Let us ignore the simple problems and continual PR nightmare that must be, and could easily be solved (#50womentokona, better live coverage, KPR) and focus on what WTC should be doing to grow as an economic entity and a leader in the triathlon community. The reason to think about long-term growth is because of the impact of the relationship between WTC and Providence Equity.
Private equity shops are smart, especially a firm like Providence Equity, and specialize in how to extract the cash value out of an enterprise. WTC paying a $220million dividend funded with speculative grade debt is a signal that Providence Equity wanted to get value out of WTC because it probably believed that WTC had reached its full cash revenue model.
Taking the dividend in 2014 suggest that WTC couldn’t sustain further growth and Providence Equity wanted to extract a solid return on investment. Given the purchase prize was around $80 million in 2008, that is an excellent return. The problem of course is in 2021 the debt becomes due, and it falls all on WTC. The world of triathlon may look very different six years from now, especially if Providence Equity doesn’t support WTC.
So what would I be doing if I was CEO of WTC and concerned about keeping my investors, participants, and sponsors happy. Let me introduce my five step manifesto for the growth of our sport.
1. Introduce a sponsored team event and have a year long competition.
I mentioned this is my last article, but wished to elaborate on the idea further. I would initially have seven companies contribute $1 million dollars a piece to sponsor a team of ten athletes. At the beginning of the year, a draft will take place and each team can take any pro athlete they want, but must have a minimum of three of each gender. The teams will keep $500,000 each and pay the athletes based on draft position using a sliding scale. $1.5 million of the sponsorship will be paid out as a prize purse to the teams based on finishing order (using KPR points accumulated), with that money distributed to the athletes based on points contributed to the team. The remaining $2 million WTC keeps.
This allows athletes to get paid for actual and expected performance, provides excellent promotion for the corporations, and generates significant revenue for WTC. There is minimal investment for WTC except for marketing, but will enhance the profile of the sport tremendously. It is also good for the age-groupers and causal fans. More things to cheer for, more ways to play fantasy, and opportunity to get behind a certain team.
Now, if a pro isn’t drafted that doesn’t mean that they can’t continue to be a professional, but it does send a good signal as to their perceived market value. Depending on the success of the team venture, more corporations could contribute thus resulting in more teams and more money.
Just as reference, $1 million a year is a steal.
2. Promote junior growth
To become a solid Ironman professional takes years to develop. No one comes out of high school or college ready to compete successfully as a professional long course athlete. I would foster a young pro challenge. Like in Le Tour, let’s start rewarding athletes 26 years and under by having a separate division for them as pros.
This will allow younger pros to develop, retaining the talent versus having them fade away because of an inability to get sponsorship dollars, or potentially losing them to other sports or none at all. This young triathlete division will be sponsored and promoted in a similar fashion to the more established pros, and again allow the casual fan to get acquainted to the rising talent in the sport.
3. Olympic tie-in
Ironman should be an Olympic event for the simple reason that the Olympic Ironman would be the only pro Ironman race in the world and a specific showcase for ironman racing versus the soap opera production of Kona. Since the Olympics now have long distance swimming, the cycling road race, and the marathon, accommodating a full ironman would not be difficult. Given the success of Olympic distance triathlon in the games, bringing in ironman is a natural evolution. In doing so it will bring in the federations and provide more homegrown and youth development to the sport.
4. Develop a media identity and improve technology
This is critical, and this brings back the participation and enjoyment for the age group athlete and causal fan. Ironman is a niche sport, not enjoyed by the masses but appreciated and loved by a devoted number of individuals. WTC needs to pay back those individuals. Now this may seem counterintuitive, but I would increase the entry fee by $25 per race. That should translate to an extra $3 million based on participation levels, and would specifically go toward the technology of the sport. I want realtime tracking in all races, better video quality, instant feedback on power, hear rate, and speed, on board cameras on the bike, etc. Anything that improves the watching experience.
Simplest of all, update the website so it is fan and supporter friendly. Develop a WTC app similar to the Tour of California. Provide age groupers with transponders so they can assess their overall place during the race. Become a leader in performance and wearable technology.
The more feedback you offer your participants and the people that care about the sport, the more people are willing to pay. Given the demand is there, spending that little bit extra to improve the experience will bring back more repeat participants even with a slight price increase.
5. Promote, promote, promote your athletes.
When I heard Heather Wurtele on the TRS podcast, I immediately thought this was someone I could cheer for. More importantly she was a person my six year old daughter could look up to along with Alex Morgan and a couple of Disney princesses. She has had many top results, but because she hasn’t won Kona, I wouldn’t have cared or even realized who she was prior to her interview. Now I, and more importantly my daughter, want and cheer for her to do well. Promote the athlete and people will care.
I want images of these top athletes all over the races. Not just at the expo, but downtown, at the airport, all along the race course. I want them publicly available to promote themselves and the sport on local radio, TV, and all available media. I want each city that hosts an ironman event to get behind it, and the best way to do that is sell them on the Ironman stars.
The 1000 true fans is not a myth. It is tangible metric for success. WTC needs to further their brand through the athletes. The more athletes that become household names the better it is for the ironman brand. The age groupers love ironman, I mean look how many people have the corporate logo tattooed on their bodies. Yet recently I have become concerned with what I perceive to be as greed from the corporate office.
The more WTC embraces the pros, the better the public image and the better for the brand. As a simple comparison let me offer this. I am loyal to Oakley because of how they treated Lance when he went through cancer. I will never buy another brand of sunglasses because of how the company handled that situation. Maybe there are better sunglasses, I know there are cheaper ones, but I respect and value both the product and the corporation for what they did. That is how you build a loyal and growing customer base. WTC should do the same.
By implementing these steps I estimate conservatively a potential increase in revenue of $15-25 million a year (spreadsheet and pro forma available upon request.)
In conclusion, just because the current model is working doesn’t mean it shouldn’t change or adapt. I am worried about 2021. That is a large financial obligation that needs to be met and what happens if we have another 2008 financial crisis in between. The success and growth of the WTC brand has been tremendous since Providence Equity came on board. There are more races, more participants, and more debate about the sport. More bikes companies, more nutrition companies, more gadgets, and more ways to evaluate performance. These are all good things. Yet there is so much more that can be offered. More than that, there is a large economic windfall waiting there, if the resources are used correctly. There is also a better way to handle the current issues in the sport, especially ones that are significantly easier to handle from an economic and PR perspective, than a $240 million payment. I leave that to better people.