Runnerville

Part I of this two part series discussed the initial planning of such a circuit.  Team formation, race creation, etc. were all talked about.  In Part II we’ll take a look at the financial side of the spectrum, as well as marketing and how to sustain a long term enterprise.

Money Makes the World Go ‘Round

Whether you want to admit it or not, no business venture is ever successful unless it makes money.  It seems like every decade 2-3 sports ventures fold due to lack of sufficient funding and revenue.  USATF, or governing body, has even had its fair share of problems since its inception with staying financially sound.  From the start, a road racing league or circuit needs to have a stable financial model to follow.  Here is what I propose:

Investors…aka Owners

I personally am sick of sponsors having to finance everything in our sport.  Most professional athletes have some sort of shoe contract.  These shoe contracts are the athletes sponsor.  This is how they make their money.  However, shoe companies 9 out of 10 times are merely sponsors, taking a very limited role in how an athlete actually performs their job.  That is the difference between a sponsor and an investor.

I know there are all different types of investors, but most investors have a strong say in how the company is run.  I personally would like to create this road racing circuit around one centralized organization, that has investors purchasing and operating their teams.  Wealthy people buying sports teams will always be an “in” thing.  I think every little kid involved in sports when they are little want to become a professional athlete.  As the kid ages and becomes an adult, I really think most sports fans would love to own a team, hence the general explosion of fantasy sports over the past decade.

Most sports leagues start with a central organization basically selling sports franchises to interested owners for a base sum of money.  Major League Soccer started with owners buying into the league and a team with $10 million.  That number has grown to upwards of $80 million in this next phase of MLS expansion.  Whether it be $10 million or $80 million that is a lot of money, but still more and more business folk are looking to obtain a MLS franchise. 

While road racing certainly isn’t as popular as soccer on a global scale, I would argue that it is on a national scale.  Nearly ten million people participated in a road race in 2008, with millions more spectating.  The potential fan base is big.  With that said, I would ask initial franchise seekers for a $1 million dollar buy in.  The $1 million dollars would be two fold.  $500k-$550k would be used as a team’s start up costs.  Paying the athletes, travel expenses, medical & insurance costs, training base, etc. are all necessities.  With the owner putting up $1 million, that would mean they could pay for everything and half of the initial buy in would be used to finance a high quality first year.

The other $450k-$500k would be put into a league pot, which the league office would use.  Say six teams are created in the first year, that leaves nearly $3 million dollars for the organization to work with in year one, before sponsors or other investors become involved, and before race entries are tallied.  Before we get into what that money would be used for, lets take a look at what else owners would get.

Team owners would have control over how their team functions.  Of course the league office would set some guidelines, but once those guidelines are set, team owners can work within the guidelines however they so choose.  Team owners then could go out and get whatever sponsors they want, which helps build a greater profile of the team and offset some of the yearly expenses.  Team merchandise and race entry revenue will also be split between the league and the owners.

Since each team will have a $500k-$600k/year operating budget, the league office will help owners create ways in which they can make more money.  Investing in a team is fun, so is managing it, but owners don’t want to own unless they can make money.  There are creative ways to do this in our sport, especially with a league, but I’ll leave that for further exploration down the road.

The League Office

The league office will consist of a commissioner, a president, a vice president, an event management staff, a marketing staff and a few others.  The league office will consist of 12-14 people initially and then expanding once feasible.  While this staff might seem small, it certainly can get the job done.  If the league was created during the fall of ‘09 for example, that would allow for one year to get race locations set, look for investors/owners, lock in owners, organize race promotions, attract sponsors and create a marketing plan.  While that is a lot, it certainly is attainable.

The previous segment talked about how owners make money, well how exactly would the league office make money, allowing them to reach further with the product?  The 6-8 owners buying in leaves the company with somewhere between $3-4 million to work with initially, while bringing in national level sponsors would create further large sources of revenue.  Being able to utilize online ad space is one potential revenue source, while each race contested has the general race, which could generate upwards of 10,000 people at $30-40 per person.  Take the small side and that is $300k per race, with six races, leaves the league office with nearly $2 million just from race entries before expenses and sponsorship comes into play.

After raising funds to sustain the league, the league office is completely responsible for putting on each race circuit event.  Putting on 6-8 large-scale events every other week over the course of three to four months is an incredible task and will take a great amount of planning the entire year leading up to the event.  Those in charge of organizing and presenting the events will be in charge of working with local running organizations in each city, obtaining volunteers and making sure the events are creative, unique and fun.

There are many more items the league office will focus on, but again I’ll leave those for a later time.

Sponsors

Like any sports enterprise, it is a must to get high profile sponsors involved.  Not only do sponsors provide financial structure to the organization or event, but they also help market and want to see your event grow because if you grow their product is viewed by a larger audience.

What makes the circuit unique is that each race in the circuit is being created from scratch, thus allowing sponsors to become involved on a national scale.  Sponsors could sign on to every event, not just one or two.  This is how this circuit could be much better than the current World Marathon Majors.  The WMM is nice in theory, and does do some great things for the sport, but because each marathon has their own set of sponsors, the five event circuit will never be able to draw in a few dominant sponsors to help really set up giant prize package or do a series promotion.

So, the league could reach out to sponsors and draw in large national sponsors with involvement in every event, while also approaching regional or local sponsors for small sponsorship packages.  On top of that event, championship and circuit naming rights can be negotiated with interested sponsors.  There really are a variety of ways to get sponsors involved, thus leaving many options for the league to explore.

Marketing

Due to having a circuit of events and a league structure to work with, a variety of marketing campaigns are easy to implement.  Each race and each team must have interactive websites.  Each event can have social networks, where fellow runners can share tips, create training groups, etc.  Team websites are not only a great way to share team information, but allows athletes to have greater interaction with their fan base through blogging, video and podcasting. 

Each season, and build-up to the season, a two person crew could follow around the teams and create a “Chasing” series, similar to that of Matt Taylor’s Chasing KIMbia, Chasing Glory and Chasing Tradition.  Few sports offer this type of insight, while creating this much buzz.  Using new media tools is something this league could utilize greater than nearly any other league, thus creating multiple platforms for fans to follow and potential fans to be drawn in.

A strong marketing effort to attract the high school base is important as well.  Every other sport in the country has heroes, but track and field only has a few and they honestly aren’t promoted very well.  Giving all the prep distance runners a new group of distance running heroes to look up to is only great for the sport.

Obviously there are many ways to market, promote and cover such an organization, but I’ll stop my thoughts here.

Staying Power

Luckily, road racing continues to grow.  The amount of race races organized in 2007 and 2008 have grown, while the participation numbers continue to rise as well.  Major marathons and other unique events are selling out in record time, while more and more sponsors become involved.  With such growth comes massive potential to do something truly creative like a road race circuit or league.  For years people have talked about a track and field league, but the place where it would be easiest to implement is on the road.

A league will be able to stay strong as long as the events they put on can be of high quality, create a unique social setting for participants and work with sponsors on promoting their respective brands in different and overly productive ways.  The more the events grow and the more years the circuit stays strong, the higher profile the league will become.  More races and more teams can always be looked out, while taking the league or circuit global is another great option.

Road racing is our sports greatest market.  The millions of participants give the sport a unique base to work with.  With the right investors involved, world class athletes showcasing their talents, sponsors that care, creative events being staged and a strong group of individuals that believe in the product, a road race circuit and league is nearly unstoppable.

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Please post your thoughts, comments or ideas here, or you can email me at SBush1002@Gmail.com.

• Money and Distance Running - September 9th, 2009
• An Idea: A Road Race Circuit (Part I) - December 3rd, 2008
• Who Should Be the Face of Our Sport? - June 4th, 2008
• Welcome to the Internet Age - April 7th, 2008
• Robinson v. Symmonds, Now We Need More - February 26th, 2008