Wanda Sports Group, the owners of IRONMAN, Rock ‘n’ Roll, Cape Epic and more endurance events, has filed to go public. This gives a rare public view into the largest event company in our market, with lots of interesting tidbits of information and potential lessons to be learned.
We will look at the various components, but you should read the SEC Filing yourself for full information. Note all values are in Euros, with €1.00 worth about $1.13.
Events Business at Wanda
The events business represents about 25% of Wanda’s total revenue, or €284 M (about $321M in US Dollars using that $1.13 conversion from 6/12/2019) and about 27% of gross profit.
They provide a breakdown of the number of events and projects across their businesses as show below. The numbers that are interesting are 326 endurance events with 1,322,000 participants.
Event Revenue Sources
The average revenue per participant was €110, and the average revenue per event was €424,000 as shown in the chart above. The go into further detail in the text of the filing.
Entry fees was €124, or 43%.
Sponsorships was €69M, or 24%.
Host city fees was €22M, or 8%.
Apparel and Merchandise was €19M, or 7%.
Licensing Fees from other event operators was €10M, or 3%.
Other Revenue (such as product licensing and media fees) €33M, or 11%.
Acquisitions
Acquisitions increased revenue from €196M in 2016to €284M in 2018. Average revenue per athlete dropped to €110 in 2018 compared with €129 and €158 in 2017 and 2016, respectively.
2016: Lagardère Unlimited Events AG in January, which added various triathlon, running, cycling and mountain biking events. This acquired business accounted for €9.7 million, €11.3 million and €13.9 million of our revenue in 2018, 2017 and 2016, respectively.
2017: CGI in June, which added the Rock ‘n’ Roll Marathon Series to our portfolio and Cape Epic (Pty) Ltd. in February, which added the Cape Epic mountain biking event. These acquired businesses accounted for €54.6 million and €47.2 million of revenue in 2018 and 2017, respectively.
2018: XLETIX in May, which added the XLETIX Challenge and Muddy Angel Run obstacle course racing events. This acquired business accounted for €8.8 million of revenue in 2018.
An interesting quote on higher marketing costs of Rock ‘n’ Roll vs. IRONMAN: “The 2.2% increase in 2017 compared with 2016 principally reflected expenses associated with our Mass Participation acquisitions, including higher marketing expense due to the acquisition of CGI. The Rock ‘n’ Roll Marathon Series business requires a higher level of marketing spend in proportion to related revenue, compared with our existing Mass Participation portfolio.”
Also, “revenue from our Mass Participation segment improved slightly in the period in 2019 compared with 2018 as a result of increased athlete participation in our marathon events in China, including Rock ‘n’ Roll Marathon Series events.
They also mention that growth in 2018 vs. 2017 came from owning CGI for a full year (half year in 2017) and from growth in the related business and the acquisition of XLETIX in 2018. Additionally, they added a number of new IRONMAN 70.3 events and increased sponsorship revenue.
Market Growth
Perhaps the most interesting part of the report was the discussion on the market starting on Page 115. They note that running is the largest part of the market accounting for 62.5%. They note it is a very fragmented market, with “the top three operators accounting together for 1.4% market share based on events organized”. This is probably not true of the total dollars spent, since their events have very high participant fees and many more revenue sources than most of the rest of the market.
The other interesting data shows their expectations for market growth, which is the opposite of what data collected by RunSignup, RunningUSA and Run Repeat. They do not cite the source of their data, but provide an optimistic forecast:
Another data point is welcomed, but we are going to remain cautious about market growth potential.
Headcount
Finally, they share their headcount, which totals 527 people as part of WEH in 2018. That translates into $539,000 of revenue per employee, although there may be some crossover of employees with other groups.
Summary
This data sheds some light on the largest business in the endurance space. It shows that at that scale, it can be profitable.
However, there is a reason why the market is so fragmented. Relatively few of the events in the space can be operated at the same scale of economics (revenue per participant, other revenue sources, repeatable processes, and investments in infrastructure). Likewise, it is difficult for a large organization like WEH to harness the power of typical local races and event managers where there is a wealth of volunteer power driving success from different measures beyond financial scale.
At RunSignup, we are trying to give every race the technology to create and manage events across their race lifecycle of Promotion – Registration – Fundraising – Race Day. Offering free services bundled email marketing and CRM, integrated fundraising and registration, and race day tools like free txt and runner tracking to keep costs low and services easy to manage.