Thoughts on the pro triathlon market…

First off, let me start this with a couple of disclaimers:

You may get the impression that I “dislike” the WTC, and Ironman, by writing this article.  But that is patently false.  I love Ironman.  I have given up everything else in my life, in pursuit of winning an Ironman. Also, I derive great joy from helping the athletes I coach achieve their Ironman dreams.  You don’t do what I’ve done, for something you “hate”, or think is “bad”.  There is no drug on earth that can match the wonderful satisfaction of nailing an Ironman race.   But… that doesn’t mean I think Ironman is perfect.  It can be improved.

Also… in this article, I’m only referring to long-course pros… I’m not immersed in the world of ITU, so I’m not including “ITU related numbers or thoughts” in any of this.

 

Ok… disclaimers over… let’s get on with this…

We don’t have access to WTCs balance sheets, as they are a privately held company. But estimates, based on some public statements, put their annual profits at around $45 million.  Right now, total payout in professional prize purses, across all events, is roughly $2.5 million* (so, $1.25 million for males, $1.25 million for females).  Some folks think that’s too much prize money, some folks think it’s not enough.  I say, both sides are wrong.  In all honestly, we have no idea if that’s too much money, or not enough money.  We have no idea what pros are truly “worth”.

* (I arrived at $2.5 million by going to the IM pro registration page, and adding up all of the listed purses for 70.3, and 140.6, races. I’ve heard “$4 million” thrown around, so maybe not all of their listed purses were up to date when I checked… or maybe “$4 million” was just made up.  Either way, it doesn’t make much difference, within the context of this article)

Some people like to yell “The pro prize purses are set by supply and demand! Pros are worth exactly what the prize purses say they’re worth!”  Unfortunately, that’s nothing more than a very lazy argument.

Why is it a lazy argument?  Because the necessary mechanisms are not currently in place to find out what pros are actually worth.  There is no proper forum for pros to negotiate with Ironman.  And without negotiation, all you have is a giant company offering a set price, saying “take it or leave it”.  You cannot properly determine the value, or “worth”, of an asset in a marketplace when a dominant company is fixing prices, which is the situation we have right now with pro prize purses.  History is FULL of these types of situations.  An example is the current mess that is the NCAA.  Football and basketball players generate billions of dollars per year in revenue for universities, yet all each athlete gets from their school is a scholarship worth about $30k.  That’s not to say that a scholarship is a horrible thing, but when these kids are generating billions for old white men in ugly blazers, they have a legitimate gripe about only getting $30k per year  (and yes, I realize triathlon doesn’t generate nearly the revenue of NCAA football & basketball… I’m just using an illustrative example).

I’m sure some clown will yell “Supply and demand!  Johnny Manziel played for a scholarship, so that must be what he’s worth! Supply and demand!”  The person who yells that, unfortunately, is a damn fool.  The NCAA players have no mechanisms for negotiating their actual value, so they just have to accept what the “powers that be” offer them.  Even though Johnny Manziel’s “real” value to Texas A&M, and the NCAA, was easily several million dollars in 2013.

Ok, now that we’ve dismissed the general concept of “that’s the way things are, so that must mean they’re perfect and correct”, let’s move on to what can be done…

One of the most basic economic principles is that people/corporations respond to incentives.  Right now, there is no incentive for Ironman to increase prize purses.  They have limited competition, and they’re making gobs of money.  They have their small group of 10-15 “superstar athletes”, and as long as they keep those 10-15 happy, and market them to the public, then Ironman is pretty content.  Those 10-15 “superstars”, in turn, have absolutely no incentive to make sure the 11th place finisher at Ironman Arizona gets paid.  Those few at the very top have paid their dues, earned their position at the tippy-top of the pyramid, and don’t want to rock the boat, for fear of losing their position/security.

So let’s categorize the various groups of “Triathlon pros”

-The “superstars”, who make $100k + per year, entirely from triathlon prize purses and sponsorships.  I’d guess there are 10-15 of these folks on the planet.  They are badasses at a level that 99.99% of the population cannot even comprehend, and have earned everything coming their way.

– The “stars”, who make $60k-$100k per year, from prize purses and sponsorships.  Very accomplished athletes, but just not quite at that “top tier”

-The “working pros”, who make $25k-$60k per year, cobbled together from prize purses, sponsorships, coaching, or working a part-time job “in the industry”.  This represents the majority of pro triathletes.

-The “lifestyle athletes”. These are folks who don’t make any significant money in the sport, and are funded either by a) mom & dad,     b) a significant other, or     c) have a full-time job.  This group is unique because they are operating with a different set of motivations than everyone else.  At the end of the day, it doesn’t really matter to them if they make money from the sport or not, because it’s really just a glorified hobby to them, not a way to make a living. This doesn’t mean their approach is “wrong”, but it does mean that they view the sport through a distinctly different lens than an athlete who needs the sport to pay the rent and put food on the table.  This category is based on “economics”, not “ability”… because there are some “lifestyle athletes” who are nasty out on the race course (Jennie Hansen, and Chris Baird, for example).

 

Now… the existence of these “tiers” of pros brings up the issue that Ironman has set up the prize purse structure to support only a certain number of pros.  However, USA Triathlon has set up a licensing system that creates far more “pros” than Ironman is willing to support.  This does not mean that USAT is doing anything “wrong”, or that Ironman is doing anything “wrong”.  It merely means that there is a false expectation created among some people, that possession of an Elite License from USAT makes one a “pro triathlete”, and entitles one to make a living off the sport. But… Ironman has absolutely no obligation to support an athlete just because USAT decided to give that athlete an Elite License.

This brings us to our obvious conclusion… it is incumbent upon us, pro triathletes, to demonstrate to Ironman that we are worthy of supporting, and it is incumbent upon us, pro triathletes, to provide incentives for Ironman to improve prize payouts.  We have no one to blame but ourselves for the current state of affairs.  Ironman hasn’t made a ton of money by being dumb. They’ve put themselves in a position where they can pay out only $5k for an Ironman win at certain races, and they know they’ll still have their 40-athlete pro field.  They’re the big dog on the block, they know it, and they know what they’re doing.  Unfortunately, pro triathletes, collectively, don’t know what we’re doing.  We’re disjointed, disorganized, and as such, are getting (financially) pwned.  Right now, “WTC” negotiating against “pro triathletes”, is like the “University of Alabama football team” playing against “a bunch of sophomore stoners who just kind of run around on the field randomly, and hope that something works out.”

If we want bigger purses, we have to demonstrate how bigger purses are good for everyone involved, not just us.  Ironman is running a business, not a charity. They want to make money, just like we do.  We have to convince them that more support for us is in the best interests of their balance sheets.

So, what are our possibilities?  (I’m just throwing a ton of ideas out there… not necessarily saying one idea is preferable to another)

-Appeal to Ironman that paying more, and paying deeper, will aid elite development.  That, in turn, will push the sport to new levels, creating more interest, and brand awareness, for Ironman.

-Collaborate with sponsors to pressure Ironman to increase prize purses

-Skip certain races or events.  Don’t go to a race, knowing what the prize purse is, and then complain about the prize purse. That just makes us look like a bunch of whining idiots.  If a race isn’t paying out enough for you to think it’s a worthwhile investment, then don’t go to that race.

-Choose to race only Challenge, or independent, races. Or even go so far as to consider a boycott of certain races or events.   The idea being that a long-term absence of large numbers of pros would make them realize (and miss) the value of having pros there in the first place.  This is a high-risk/high-reward possibility.  It could work great for us, or it could turn out similar to when George asked Susan for a pre-nup

-Stop selling yourself so cheaply. Some ways to not be “bought so cheaply”: Insist on homestays or hotel stays, from race directors… Insist on more media coverage and/or press releases, from race directors… Demand more in return for your endorsements… Don’t undermine another athlete’s negotiations by undercutting them… etc…

-Offer our services, for more things besides racing.  Offer to give clinics/talks/seminars, in exchange for money/accommodations/etc… If Ironman doesn’t want to give you a venue to do this at races, then organize the clinics/talks/seminars on your own, and demonstrate the value of them to Ironman.

-Unionize.  This has been tried a couple of times, and failed.  I don’t know all of the details, but I’d suspect it was mostly due to:  a) the selfish, short-term, interests of some athletes    b) athletes being afraid to risk the small amount they’ve earned, and/or    c) lack of a central leader, with no other jobs/work, who was 100% committed to organizing and empowering the union.

-Teams. Similar concept to unionizing, but on a smaller scale. Some examples where this has worked (at least for a few years) would be: Tri Dubai; Uplace; Team TBB; etc…

-View yourself as a business. One of the greatest rap lyrics I’ve ever heard is from Jay-Z, when he said “I’m not a businessman… I’m a business, man.” (in Diamonds from Sierra Leone).  Not enough triathletes view themselves as businesses. A corporate CFO’s head would explode if he/she saw the balance sheets for how most pros conduct their training/racing/travel.

Those are just a few things to think about… I’m sure there are dozens of more possibilities.

Phew… that was long.  Does Ironman pay out as much as we’d like?  No. But they’ve figured out how much they can get away with paying, and that’s what they’re doing.  Now, it’s our job to get ourselves into a better position…   C.R.E.A.M.

Until next time… keep training hard, and resting harder,

D-Mac.

 

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3 thoughts on “Thoughts on the pro triathlon market…

  1. Great article. I’d like to add the following idea to the discussion.

    I suspect that most pro triathletes don’t have agents but in many cases, their coaches are already in a similar role – or could be. I’ve seen several events where a coach brings their stable to a specific race (along with a boat load of age groupers). Why aren’t top level coaches negotiating on behalf of their pro athletes? They definitely stand to gain from larger purses or appearance fees.

    Coaches also have (based on the number and quality of their athletes) a louder voice with sponsors and event promoters. They could be enhancing athlete income potential on several fronts (and taking their administrative fees) if they wanted to. It an aspect of business I haven’t seen covered in the media so maybe its untapped.

    If you look at automobile racing in Europe in the 50’s and 60’s there are similar parallels. Prize money was sparse but the appearance fees to show up kept the teams and drivers afloat. It was only when the sport matured and started to view itself as a professional business that the constructors association came into existence and real negotiations over money started. They had strikes, they had set backs but in the end, they got a decent share of the revenue.

    The conversation is starting to go public. That’s progress.

    • I’m pretty sure the Bennetts have representation. I’ve heard through the grapevine that they are also highest earners in the sports by far. Sean Watkins has also represented a number of athletes in contract negotiations. A lot of endorsement contracts also have non-disclosure agreements. This makes it harder to negotiate an endorsement contract, because the athlete, or at least a new athlete, lacks a frame of reference. An agent, or at least an experienced pro, has a frame of reference and knows where to negotiate.

      Racing non-WTC events also poses a problem. Rev3 has eliminated many pro purses at many, if not all, of its races. There’s Challenge, but Challenge doesn’t have a lot of races in North America and travel to Europe, Australia, and Asia is expensive. Even then, many endorsement contracts may only offer bonuses for WTC races.

      Ultimately, you need a way to makes the pros ,ore valuable, so they’re worth higher purses and endorsements. Salaries went up in baseball with the end of the reserve clause, which gave rise to free agency, and the rise of a national media market that gave the athletes greater exposure and a way to market themselves. For triathlon, a media strategy is where it has to go. The development of Redbull TV provides a great example of how this can be done.

      With regard to tiers of pay, I think is will always exist. I don’t think it’s that different from minor league vs Major League Baseball. There will be new pros who still need to establish themselves and others who have been around, but lacked the talent, drive, and business savvy (either their own or through representation) to market themselves.

  2. This problem started when Ironman decided to charge $750 annually to their pro’s, just to do their races. Ridiculous, and yet the pro’s came running to sign up. I decided to retire instead, put my energy and money toward something better. I was one of the few.

    Ironman consistently marketed me as being on the start line in all their press releases, discussed me on their live broadcasts, I was always “in the race” competing for the win or podium, and yet I was supposed to pay them $750 for that, plus travel expenses? Then to get a measely prize purse? No, sorry.

    That’s the problem. All it would take is every pro to stand together and say, “we are not paying for this fee.”Or at least 90% of them. And any pro who does pay it should be ostracized. That would be a good first step.

    Most of the pro’s are idiots though, and the Rev3 prize purse and revocation of said purse is proof. Short-sighted, and not in touch with reality. I don’t blame Ironman one bit. They are laughing all the way to the bank.

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