When the horn sounds today for the 25,000 runners at the inaugural Rock 'n' Roll Seattle Marathon, it will be thanks, in part, to more than $800,000 in tax money promised over three years, as well as the efforts of thousands of volunteers. But behind the scenes is big business that's found a way to...
When the horn sounds today for the 25,000 runners at the inaugural Rock ‘n’ Roll Seattle Marathon, it will be thanks, in part, to more than $800,000 in tax money promised over three years, as well as the efforts of thousands of volunteers.
But what many may not realize is who stands to make money from the sold-out event: a private equity firm based on New York City’s Park Avenue. Behind the marathon is big business — a business that is growing so fast, in fact, it’s transforming the landscape of endurance athletics across the nation. It’s a business that taps deeply into both capitalism and civic pride.
Few have heard of the race organizer, Competitor Group, a company that was created just 18 months ago with backing from the equity firm Falconhead Capital. But already it has vacuumed up underperforming marathons in Las Vegas, Denver, Seattle and New Orleans, and started a new race in San Antonio, adding to a stable of Rock ‘n’ Roll events it acquired when it bought San Diego-based Elite Racing.
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What the Competitor Group is doing is something new. By replicating a fun and successful race model — in which bands blast out music every mile and cheer squads entertain — the company is appealing to big sponsors that wouldn’t be interested in any single event. Those sponsors include the Miller brewing company and Nutrilite, a line of health supplements owned by Amway.
The Seattle Times is a media sponsor, which involves providing advertising space in exchange for promotional signs at the race.
The man at the center of it all is Peter Englehart, the Competitor Group’s CEO and an operating partner at Falconhead. Englehart, who has an MBA from Harvard and a background in television management, said he studied the endurance-sports market for a couple of years before making his move.
“What we saw out there was a very fragmented landscape. None of the races had the right kind of scale to be able to market and sell nationally,” he said. “We liked what we saw.”
By next year, Englehart said, he hopes to have 17 Rock ‘n’ Roll marathons and 350,000 runners. He said it’s possible the company’s annual revenues could top $100 million within a couple of years. The firm also publishes fitness magazines and operates a Web site.
Runners’ fees — approximately $100 per person for the race in Seattle, for a total of $2.5 million — account for only about 30 percent of the total business, he added.
People who run marathons tend to be among society’s most affluent, Englehart said, a group prized by advertisers.
In Seattle, the Competitor Group last year had its eye on the Seafair Marathon, which had never turned a profit in five years and had run into logistical problems. Seafair organizers, with a paid staff of just 14, were ill-equipped to grow the event.
Competitor Group has about 170 full-time staff.
The company paid Seafair to acquire its database of 5,000 runners and for Seafair to continue providing volunteers — 3,400 this year. Beth Knox, Seafair president and CEO, declined to say how much it received for its marathon assets.
Competitor Group talked with the cities of Bellevue and Tukwila to figure out a marathon starting point. In the end, Tukwila came through — with a commitment of $750,000 over three years.
Of that money, which comes from lodging taxes, $450,000 will go directly to the Competitor Group for promoting Tukwila. Another $150,000 will be used to pay for road closures and for police and fire personnel along the route. The remainder will go toward a marketing campaign that will give runners discounts at Tukwila stores.
Derek Speck, the economic-development manager for Tukwila, said it’s money well-spent. As well as getting people to stay in Tukwila hotels and spend money there, he said, the marathon will give the city worldwide name recognition. Speck said the marathon folks told him the word “Tukwila” will appear on 100 million pieces of literature, including brochures, magazines and other promotional material.
“For now, we are a city struggling to build our identity,” Speck said. “We look at it in terms of, ‘Where do we get the best marketing bang for our buck?’ “
Speck said he’s not bothered that a private company benefits so long as the whole city also benefits: “Why do we have this standard in our society where only nonprofits do good things?”
The city of Tukwila has reached out to the community for marathon volunteers and expects about 300 at the starting line today. Speck has instructed them to greet each runner with the words “Welcome to Tukwila, have a great race,” to again emphasize the city’s name.
Tukwila isn’t the only public organization contributing to the event. Seattle’s Convention and Visitors Bureau, which gets about 60 percent of its funding from public sources, expects to pay $150,000 to the Competitors Group for promotion over three years.
Bureau CEO Tom Norwalk said he’s encouraged by the interest in the race, and believes the event might generate $25 million in spending in the Seattle area.
King County also is contributing, offering free tickets for runners who show up with their bib at the Keb’ Mo’ concert tonight in Redmond’s Marymoor Park. The tickets have a face value of $49.50.
Doug Williams, a spokesman for King County Parks, said the county gets good publicity out of the event. He added that the county executive’s office wants to promote events that encourage fitness.
The city of Seattle said it’s not providing any money to marathon organizers, but rather is charging the group $53,000 in permits and fees to use city streets and pay for police.
When the Competitor Group had all the pieces lined up in Seattle and decided to go forward, interest was huge. Event manager Megan Young said word seemed to go viral, with 8,000 people registering in February alone. The marathon will be the largest ever in Seattle.
Englehart said he’s already looking to next year and has been speaking with Seattle Mayor Greg Nickels about expanding the event. After all, when it comes to the growth in endurance racing, it seems there’s no end in sight.
Staff researcher David Turim contributed to this story.
Nick Perry: 206-515-5639 or email@example.com