Last week the New York Times posted a story about Ironman’s challenges as its owner, Wanda Sports Group, looks to close the sale of the company to Advance, the owner of Conde Nast, for US$730 million later this month.
“That leaves Ironman in an awkward purgatory, during which the seller wants to spend as little money as possible and the buyer wants the company to do everything possible to maintain its value,” Matthew Futterman wrote in the piece.
So how did a participant-based sport become a three-quarter of a billion dollar business?
The beginning in Honolulu
The Ironman World Championship began as a challenge – who was the fittest athlete, a swimmer, a biker or a runner. The debate came up at an awards ceremony and US Navy Commander John Collins suggested that the argument could be settled in a race that combined the Waikiki Rough Water Swim, the Around Oahu Bike Race and the Honolulu Marathon. Collins and his wife, Judy, had both taken part in the first triathlon event held in San Diego in 1974 – when they eventually put on the first Ironman race in Honolulu in 1978, Commander Collins was one of the 14 participants.
After putting the race on a couple of times, Collins asked the owners of the Nautilus Fitness Center in Honolulu, Hank Grundman and Valerie Silk, if they would like to take over the event. They did and organized the race in 1980. Silk, who had done the bulk of the work on the race, took over in 1981 after the couple divorced.
The first payment around Ironman’s ownership took place a few years later. In an interview with Scott Tinley in 2015, Silk explained how her ex-husband got himself paid for his part-ownership of the Ironman event. A few days before the 1983 race, Grundman demanded $145,000 for his portion of the race. Silk didn’t have that much money, but a man named Don Carlsmith agreed to give her the money in return for a 49 per cent ownership.
Ironman corporation moves to Florida
Through the 1980s the Ironman brand began to really grow. Qualifying races were taking place around the world and ABC’s Wide World of Sports’ coverage of the event helped the race’s popularity. Late in 1989 Silk sold Ironman to a Florida eye surgeon, Dr. Pitt Gills. An avid triathlete and endurance racer himself, Gills had made a huge fortune through real estate, almost by accident. After investing heavily in orange groves one year, he almost went bankrupt when a frost destroyed the crop. Instead of selling oranges, Gills took out all the trees and developed all the land, and would eventually become one of Florida’s largest land developers in addition to his thriving medical practice and many other businesses.
It is reported that Gills bought Ironman from Silk for US$3 million. He formed World Triathlon Corporation (WTC), which looked to commercialize the brand and expand its reach even further. In 1998 he appointed Lew Friedland as the president of WTC, who dramatically expanded Ironman’s reach around the world with the addtion of many more races to the qualifying series. It was Friedland who paved the way for Graham Fraser to create Ironman North America, for example.
Providence Equity Partners, then Wanda
By the time private equity firm Providence Equity Partners (PEP) acquired WTC in September, 2008, for an undisclosed amount (rumours typically estimate the cost between US$80 to $100 million) the company put on or licensed 53 full- and half-distance races around the world.
PEP would continue to expand the company’s global presence, adding many more events. When China-based Wanda Group bought Ironman in 2015 for US$650 million (and is said to have also taken over US$220 million in debt) Ironman was expected to generate $183 million in revenue for the year and had seen a growth rate of 21 per cent over the previous four years.
In July, 2019 Ironman completed a U.S. initial public offering (IPO) and raised $190.4 million – far short of the $500 million goal. Documents from that IPO provide some interesting insights on the company’s growth and income.
Over the years Ironman had expanded beyond triathlon events and owned a number of running and cycling races, too. The company put on 232 mass-participation events in 2016, 266 in 2017 and 326 in 2018. Despite the dramatic increase in events, revenue for those years stayed relatively constant between $91.1 and $91.9 million.
Which brings us to the latest Ironman sale. The deal that will close this month saw Advance, a family owned business that owns Conde Nast, acquire Ironman Group for US$730 million. That seemingly implies that Wanda will lose money on its Ironman dealings, having reportedly spent over $850 million for the company, a sum that doesn’t include the additional investments in other events.
“Since Dalian Wanda bought Ironman in 2015 for $650 million, the company has been on a buying spree in outdoor sports like marathons, road cycling and mountain bike races,” the New York Times reported when the company purchased the Rock ‘n’ Roll marathon series in 2017. “The Wanda Sports arm of Dalian Wanda already owns or operates more than 20 running races worldwide, including the Singapore Marathon, the Auckland Marathon and Marathon Bordeaux.”
According to last week’s story in the New York Times, Advance isn’t worried about the challenges Ironman is facing due to the coronavirus COVID-19 pandemic.
Janine Shelffo, Advance’s chief strategy and development officer, told the New York Times that they’d been “eying Ironman for a year and believed that it would be, at its core, an event-based business.”
“We went in with our eyes wide open, knowing there might not be live events for much of 2020,” she said. “And that’s fine.”
Which implies that we won’t be reporting on another purchase any time soon as the new owners look to recoup their investment over many years.