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Did the PTO just threaten Ironman?

In an open letter the Professional Triathletes Organisation says the value of Ironman's business may be adversely affected by not engaging in discussions.

The Professional Triathletes Organisation (PTO) says Ironman has not responded to its Feb. 3 letter and says that Ironman’s sale value would be “adversely affected” by not engaging in discussions.

Finish line of Ironman Louisville. Photo: Ironman

Last fall, when the PTO first sent a letter to Ironman saying that it was seeking to buy Ironman’s assets, it was easy to see the move as a bit of a publicity stunt. At that point the PTO didn’t appear to have the resources for such a purchase – the long-announced Collins Cup, which was to be the flagship event organized by the group, had yet to come to fruition.

That all changed in January with the announcement of the PTO’s new partner – Michael Moritz and Crankstart Investments – which suddenly gave the organization some monstrous legs. The Collins Cup suddenly became a $2 million reality. Then, a few weeks ago, the PTO announced a new $2 million bonus program, adding even more prize-money clout to keep things interesting for the pros. Before that, though, the PTO had once again reached out to Wanda (the group that owns Ironman), expressing an interest in buying the company’s endurance sport assets.

Wanda, and Ironman, have no obligation to respond to such correspondence, I’m told by folks who are much more savvy in the world of business than I, but they did reply to the PTO’s first expression of interest last fall. Instead of reaching out to the PTO this time, though, we learned that Wanda was looking to sell Ironman for $1 billion, according to a report in Bloomberg News.

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All of which leads us to the letter released yesterday by the PTO, which seems to harbour the threat that “in its view the value of the Ironman Business in any possible sale would be adversely affected by its failure to engage in constructive discussions with the PTO.”

The letter goes on to imply that Ironman needs the PTO’s cooperation for its business – “the cooperation of the PTO in the operations of the WTC Business is vital to its valuation and its ongoing and future success and, further, in our view, the continued failure of the WSG Board or any potential bidder with whom you may be in discussions to engage with the PTO in a constructive and cooperative manner may have an adverse effect on the WTC Business and the WSG shareholders.”

Putting millions of dollars in prize money on the table has allowed the PTO to sign all the top Ironman athletes, so this isn’t exactly an idle threat. Whether those athletes would be willing to start pulling out of Ironman races, including the Ironman World Championship in Kona, is the big question.

Last month we asked the question of whether or not the PTO would look to purchase Challenge Family rather than Ironman – the two organizations already have close ties. The meeting that kick started the PTO was held at a Challenge Family event in Bahrain way back 2014, Challenge Family will be producing the Collins Cup in Samorin, Slovakia in May and the chairman of the Challenge Family board of directors, Zibi Szlufcik, is also on the PTO board.

Taking over the Challenge Family series of races and making them all part of the PTO would be considerably cheaper than $1 billion, one would imagine. But is that a viable business model? As much as pro athletes bring to the table in terms of excitement and media, Ironman makes its money through age-group entries, not through professional participation.

The timing of all this is even more ironic – already in Asia there have been a number of event postponements, so now might not be the best time to be looking at purchasing an event company.

The bottom line from all this is that the PTO is most-definitely not going away. It has money, it has the best long-distance triathletes in the world … and certainly seems more than a little motivated to change the status quo in the world of Ironman racing.

Here’s the full letter sent by the PTO yesterday:

FOR IMMEDIATE RELEASE: 4th March 2020

LONDON, ENGLAND–: The Professional Triathletes Organisation today released the following letter sent to the Board of Directors of Wanda Sports Group Company Limited on 3rd March 2020 advising the Board that in its view the value of the Ironman Business in any possible sale would be adversely affected by its failure to engage in constructive discussions with the PTO.

Board of Directors, Wanda Sports Group Company Limited, Wanda Plaza, Tower B, 9th Floor, 93 Jianguo Road Chaoyang District, Beijing, China, Attn: Mr. Yimin Gao–CEO

Andrew Messick, Chief Executive Officer, World Triathlon Corporation, 3407 W. Martin Luther King Blvd, Suite 100, Tampa, Florida 33607

Dear Members of the Board:

We are writing on behalf of the Professional Triathletes Organisation (the “PTO”) and note with interest your public announcement that the Wanda Sports Group Company Limited (“WSG”) is in preliminary discussions concerning the possible sale of its worldwide triathlon and mass participation business (the “WTC Business”). We further note that the WSG Board has yet to respond to our letter dated 3rd of February 2020, in which we advised the Board that the PTO is prepared to enter into discussions regarding the acquisition of the WTC Business and to consider an all-cash transaction or one in which the existing shareholders of WSG are able to participate in the growth of the WTC Business that the PTO and its professionals are uniquely able to deliver. In our letter we also advised the WSG Board that we are prepared to work with other groups who may be interested in acquiring the WTC Business.

We strongly believe that our involvement in the sale process will enable the WSG shareholders to maximise the value of any sale of the WTC Business, and failure to allow the PTO the opportunity to be part of any sale process will adversely affect the WSG shareholders. We believe that this proposal represents a unique opportunity to realise significant value for WSG shareholders and the employees of WTC, and that the PTO can uniquely provide a healthy and growing environment for the WTC Business. The PTO and North Point Advisors, our financial advisors, are prepared to begin discussions forthwith with your senior management and your financial advisors and to sign a customary confidentiality agreement in order to commence certain due diligence.

We hope that you share our enthusiasm and that the WSG Board, in the exercise of its fiduciary duties, delivers a prompt and favourable reply to us. As the WSG Board has failed to respond to our previous good faith approach, we will publicly release a copy of this letter. We would urge you to convey to any potential bidders with whom you may be in discussions our view that the cooperation of the PTO in the operations of the WTC Business is vital to its valuation and its ongoing and future success and, further, in our view, the continued failure of the WSG Board or any potential bidder with whom you may be in discussions to engage with the PTO in a constructive and cooperative manner may have an adverse effect on the WTC Business and the WSG shareholders. We would accordingly request that if there are any restrictions in any Non-Disclosure Agreements prohibiting potential bidders from engaging in discussions with the PTO, that they be waived so that WSG shareholders are able to maximise the sale price of the WTC Business.

Respectfully yours,

Charles Adamo –– Chairman

Sam Renouf –– Chief Executive Officer

Rachel Joyce –– Athlete Director

Dylan McNeice –– Athlete Director

cc: David Jacquin, North Point Advisors, 580 California Street, Suite 200, San Francisco, CA 94104