Los Angeles Marathon to be rumored up for sale! Marathon Operator Chris Devine says no deal has been reached despite talk involving equity firm that has bought related businesses - and many see room for improvement no matter who owns event, to be run March 2. The article stated. "As the 23rd running of the Los Angeles Marathon approaches, the race remains something of a mixed bag. It is popular with Southern Californians but is ignored by many top marathoners who prefer events in London, New York and Boston, and viewed with suspicion by sports agents who have had trouble collecting appearance fees from current race operator Chris Devine. [ME: Chris Devine is an unethical liar who's repeatdely not paid winners of Marathon he's operated their prize money - this is well known in marathoning, click here.] . Now the marathon that founder William Burke sold to Devine four years ago for $15 million reportedly is on the block again. A national sports business publication reported last month that Chicago-based Devine Racing is in talks with a private equity firm that recently acquired four cycling, marathon and triathlon businesses and is on the prowl for more race-related companies. David Moross, chairman of Falconhead Capital LLC, a New York investment firm, declined to comment on the reported discussions with Devine -- but did state that more deals will occur: "All I can tell you is to stay tuned." Devine wrote in an e-mail to The Times that he was "horribly misquoted" by the Sports Business Journal, and that there is no deal to report, though he did not address whether he was in discussions with Falconhead. The publication did not respond to a request for comment. Whether the race is for sale, the rumors suggest that the once sleepy business of running marathons -- long the province of mom-and-pop operators who scramble to stage one race per year -- might finally be poised for change. "We absolutely think there's a need -- a crying need -- for consolidation on multiple fronts," said Moross, whose company acquired three endurance sports companies in San Diego County on Jan. 7. "There are a lot of revenue synergies and cost synergies, and, ultimately, we could give [runners] a much better product." For runners, that could mean easier registration, better-marked courses, plenty of water stations and, for elite competitors, better paydays. For municipalities, it could bring a stronger economic boon should the new-and-improved events attract additional out-of-town runners. Though the Los Angeles race draws as many as 25,000 runners, last year 95% were from California. In contrast, just 20% of the 23,906 athletes in last year's Boston Marathon were from Massachusetts, and 14% were from other countries. About half of the ING New York City Marathon field came from other countries. Falconhead will have to prove that it can wring additional revenue and profits from its newly acquired race-related businesses. The allure for Moross is the attractive demographics of such endurance sports as marathons, triathlons and long-distance cycling. For example, Triathlete magazine's 60,000 subscribers boast a median income of $122,600. Falconhead believes it now can offer easier access for car companies, fast-food chains and other marketers to almost 200,000 athletes who will register for races this year. "It's a good time to be selling sponsorship to marathons and other running-related events," said William Chipps, senior editor of Chicago-based IEG Sponsorship Report, which estimates that sponsorship spending for the category during 2007 rose by 14% to $77.5 million. Falconhead isn't the first company to pursue a consolidation. Devine tried to do much the same thing after acquiring the L.A. Marathon in 2004, when he assembled a high-powered team of sports marketing executives and sought out acquisitions. But the process proved more difficult than anticipated, Devine has said, because many races were not sufficiently profitable or had "suspect" bookkeeping. His Chicago-based Devine Racing, which had staffed up to market corporate sponsorship deals, ran into cash-flow problems that led to delayed payments to professional athletes who had run in Devine races. Devine, in a 2006 interview with The Times, described the cash crunch as temporary. But well into 2007 some athlete agents publicly complained about continued late payments. In a recent e-mail, Devine said that all runners in the 2007 L.A. Marathon have been paid[ME: Not sure this is true] , and that winners of December's Las Vegas Marathon will be paid before March 1 [ME: Don't Hold Your Breath!]. The international reputation of the L.A. Marathon, which will run its 23rd annual race March 2, continues to suffer, according to marathon industry observers. "Obviously, L.A. has taken a hit on the quality of the field," said agent Derek Froude, who represents such athletes as Marilson Gomes Dos Santos, who won the 2006 New York City Marathon. "I'm working with them the best I can, but there definitely are managers [who] won't deal with Devine at present, and that's hurting the overall sport." Ricky Simms, director of Teddington, England-based Pace Sports Management, which represents such runners as Stephen Ndungu of Kenya, who won the Los Angeles race in 2001 and 2002, also said that the cash crunch continues to worry some agents. "To be honest, none of our athletes have asked to run in the L.A. Marathon recently so it has not been a problem," Simms said. "But it is something that we keep an eye on." Prize money also shapes a race's image among top runners. The L.A. Marathon offers $100,000 to the first runner to finish. He or she -- a time differential is established once the top male and female field is set -- also receives a $20,000 prize and a Honda Accord. The appearance of top athletes tends to have a synergistic effect, according to Jeff Vannini, co-owner of Phidippides Encino, one of Southern California's premier running stores. Though he has run dozens of marathons, he still gets a kick out of competing against the world's best athletes. "That doesn't happen in NASCAR, football or baseball," Vannini said. Vannini also longs for a course that would incorporate a brief stretch along the Pacific Ocean. "What could be more attractive than running in Los Angeles at that time of the year?" Vannini said. "Who wouldn't want to run a race that shows everything that L.A. is about?" [END].
Note - couple this with BusinessWeek's take: " private equity groups including Falconhead Capital and Seaport Capital are studying the economics of the business, industry sources say. It's a solid growth business. The number of people finishing marathons has nearly tripled from 143,000 in 1980 to 410,000 last year, estimates the Road Running Information Center. Organizers reap handsome revenues from runners who pay up to $100 a pop -- in some cases more -- to enter races. Additionally, the managers pocket hefty sponsorship fees and marketing dollars from advertisers keen to reach the affluent demographic runners represent. "You have an average household income of $160,000, every one of them has a computer, 98% use it daily," David Moross, chief executive of Falconhead, told SportsBusiness Journal. "It is an affluent group that spends and from a marketer's perspective it is a very attractive demographic." Advertisers such as car companies and banks have flocked to runs to reach potential consumers. It's no accident that ING (ING) and LaSalle [now Bank of America (BAC)] are heavily involved with the runs in New York and Chicago. The backing of such groups has thrust hefty amounts of money into the sport. Indeed, SportsBusiness Journal reported that the ING New York City Marathon, slated for Nov. 4, (last year '07) will draw about $27 million in revenue (itself - far more for the City), even as its economic spin-off effects for hotels, restaurants, and other outfits toss still more money into play. Although it is a run by a nonprofit group, the New York Road Runners, the journal reported the outfit is likely to reap a $6 million gain (profit). Such races all over the country have been overwhelmed by the number of applicants, even as many have hiked the number of slots available for runners. New York will play host to about 38,000 runners and has had more than twice that seek slots. Chicago's race, in October, drew a like number and registration for it closed months before, last April. A combined marathon and half-marathon in Houston, slated for January, sold out 17,000 spots by early October and has been battling scalpers who are selling entries for as much as $500. Still, making sure of a payoff, particularly when getting races going, can be risky for promoters. Chicago-based Devine Sports, believed to be the second-biggest for-profit operator in the business, says it makes money on its Los Angeles marathon, which draws some 26,000 runners and thousands more for an accompanying bicycle ride. But it has lost money on new races in Las Vegas and Salt Lake City, even while drawing thousands of runners, says Chief Executive Chris Devine. "We want to make sure that they become profitable in 2008 and then we'll expand," he adds. Industry-leading Elite Racing, which operates such entertainment-heavy races as the Rock 'n' Roll marathons in San Diego and San Antonio, and a country-music race in Nashville, lost money on its startups, as well, says Chief Executive Timothy Murphy. But he says the company, which he founded in the 1980s, now turns a nice profit on more than $35 million in annual revenues. "It's a good strong business, but you have to invest," says Murphy. The economics of the industry have grown treacherous as races have become entertainment extravaganzas, not just athletic competitions. The New York and Boston marathons, both run by nonprofits, are unlikely to wind up in the hands of private equity investors, running veterans argue. But Chicago's race, which Devine once owned and Murphy once ran, has changed hands a few times. It's unclear whether Bank of America, which took over LaSalle only weeks before the latest race, will keep the Chicago event over time -- though it has scheduled the October, 2008, run already. Murphy says one of his partners has been knocking on the bank's door to take the event off its hands. Murphy adds that he has been approached from time to time by investor groups interested in taking over Elite Racing and he is now talking with one he declines to name. While he says he's not intending to sell at the moment and is instead focusing on growing his business, Devine has been in and out of the field over the last 10 years. He says several private equity firms are out trolling for ways to get into the business. If there is money to be made on marathons, half-marathons, triathlons, and even smaller events, private equity firms certainly will want to run the numbers on them. [END]. I always encourage runners to visit marathonguide.com and other online forums and groups to learn and discuss specific marathons before you enter them - there are crooks in this business and Devine is one - you have to learn how well organized, supported, etc. these races are. Runners have marginalized quality experiences in marathons all the time (insufficient water stations, etc.). This blog entry illustrates why many of my seasoned long time runner friends find big & mid city size marathons entirely unappealing - it's business first and foremost. Even me with the New York Road Runners? I used to race in every single race, week after week. Now? I'll probably only race in a 4 or 5 premier events in '08, that's it. I have friends who are Race Directors, they charge $2 for the events - no T Shirt & the bib is a 3" x 5" Index Card with a Magic Marker written number on the card pinned to the top of the runner. Long time runners know what I'm talking about. The running lifestyle is just that - in and of itself - and you are no less a runner if you shy away from all these business events. The race does not define, characterize, or brand you. It's what you do - in your private moments alone - on a daily or weekly basis - putting in those miles - that says who you are. Have a great day.
(source:harlemrunner.blogspot.com)
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