Advice for the New Owners

10/2008

Anybody remember Victor Kiam? He's the guy whose wife bought him a Remington electric razor, a seemingly minor incident which led to one of the most famous catchphrases in modern advertising: "I liked it so much, I bought the company!"

True story, but not the last of its kind. I myself tried to buy Haagen Dazs, Hostess and Sara Lee at various times in my career, but wasn't able to put together a deal, for several reasons, most having to do with an arcane financial concept called NSF which I learned about from reading a rubber stamped imprint on one of my personal checks.

Just last month, though, a triathlete who apparently did not have this obscure "NSF" problem decided he liked Ironman so much that he bought that whole company. At least that's what he claimed. I have it on good authority that he needed an entry into the World Championships but all the community slots on eBay had been snapped up, so he snapped up WTC instead. (I have this recurring fantasy of doing something similar the next time I show up at an airport only to find that the airline "misplaced" my reservation. I make a phone call, then turn to the ticket agent and say, "I now own the airline. Find me a seat or find the door.")

Love of the sport notwithstanding, there's no reason not to make a buck at the same time. Victor Kiam got so rich off Remington that he had to buy the New England Patriots just to make sure he didn't have too much money. Ironman is perfectly poised to become a brand as well known among the masses as Coca Cola, Remington and Enron, so my feeling is that the new owners should get themselves in gear to make that happen.

I've given WTC a lot of advice over the years. They've taken none of it. There are only two different meanings you can attach to that, and hey: I'm not the one who got sold, if you get my drift.

So I'm going to give the new owners the same opportunity I gave the old and see if they do a better job of paying attention when I offer up some free consulting. Starting right now.

The new owner is "Providence Equity Partners." You can tell a lot from a corporate name. It isn't voodoo science, either, like reading auras or body language. Companies spend millions on really smart consultants who help them craft corporate identities, so these names don't just come out of thin air. They're supposed to mean things.

A name like "Foundation for the Well-Being of Children All Over the Globe" tells you something. So does "Acme Radio Parts Company" and "Corleone Waste Disposal." You hear those names, you pretty much know what they do.

When you hear words like "equity" and "partners," you have no idea whatsoever what they do, but what you do know is that at least a few of the partners probably don't do Ironman (that the company's acronym spells "Pep" is pure coincidence) or even know what it is and are wondering why the heck they bought its owner. That, however, is plenty sufficient for me to start dispensing advice about how to make their latest investment throw off some serious shekels so that the partner behind the push to buy it ends up looking a lot better than if he was just trying to cop a free entry without qualifying.

I don't want to expose all my cards here – there's a concept called "leverage" I'll explain another time – so I'll just show the Pep company how a single event, the Ironman World Championships, can easily be re-engineered to take care of Providence Equity's short-term expectations.

Every year, some ninety thousand athletes from all over the globe compete for about 2,000 Kona slots. I say let 'em all in. And while you're at it, double the entry fees.

Think about it. Right there you've got ninety million dollars in up-front revenue where you used to have less than a million. And you can forget about price elasticity and all that other macroeconomic hoohah you learned in college. Triathletes aren't like weekend 10K-ers who fret when their one pair of running shoes start to wear out. Triathletes think nothing of blowing a hundred bucks on a carbon fiber bottle cage to save three grams. You think someone with a $9,000 bike is going to balk at ponying up an extra $500 for a chance to compete in Mecca?

You might be asking yourself, Why didn't the old owners think of that? Well, they did, but they somehow convinced themselves that you couldn't cram more than 2,000 bikes onto the Kona pier. Used to be that they thought they couldn't cram 1,500, either, and before that it was 1,400 and before that a thousand.

See a pattern here? Human creativity is an amazing thing, and its primary stimulation is need. The new owners need to put 90,000 people into this race, and therefore they can. I know they can because I've already figured it out. Don't want to get into details but it involves leading-edge concepts such as "stacking" and doing away with unnecessary frills like showers, changing tents and aisles.

Now, obviously, not every spot can be considered primo, right? Well, where others see obstacles, I see lemonade. What you do is auction the bike locations. Highest bidder, best spot. Prime space will probably go to your pros, because their sponsors will put up the dough, but if some back-of-the-pack amateur wins himself a good row, so what? You've got a happy athlete and $15-20,000 in the bank with 29,999 bids yet to come. See where I'm heading with this?

It's a well-known fact of Ironman that race fees don’t begin to cover the actual costs of putting on a race. We know because the old owners kept telling us that, so it's probably true and I believe them. Question I have is, What are you doing to make up the difference? I'm not a socialist, so this idea of equitable contribution and distribution bothers me. The model I like is the politically conservative philosophy of paying for what you use. So it should be with Ironman.

Somebody who grabs a cup of water shouldn't suffer the same cost as someone who sweeps up three bottles of Gatorade, half a dozen PowerGels and some Fig Newtons. So let's put the aid stations on a cash basis. We can take ATM cards, too, and if you lose yours somewhere out on the course, you're S.O.L.

T2 is going to be a bit of a problem, what with all those athletes speeding in and then running out on tired legs. What we should do is make the bike course a Figure 8, like those old demolition derbies in the Sixties. It'll give a whole new meaning to "Hot Corner" and should knock out about a third of the field.

Which brings us to the medical tent. There's no reason why someone who hydrates properly and manages not to get wiped out at the Hot Corner should subsidize the guy who drags himself in after 11:00 at night, slurps up three IV bags and gets enough medical attention from high-priced trauma physicians to start his own TV show. If the Mayo Clinic can charge for its services, why can't Ironman? And just to make sure there are no liability issues as a result of turning away disoriented athletes who didn't have enough sense to get their ATM cards back from the aid stations, the race can sell one-day insurance policies, just like USAT does. In fact, they should be mandatory. Who wouldn't pay fifty bucks for a top-notch insurance policy, especially if the deductible was only $500 with a $75 co-pay?

And what's with the free medals? Isn't anybody watching the bottom line here?

I got plenty more ideas, but it just occurred to me that I shouldn't be giving them away. This was just enough to whet their appetites.

I'm sure they’ll get back to me for some more.