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Lenders to Competitor Group take control

Participation in the Rock ’n’ Roll Marathon Series has not grown at the same rate it did before Calera Capital bought the series’ parent company Competitor Group in December 2012.
Photo by: GETTY IMAGES
Lenders to one of the country’s largest operators of endurance races, Competitor Group Inc., recently assumed control of the company, a development sources said came after ownership struggled to pay off loans tied to its acquisition a little more than three years ago.

Ares Management, which is co-owned by Atlanta Hawks owner Tony Ressler, and Golub Capital now control two of three board seats at CGI, best known for its 30-race Rock ’n’ Roll Marathon Series. The third seat belongs to Calera Capital, which bought CGI in December 2012 in a transaction that at the time valued the company at nearly $250 million.

“We recently just got through a debt restructure,” said Josh Furlow, CGI president. “With that debt restructure, we brought on … new board members that are Ares and Golub.”

“For Q1, the Rock ’n’ Roll Series was up 10 percent year over year, while the marketplace was down 5 percent.”
JOSH FURLOW
PRESIDENT, CGI
Furlow declined to detail what changes precipitated the lenders taking equity in the company. Financial experts, however, said that the conversion surely stemmed from CGI not generating the revenue anticipated when Calera assumed the loans as part of its 2012 purchase, leaving the equity fund unable to cover the debt.

“Lenders that have emerged as equity shareholders typically convert their debt as a result of the company not being able to support their debt payments,” said sports investment banker Rob Tilliss of Inner Circle Sports.

Golub Capital declined to comment. An Ares spokesman wrote in an email, “Ares is not prepared to talk about this investment, at this time.”

Since Calera bought CGI, participation in the company’s main business, the Rock ’n’ Roll Marathon Series, is relatively flat, underscoring the challenges facing the once-hot endurance space (see related story). In 2012, the year Calera acquired CGI, 446,571 runners competed in the marathon series in the United States, a 36 percent increase from the end of 2010. The series did not reach that level again until 2015, when 449,460 runners competed. That translates to growth of less than 1 percent over the first three years Calera owned the series.

Participation in Rock 'n' Roll Marathon Series (U.S. events)

YEAR TOTAL NO. OF RUNNERS NO. OF EVENTS
2016 Up 10% Through 8 races*
2015 449,460 24
2014 442,856 23
2013 438,108 25
2012 446,571 25
2011 414,480 20
2010 328,918 15

* Compared to the first eight races of 2015
Source: Competitor Group Inc.


The company has added races overseas, but the growth from that expansion still pales compared with the company’s pre-Calera days. From the end of 2010 through 2012, participant growth at all races, domestic and international, grew 49 percent, to 490,152, according to figures provided by CGI. From the end of 2012 through 2015, the series grew 9 percent, to 534,981.

One source familiar with CGI said the company has suffered through significant management turnover, both within CGI and at Calera. For example, when Calera bought CGI, Scott Dickey ran the racing company. He left soon after, and David Abeles replaced him. Abeles stayed a year, when Furlow assumed his job.

CGI said its business is healthy and the company is aggressively expanding overseas and domestically.
“For Q1, the Rock ’n’ Roll Series was up 10 percent year over year, while the marketplace was down 5 percent,” said Furlow, speaking from Madrid, where the series had just completed a marathon and half marathon.

The Rock ’n’ Roll Marathon Series is CGI’s main business, operating in the United States and internationally. Of the series’ 30 races, six are outside the United States. CGI added the first three in 2012 and three since. Furlow said the group is in talks to stage races in China, Japan and South America, as well.

CGI also manages a triathlon series, puts out a cycling magazine and a women’s running magazine, operates www.running.competitor.com, and publishes athlete books.

Staff writer Ben Fischer contributed to this report.

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