have no clue. None of my friends or colleagues who are not active care about pro triathlon. They care about the World Series. I think this is the rough problem in terms of scaling WTC's valuation. Its really a pure services business model proportional to headcount and infrastructure. Investors hate services models when it comes to ability to have multiples of revenue valuations.
I think licensing their name to smaller races is potentially scaleable and could be a win/win for both parties. Those races would get some name brand recognition and as a result higher participation numbers and WTC receives royalty revenue without increasing their cost base. They already do some of this, right (thinking AC 70.3)? They would have to have a brand ambassodor attend these events to ensure the experience is up to brand standards... but to be honest, I get the impression that local races are run better anyway.
Why do their short course (5150) offerings suck so much and/or why did they never take off? Is that market just too competitive and saturated?
They have also been expanding into pure running races (thinking the Rock & Roll Marathon acquisition last summer) If I were them I would want to maximize my merch sales - branding a series of half marathons that get 20-30k plus participants "IRONMAN 13.1" or something similar gives them a lot more outlets to do this, and it also promotes the core brand and pinnacle of the sport which still rests at Kona, which could in turn increase the interest in IM events and viewership.
Just my 2c anyway
Strava