COVID-19: The Financial Impact on Endurance Sports
In a nutshell, it's ugly.
The cruise ship industry is destroyed. They will most likely get bailed out.
The airline industry is decimated. They will most likely get bailed out.
The endurance industry is being pummeled. It’s a long shot of whether or not we’ll be bailed out.
It is most likely up to us, collectively, to hold our industry together.
The Sad State of Revenue
This is not about politics. Nor is it about being territorial. This is not about big companies vs small companies. This is about solving the immediate needs of our industry, not just ourselves.
This is about how a rising industry raises all races.
Unlike the industries that tend to get bailed out, the endurance industry is not comprised of a few conglomerates. We are thousands of small entrepreneurial businesses putting on tens of thousands of events.
Many of the businesses rely on event registration cash flow to stay alive. Many are non-profits who’s primary source of funding comes from endurance events.
Here's the problem, registrations across the industry are currently down 85-90% from normal levels. For every $100 you made every month, you're now making $10. In other words, event companies, timers and registration companies (among others) are not generating any revenue right now..
The Economics of Event Companies
The economics are pretty straight-forward…
Let’s say Company A is bootstrapping it. They have only two people employed, each at a $50k salary. That’s $8,300 per month (assuming no health coverage or benefits). Add on another $12k of monthly expenses (rent, supplies, software, etc.). That’s $20k per month.
Company A needs to bring in $240k per year in revenue just to keep the lights on.
Let’s add another $110k to put on their event. That means they need about 7,500 registrations just to keep the lights on.
This year, they may only get 3,000. That means Company A is going to be $215,000 short of breakeven. Because Company A is so small, they probably don’t have an extra $215k sitting around to fund the difference.
So what do they do?
Options for Small Events
Let’s look at the options for Company A:
A. Get a second (or third) mortgage on the home
B. Take out a (potentially high interest) loan
C. Try to sell the company for whatever they can
D. Close down the business
The trends we are seeing right now are setting up for Option D to play out a significant amount of times in the next 6 months.
Fortunately, many small companies in this space are run as side businesses by their owners. The owners have full-time jobs which pay them adequate salaries. These owners are so crazy passionate that they spend their evenings and weekends helping create events. Those owners should be safe as long as they can keep their existing jobs.
But not everybody is in that scenario. We are at a real risk of losing a lot of good businesses involved with a lot of good events.
Stop the Bleeding
So what can we do to help stem the flow?
I don’t know all (or really any) of the answers. But here’s what I do see.
Facebook has earmarked $100 million in grants to small businesses being impacted by the Coronavirus pandemic. [https://bit.ly/3bhY2UN]
The Small Business Administration is offering low-interest loans to small businesses and non-profits impacted by the pandemic [https://bit.ly/3dmCaJx]
Some states have created Small Business Emergency Relief Funds [https://bit.ly/2QAJxmS]
The challenge with the above options is that the resources may be difficult to get and, once/if you get approved, there’s a chance the loan will be only a small amount ($10k or $20k).
$20k does not help Company A survive their $215k deficit.
There are leaders in our industry who are already trying to push Washington DC to provide us with relief. But let me ask you, what else can we do?
What are larger companies in this space doing to help the smaller organizations survive?
What are the mid-size companies doing to help each other?
If you own a small company that is in a tight financial position and are open to sharing your story, please let me know.
Let’s work together to find solutions.
Our collective future is in our collective hands.