SBJ/October 31-November 6, 2011/Events and Attractions

Is New York City a two-marathon town?

Competitor Group makes small inroad in Brooklyn, with eye on NYRR’s market dominance

As Competitor Group President Scott Dickey walked among the 6,000 or so sweaty runners who finished the Oct. 22 Rock ’n’ Roll New York 10K, he listed the ways the company’s inaugural New York City race could improve. Sponsor activation was small. City officials denied live music along the course and confined the route to the four-mile loop inside Brooklyn’s Prospect Park.

When compared with Competitor’s 42 other global Rock ’n’ Roll races, several of which attract more than 30,000 participants and dominate entire municipalities, the New York race was tiny. Still, despite its modest appearance, the Brooklyn race represented a crucial beachhead for Competitor in New York, arguably the country’s most challenging running market.

Competitor's Rock 'n' Roll New York 10K attracted about 6,000 runners.
Photo by: VICTAH SAILER / COMPETITOR GROUP
“It’s a good start, but we’re used to bigger and better,” Dickey said.

Manhattan-based private equity firm Falconhead Capital owns Competitor, and the company’s Rock ’n’ Roll series — predominantly composed of half and full marathons featuring live music along the running course — is the largest series of long-distance running events in the world. Competitor officials declined to discuss the company’s annual revenue, but sources familiar with the organization said its major events in Las Vegas, San Diego and Nashville each take in roughly $7 million in revenue from entry fees, sponsorships, merchandise and municipal funds. Competitor has its sights squarely on New York City, as it plans to expand the Brooklyn 10K into a half marathon within two years, with the long-term goal of holding a major full-length Rock ’n’ Roll marathon in the borough.

“We believe a second New York City marathon is absolutely achievable,” said David Moross, chairman and CEO of Falconhead Capital, who declined to give a time frame for holding a marathon. “The question is whether there is the political fortitude to make it work and whether there is pressure from outside sources restricting it from working.”

The ambitious plan puts Competitor on a collision course with the New York Road Runners, organizers of Sunday’s ING New York City Marathon and 54 smaller races around the city. With a reputation as one of the world’s greatest marathons, this week’s race is expected to set a new participation record with more than 45,000 runners.

With deep political connections, NYRR is revered for its sizable contributions to charity, and its CEO, Mary Wittenberg, is one of the most recognizable figures in the global running business. But some within the running business — Moross included — believe NYRR holds a monopoly within New York City.

“The New York Road Runners does not like competition,” Moross said. “They put on a spectacular marathon once a year. We’re building a much larger organization.”

Wittenberg dismissed any allegations of monopoly, and said the club has to apply for event permits — the city’s way of screening event organizers — just like other groups each year. A New York City Department of Parks & Recreation representative, though, said NYRR’s permits go through the mayor’s office and the Central Park Conservancy, which is a different process than that of other operators holding races within parks. Wittenberg said NYRR’s long-standing partnership with the city simply allows the club to organize the events that the city wishes to put on.

“We are the running people who are involved in the community all year round,” Wittenberg said. “If the city wants to grow running races in a given borough, they partner with us.”

Wittenberg does not support an additional marathon in the city, saying it could dilute the economic and charitable impact of the ING marathon. She also believes that NYRR’s altruistic motivation separates it from Competitor.

“We are not private equity, our laser focus is not to increase our value with the intent to sell,” she said. “We’ve been here for 50 years, we intend to be around for at least 50 more.”

The first Rock ‘n’ Roll New York 10K was run in Brooklyn’s Prospect Park.
Photo by: VICTAH SAILER / COMPETITOR GROUP
Falconhead formed the Competitor Group in 2008 after purchasing four separate endurance sports magazines and the San Diego-based Elite Racing, which developed the Rock ’n’ Roll format in 1998 and held marathons in San Diego, Phoenix, Virginia Beach, San Jose and Nashville. Since then, the company has purchased existing races and started new events, and now owns 13 full marathons, 27 half marathons and two 10Ks.

Moross said Falconhead’s $500 million fund has seven years remaining in its lifespan, with an additional two-year option, before it must return its capital. Sources familiar with Falconhead estimate Moross will hold onto the Competitor Group for three to four more years before looking for a buyer. Moross, however, said he’s not looking to sell any time soon.

“It’s too early, it’s an organic growth business and we’re at the point where we don’t have to finance any new deals,” Moross said. “If we lose money in a race the first year, we absolutely don’t in the second.”

The Brooklyn race is not Competitor’s first attempt to hold an event in New York City. In 2009, it unsuccessfully lobbied the Bronx to host a Latin-music-themed marathon, such as its Dec. 11 Latin-music half marathon in Miami Beach. Peter Douglass, a minority shareholder in Competitor, said the company received support from Bronx politicians but was unable to secure political support from City Hall.

“There were a lot of sign-offs that just never happened,” Douglass said. “It became pretty clear that we weren’t welcomed by the big shots in town.”

Competitor regrouped, and in September 2010 queried the Prospect Park Alliance about holding a Brooklyn race. Jasmine Haynes, director of special events for Prospect Park, said the alliance balked at Competitor’s first proposal for a 13.1-mile race, but agreed to a 10K race, preferring the smaller event. Haynes also traveled to Competitor’s half marathon in New Orleans in March to see a Rock ’n’ Roll race up close. She liked what she saw. “Road Runners is good, but I like the way [Competitor] does their business,” Haynes said. “I think competition is good.”

Sources familiar with the New York City running industry said Competitor’s chances at achieving a marathon in the city are slim. The group must coordinate a schedule with local police and fire departments to shut down roadways, the Department of Parks & Recreation to use any park space, as well as the Mayor’s Office to hold any event with more than 5,000 people. “There won’t be another marathon in New York City so long as Bloomberg is in office,” said one source familiar with the city’s permitting process. Calls and emails to the mayor’s office were not returned.

In addition, Competitor must mitigate production costs, which sources said would be substantially higher in New York than in other markets. Dickey said even a half marathon in New York City would cost well into the seven figures to organize, and would be comparable in cost to full marathon races in major markets such as Los Angeles. The company also must win over the local elected officials. Brooklyn Borough President Marty Markowitz said the borough would have to weigh the inconvenience of operating another race on city streets before giving the go-ahead.

“They want to grow, and that’s a good thing,” said Markowitz, who attended the Brooklyn race. “If they want a half marathon, we’ll see how things develop. A full marathon? I don’t know if it’s needed.”

The hurdles do not appear to have slowed Competitor’s enthusiasm to gain ground in New York. The company invited New York City Health Commissioner Thomas Farley to run in the Brooklyn race, and he finished the event. Competitor also partnered with New York City’s 2014 Super Bowl host committee, although Moross said the partnership is not strategically linked to races in New York.

Moross guaranteed the company’s business in New York is there to stay.

John Korff, founder of the New York City Triathlon, said he understands why the major players in endurance racing want to be in New York City. But that does not change the difficult environment for doing business there.

“It makes a lot of sense for Competitor to want to be in a major market like New York City. I think it probably looks a lot better than Rock ’n’ Roll Omaha,” Korff said. “But race organizers all the time say, ‘We’re going to be in New York City.’ I tell them good luck with that.”

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