Race Registration Market Analysis – April 2020

We usually do a Race Registration Market Analysis twice a year. We usually include a bunch of stats from different sources to compare the various registration platforms and track general industry trends. Usually, we publish the spring one in March. This year is obviously different because the Coronavirus really started impacting normal life in the endurance community the week of March 9, with maybe half of the races cancelled the weekend of March 14, and almost all races across the US cancelled the week of March 21.

This analysis will use a bunch of internal RunSignup data to try to extrapolate what is happening generally. We will also make a number of observations and give our opinions on a number of areas of general interest to the endurance community.

Transaction Volume

They say a picture is worth a thousand words. This is what has happened to transaction volume on RunSignup over the past couple of months.

Keep in Mind: Before March 7, we were up about 29% over the previous year since Jan. 1. At that time, the general trends we were seeing was that there was a minor amount (about 2% growth) of growth we reported in our 2019 RaceTrends Report, and RunningUSA reported a decline of 2.7%. So we were continuing to take a fair amount of market share, having grown paid registrations from 5 Million in 2018 to 6.2 Million in 2019. So the above numbers and the stats we will share below may not be generally reflective of what is happening to other registration vendors or to individual race organizations.

Our transaction volume was down the following amounts on a weekly basis from the same week the year before:

Virtual Races

It is important to understand the impact of virtual races. The transaction volume improvement over the past several weeks is almost entirely attributed to virtual races. While the endurance community had in the past looked down on virtual races, they have suddenly become accepted.

We have seen large (greater than 10,000 participant races) scheduled for April that switched to virtual. While they did not reach previous year’s total entries, they still had over 1,000 people sign up for the virtual run between mid March and mid April when their races were scheduled.

In addition, we do have experience with large virtual races in 2019 before the crisis that had 5,000 and 18,000 participants.

Most of the transaction volume we have seen so far is from established race organizations creating new virtual experiences. For example, Laz and Dub of Barclay’s Marathon fame set up a 1,000KM summer training “Race Across Tennessee” that has raised tens of thousands of dollars for charity. There are funny themed races like the Bigfoot Social Distancing Challenge.

However, we are seeing traditional races turn to virtual and seeing great results. Here is an email we received today:

We have 200 signed up for the virtual race, with another 12 who still have to transfer their registrations. We had 220 for the race last year and that was our highest number we had ever had. I know we will surpass this number this year. We have runners in 14 states, Washington DC and one in the Netherlands!!! We will definitely have a virtual race every year going forward!MSDA Meghan Doyle ’05K

We are seeing a growing number of summer and fall races open up as virtual runs, and if things become clearer, adding a traditional race that virtual participants can transfer into. This is easier to plan for, reduces costs, and provides a fundraising platform for many nonprofits who simply have a need to bring in funds.

Once the virus threat is gone and races return to the new normal, we are expecting to see a virtual alternative to many races.

New and Renewed Races

One of the pieces of data we collect is the number of new races created on RunSignup and the number of races that are renewed. We are sharing this data publicly for the first time so that you can see how dramatically these numbers have declined. This provides some facts to confirm the general feeling that race directors are “frozen” and not sure how to move forward.

Note that these stats are not precise in that some race directors create a new race instead of renewing. Also, a number of new races are created just as test races and are never turned on. For example, of races that were created in January, only 73% had registrations – so 27% were probably test races.

The drop in the number of renewed races is huge. For the first 5 weeks shown, renewed races grew from 1,596 to 2,081 – a growth of 30% (which seems about right since we were growing 29% overall over the past year). However the past 5 weeks shows a decline from 1,300 renewed races last year to only 359 – a decline of 72%.

This decline is based on race directors just not being sure if they will be able to hold their summer or fall race.

There were also declines on new races, although the virtual race phenomenon has held the numbers up above what they would have been.

While the number of new races has fallen by roughly 40%, the past 4 weeks shows a growth in the number of new races from 2019. There were 1,038 races created the past 4 weeks as compared with 1,007 last year.

Most of these new races are virtual. And our numbers are probably positively impacted because RunSignup has a pretty substantial technology lead on virtual technology with RaceJoy, Virtual TXT Service BOT, Virtual bibs, Real Race Websites and more (we will cover that in more detail below).

Chargebacks and Merchant Reserves

One of the hot topics that has emerged is the risk to races and to registration and ticketing platforms of chargebacks. There has been a wide range of responses to this.

VISA has been public in their response saying that cardholders can get their money back from a vendor who did not deliver the promised service. We have seen this in our chargeback challenges on behalf of customers in declining the challenges that include no refund policies and providing postponements or a virtual race or a deferral.

RunSignup has probably been the most public and furthest ahead in terms of implementing a consistent set of policies and using automation. We recently lowered our initial 20% reserve requirements to 10% and are likely to lower it further in May as we collect more data and the race and participant response has become more consistent over time.

Ticketmaster has probably received the most publicity. Considering they process over $30 Billion a year, that is expected. They have had a moving policy from not doing refunds to saying they will do select refunds in certain cases. Their situation is further complicated since LiveNation, their parent company, also owns many of the venues and acts.

Eventbrite had a fair amount of publicity as well with the furloughing of 45% of their staff. They have announced that they will hold all funds until after the event has completed.

Stripe has delayed payouts for 14 days after transactions for the Stripe Direct customers. In discussions with them on some alternative payment processing we are looking into, they expressed that they did not want to currently want to take on events like races, and would likely put in place a 75% holdback reserve.

We have heard anecdotally that other race registration vendors are holding all funds until after the race, or have had more sporadic payments or refund policies as they manage their cash flow. We hope they do not have issues like RacePartner had a couple of years ago.

The net is that with so much turmoil in the market, our normally very calm and stable community has been turned upside down. Past business models of paying for event costs with future participant payments before the event are going to have to change.

Not only will the credit card networks not allow it totally, but it is likely that participants will sign up even closer to the event date in the future. So events will need to develop new approaches.

Web Traffic

This is one area that we can use the data from past market analysis with the Alexa Rank data. This approximates the rank of a website compared with others in the US. Here is the complete list updated with a sort by current rank from April 27:

This has become a real eye chart because of how long we have been collecting the data, but historical context is useful. As with everything else in the endurance community, the numbers are all red…

This chart just shows the race registration companies and their change since last March. Let’s use RunSignup data again to set some real numbers in place:

For the past 30 days, our traffic fell from about 18.3M pageviews to 9.8M, a drop of 46%. Our rank fell 110% to 7,414 in the US.

(As an aside, it is interesting to see that our pageviews from being ranked about 7,400 is about half of what we had been. Comparing some of the registration vendors above, it helps to confirm some of our previous extrapolation on registration volume and market share.)

Some comments on the above data combined with general market awareness on some of the above vendors.

Eventbrite – They cut 45% of their workforce. They have fallen from the 134th most popular site in the US, and 405th spot – a very significant drop. Being a public company, they have to be very open about their situation, and act to move toward a sustainable model of business. Much like RunSignup, who cut our costs by 50% (in a very different way – we asked all of our employees to take half pay, which has been put back to full pay for 8 weeks with the PPP program), all of their revenue comes from events – and the revenue model fell off a cliff. It will be interesting to see their first quarter earnings announcement on May 11.

Active has held up better than any of the other vendors. While they have a more diverse set of offerings beyond endurance, it is still impressive.

Race Roster, Haku and Enmotive seem to be holding up pretty well – more of a drop than RunSignup has seen, but not as bad as Eventbrite. This continues the trend where they all seem to be picking up market share, but not as rapidly as RunSignup.

Race Roster has been acquired by Asics. It will be interesting to watch how Asics overall business recovers, and their commitment to continuing to invest in Race Roster to achieve critical mass. As we discussed in more detail when the announcement was made, Asics paid $28M for what looks like 1.3M registrations. The question is what does the profitability of that business look like with over 70 employees (RunSignup has 48). And does Asics earn enough off of incremental shoe sales from those participants – especially the drop in the Race Roster revenue and reach during this time. If they are able to continue to invest, then Race Roster is likely to pick up market share along with other market leaders from some of the weaker competitors.

Haku also has most of their business at the high end of the market, which has wide swings in terms of traffic. Large races will also have a more difficult time in putting their events on at full scale for a while.

Enmotive was acquired by Gannett last year, and then acquired IMAthlete. It looks like they are going with Enmotive as their strategic platform given the large drop in the IMAthlete traffic. They face a similar question to Race Roster, however, Gannett faces a lot more financial pressure as the newspaper industry is going to have a difficult time recovering, and they carry $1.6B of debt on their balance sheet with a market cap of only $120M for the 250 newspapers they own.

Similarly, it seems Stack has decided that GetMeRegistered is their strategic platform over RaceWire from the drastic drop in RaceWire traffic and the relatively lower drop by GMR. GMR is faced with the issue of changing management, and an old technology base. We hear rumblings of delayed payments and unhappy customers.

Bikereg is in a very difficult position. While they are the leaders in this segment, it is also the most difficult to energize for virtual events to replace their revenue source. And their events may be more difficult to put on in the age of social distancing. They are a good company and group of people and we hope for the best for them.

The other vendors already had challenges in terms of not having enough critical mass to develop enough competitive technology. The drop in revenue which is likely to last 6-12 months at least will put a lot of stress on these smaller vendors. There is likely to be more customer migration to the larger vendors, which will exacerbate their revenue shortfalls. Although other companies are not being public about their staff cuts or plans on reducing expenses, given Eventbrite and RunSignup both cut 50% (in very different ways) early on it is likely that most others have had staff reductions.

With the PPP program, RunSignup is able to give our employees full pay for 8 weeks after being paid 50% since March 13. Once the PPP funds are gone, we will return employees to the level of compensation that allows us to be break even. Right now that is about 50-60%. But given the upward trend we are seeing, we are hopeful that we are able to return to full salary by the fall. We have cut other costs like the Symposium, and will likely pass on a number of other marketing costs this coming winter like attending RunningUSA as a vendor. Our strategy on keeping all of our people was that we would recover over the next year and we would need everyone we had and that our customers would continue to need our technology improvements.

As mentioned above, vendors owned by larger entities are not able to avail themselves of the PPP. The smaller vendors can, which may help them weather the storm. However, we have heard that others are taking a similar approach to Eventbrite of furloughing staff and keeping some. That is likely to stall their development efforts, and create issues in bringing the team back together. It is also likely that no other registration platform has the volume and has seen the recovery from virtual races that allow them to run at a break even level, which will be the only way any of them can survive since there will be no new outside funding into this market for a long time.

Virtual Race Technology

RunSignup entered this new era with a solid base of technology, having developed a virtual TXT bot service over a year earlier, as well as having RaceJoy so that races could have a more real flavor even though they were virtual. RunSignup’s rapid development capabilities have also resulted in a slew of new and enhanced features for virtual races. We also brought out our Virtual Hub of information to races. In addition, our extensive timer channel and wide mix of 21,000 races gives a very rich set of customers who will be looking to virtual races to produce revenue. These are likely the reasons why we have seen less of a traffic drop than other vendors.

Looking Forward

We worked with a wide variety of race directors, timers and industry professionals to come up with an open document titled “Looking Forward: Guidelines for Races” covering the many aspects of opening races back up. This effort hopefully allows races to start up again sooner and more safely, which will benefit the entire community and all vendors.

When we think about how this will roll out, we think that it will start small. We have already seen our own Crisp McDonald hold an experimental “touchless” chip timed event this past weekend in his neighborhood. (There was a bottle of hand sanitizer next to the self-serve checkin tablet not visible in the picture!)

However, the high end of the market will have challenges, as we pointed out in our Start Line Bottleneck analysis, probably through the end of this year. These challenges will put real financial costs on events of all sizes, but could escalate quite a bit for large events. And many of these large event organizations will have a difficult two years as they try to figure out how to make one year of revenue last for two years. We anticipate the large organizations will turn to virtual events and put their marketing muscle behind it, as we have seen from Rock & Roll and Ironman already.

Doubtless, the Coronavirus will have a sustained impact on our community probably for the next couple of years. It will put extra costs and limitations on events, and there will be missed revenue. It will require events and the vendors who serve them to figure out ways to make money and save money to survive. It will result in a lot of changes.

On the cheerful side (and we are optimistic), there will be a large pent-up demand. Event organizers are typically more than business operators – their events have been successful because of the love they have for the sport, their events and the causes they represent. That passion will carry us all through this tough time.

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