The Business Economics of IM Races?

Triathlon Forum
1

I’d am curious to understand the the sport, IMNA and WTC from a business perspective.

While people often start with the math of $450 X 2,000 entrants, and complain that there are a lot of “deep pockets” that reamain lined with coins…I haven’t seen anyone go into the expense side of things. There sure is a lot of people-hours and equipment required to put on an IM race. I don’t see a lot of big sponosors around (Kona didn’t have a title sponsor this year). Maybe Graeme Frasier makes a decent living, (he should; he puts on many great shows) but I don’t see a lot of personnel bloat nor do I imagine the saleries are all that huge for others. WTC doesn’t seem to have much big expenses either, and certainly they likely didn’t pay-up for a national level sports org leader by promoting Ben Fertic from within (no offense to his abilities).

Pro’s don’t seem to be making very much money and bike shops don’t seem to be going into lucrative franchising.

It would appear that there is less money around than many people think and that the people who work in the industry (from vendor reps to pros to RD’s) are more in it for their connection and feelings for the sport than to make a substantial living.

As I said, I’d like to understand the expenses of an IM race, and the expenses of a pro vs. their revenues.

Here’s a stab at the P&L for an IMNA (please add your thoughts):

Revenues

Entry Fees $900,000 (450 X 2,000 competitors)

Sponsorships $75,000 (a wild guess that somehow you get $25k from 3 companies?)

Booth Rental at IM Villages $60,000 (2000 X 30?)

Venue Cash Contribution $75,000 (not sure if this is even a category, but the Tourist Bureau might kick in something to get the event to come to town and fill up the hotels and restaurants and go shopping)

Total Revenues $1,110,000

Expenses

Athlete Carbo & Awards Dinners $100,000 ($25 x 2 meals x 2,000)

Volunteer Dinners $200,000

Athlete T-shirts $10,000

Volunteer T-shirts $20,000

Timing $20,000

Printing and Communications $125,000 (includes programs, internet and VHF radio rental for the event and portion of annual overhead)

Race Equipment Rental Transportation and set-up $200,000

Personnel $150,000 (on hand and portion of yearly overhead at the home office)

Insurance $100,000

License Fee from WTC $25,000 (wild guess)

Pro Prize Money $75,000

Total Expenses $1,025,000

Net Profit $85,000

2

I think you gave too much money to the food. I doubt it costs 200,000 to feed the volunteers. Maybe half.

3

You overestimated expenses, probably by double, and underestimated income by about 20-30% I’ll bet. You forgot t-shirt sales, hat sales, etc. Also, I’ll bet there are 5-10 little guys who are kicking in vigorish at each race.

WTC is making a killing today.

Why don’t you ask them if you might see their P & L?

Bwuahahahahahaha!

-Robert

4

so can you put the numbers behind your comments? I’m honestly curiious. Like where is the revenue coming from (do you think there is more per sponsor dollars? and more sponsors?) or how much do you think they get from T-shirt sales

5

Finishing an Ironman, priceless…

6

I see numerous things that you over valuing and undervaluing (I think). I believe they make way more than 75,000 from company sponsorships. I also think tourist bureau’s pay more to have Ironman come to town. I would also bet that all the dinner prices are high. The $75,000 purse you state is also the biggest purse of all IMNA cda $50,000 lp $50,000 florida $50,000 wisconsin 30,000 tempe is the only one with $75,000. I also don’t know if they get anything off of the licensing and merchandising but they probably make something. I have know real knowledge of most of these things but I think in general you are pretty far off on both sides expenses/revenues. Maybe somebody else on the forum has more inside knowledge of this.

just my thoughts
Kerry Classen

7

I’m neither a CPA or an MBA, but I don’t see an accounting of licensing fees, which is a substantial revenue stream.

My armchair understanding of their agreement with Timex is a buck a watch for everything with the M-Dot logo.

Add to that trash bags, socks, clothing and a long, long, LONG list of official Ironman ™ licensed products (at one tie including SUV’s!) and you have a revenue stream well into seven figures.

That is where the “meat” is. Additionally, whatever convoluted negotiation for broadcast rights may be an additional revenue stream.

Suffice it to say, the brand is well marketed and merchandised.

8

Interesting.

WTC and IMNA are private business operations, so what they do behind the scenes is their business. I respect that. Any numbers that people want to put to this is purly speculation. I do know that running these events is not the pot-o-gold that I think people think that they are.

One fundemental principal that is basic to events like this, is that your entry fees need to cover just about ALL expenses. Why: Quit simply, other revenue streams are extremely fickle or very challenging to get or change. You can’t really depend on some local toursim board or municipality kicking in X$$$. Their budget might get cut or their focus change. Sponsors come and go, but getting them in the first place is a huge challenge and a tremendous amount of work. Same for Expo booths. Problem with the Expo booths is that you are often restricted in who you can sell space to due to sponsors exclusivity demends, which is understandable.

Fleck

9

I wonder if it is “their business” to be private. It’s not your typical business. I could make a lot of money if I had thousands of folks volunteering to make my product. I wonder if they do have a disclosure responsibility to their stakeholders.

10

In Florida the Host Hotel essentially doubles their rates and gives a cut to Ironman.

11

Without audited financials we are all just guessing.

I don’t blame them for wanting to make a profit, but their prices are exhorbitant. Personally, I think Fred Sommer puts on as good a race as IMNA and for less money and with fewer sponsors. His business has grown enormously the last 6-7 years as well. (That analysis alone suggests that WTC and IMNA are probably doing much bettter than most of us are willing to admit. They could always squelch these rumors by posting their audited financials. :slight_smile: )

The people most likely to downplay the upside for WTC are in the business. I take their views cum granulo salis.

-Robert

12

What did it cost to stay at the Host Hotel?

I wondered if this might be the case. Considering it is “off season” down there and likely they don’t need or can’t rent out the halls I was wondering if IMNA said “we’ll fill your hotel for the better part of a week if you gives us a deal on the halls and grounds”

~Matt

13

This isn’t even the biggest question about IMNA. The biggest question is exactly what is their relationship with USAT and what should that relationship actually look like.

Hmm… Methinks USAT fears the 800 pound gorilla.

-Robert

14

I don’t wanna get into a lot of detail, but here’s some background…

http://www.ironmannorthamerica.com/sponsorpres/intro.pdf

http://www.ironmannorthamerica.com/sponsorpres/imadpres/phpslideshow.php?directory=.&currentPic=1

15

First, the pro forma numbers were for a single IM and not the WTC corp. (And anyone who thinks people are getting rich selling IMFL 2004 t-shirts at the event doesn’t have a very sharp pencil.)

Second, how can the brand be well marketed and merchandized if they don’t have a title sponsor for their World Champs?

That they can’t even fill out 5 IMNA events with viable pros is a telling development. Read Andrea Fisher’s or Luke Bell’s stories of what pro life is like outside of the top 3.

Yes IMNA is selling out the 10,000 available IM spots quickly and it seems that bike vendor activity is pointing to a healthy marketplace of triathletes, but with the level of other IM races stagnant at best, and ony a handful of people actually making anything in the sport (for every Sommers Sports series or RD, I’d guess there are 20 break evens and 10 in the reds) I am just not seeing

Did you see the ads they ran during the IM Hawaii broadcast? Most of them were local cable-variety, not national brands.

16

I don’t wanna get into a lot of detail, but here’s some background…

http://www.ironmannorthamerica.com/sponsorpres/intro.pdf

http://www.ironmannorthamerica.com/sponsorpres/imadpres/phpslideshow.php?directory=.&currentPic=1

Good post. That pretty much shows the level of the business/industry. If you know anything about event marketing (as a buyer or a seller), you would see that there isn’t a lot there for them to sell. I have seen better presentations for a local charity’s century ride (because those often have higher level marketing professionals who will volunteer their high cost time and use their own company’s extensive resources to put it together). Since IMNA has to run it out of their own business office with their own staff, they aren’t able to put up a sophisticated presentation.

Again, no slam on IMNA, I think they do a GREAT job (and I am and will be one of their best customers), but the point is that those people who think that the sport is a gold mine and that the participants are being ripped off by high fees wouldn’t seem to have much of a real arguement.

17

I dont have the exact numbers but it was above $100 a night. I talked to an athlete who was told if he was there for IM he had to pay $2x. If he wasnt he had to pay $x. I also chatted with the controller at the hotel I stayed at. IM wanted them to be the host hotel. They wanted them to double the rates and pay the difference to IM.

el

18

I think you gave too much money to the food. I doubt it costs 200,000 to feed the volunteers. Maybe half.
porbably right, but he also didnt put in enough for cost of two meals for athletes. I plan conventions and havent seen a meal or lunch under $30 in years.

19

I dont have the exact numbers but it was above $100 a night. I talked to an athlete who was told if he was there for IM he had to pay $2x. If he wasnt he had to pay $x. I also chatted with the controller at the hotel I stayed at. IM wanted them to be the host hotel. They wanted them to double the rates and pay the difference to IM.

el
They probably get commissions from the hotel rooms they fill. But I would guess they have to pay cities for use of roads, police, emergency personell, etc…

20

Fleck, for starters, in the “Half ironman Monte Carlo” thread, Triangle claims that is would cost 900K Euros to put on that race and they only expected 300K Euros from race entries.

I agree with you that local and even National races need to cover costs with entry fees (having organized local races myself), but “brand name” international races, have access to a far greater pool of revenue than entry only. If they don’t access those revenue streams they will fold.