Ironman suitor PTO: We'd bring investment indebted Wanda can't
By Tariq Saleh
The Professional Triathletes Organisation, a body involving leading competitors in the sport, claims Ironman, the organiser of high-profile long-distance events, is in the “wrong ownership structure” and believes there would be wide benefits if it is able to acquire the business from Wanda Sports.
On the back of a recent funding injection, the PTO last week sent a letter to the Chinese company that presently owns Ironman/World Triathlon Corporation, and WTC chief executive Andrew Messick expressing its desire to enter into negotiations over a purchase.
A previous bid was rejected last October, but the PTO has stressed that it is now in a stronger position having secured partnership financing from Crankstart Investments, a vehicle of UK billionaire Michael Moritz, and is confident it has the resources to grow Ironman.
According to Charles Adamo, the PTO chairman, parent company Dalian Wanda's debts mean it is restricted in how much it can invest in Ironman, and this is impacting on the attractiveness of the brand.
In an interview with Sportcal, he said: "Our athletes, or members of the PTO, do a lot of Ironman races. It's a great brand and the people who run Ironman are fantastic. But they are fairly restricted because Wanda has so much debt on the organisation, so they are not able to do the investments in the products and in the sport that one would normally do if you were not so restricted.
“Lots of professional leagues and sports have limits on how much debt you can have on a club, or on a sport. For example, there's financial fair play rules in soccer and I know in the US, in MLB and the NFL, there are strict limits on how much debt can be on a team, because they know it is very insidious. It just undermines the goodwill and the ability to invest in the sport.
“So sadly, that is where Wanda is and Ironman as an asset is very valuable to the sport and very valuable for the sport to continue to grow. It is just in the wrong ownership structure and we have got the resources and it is just natural for the professionals to be involved as we try to unleash it from this bad structure and then use that, as well as an ongoing platform, to continue to grow the sport.”
Wanda acquired WTC from US private equity firm Providence Equity Partners in a $650-million deal back in 2015, but there has been talk it could listen to offers for the business after a Nasdaq listing last July raised a smaller-than-expected $190.4 million.
Wanda, which also includes international sports agency Infront, posted a loss of €31.2 million ($34 million) for the third quarter of 2019, with the New York listing having an impact, but revenue came to €245.2 million, up 8 per cent year-on-year and up 33 per cent when excluding the impact of reimbursement revenue.
The PTO has already stated that it is willing to work with other potential buyers, and existing shareholders of WSG, on a takeover deal.
Adamo is confident that with the investment from Crankstart, the PTO is well positioned to take the sport into the mainstream, and has already identified two key areas it will focus on if it can acquire Ironman.
He said: “They [Wanda] do some broadcasts, but they do very little investment in it so they are not the highest of standards, I think they readily admit that themselves, and that diminishes the attractiveness of the sport. So that is part of what we will be able to do with fresh capital and also promote the professionals as an entity like [mixed martial arts’] UFC did, as opposed to just running lots of races.
“That is what tennis did when the ATP formed, they started promoting the professionals and then the sport naturally had a growth. It costs money to promote professionals and if you are stuck in a debt structure it is very hard to justify those types of investments. If you are layered with a lot of debt and you have got interest payments to meet every quarter, it is a little more difficult. So I think that will be our goal, in working with the Ironman management as an entity to unlock it from the debt structure. The team itself is fantastic and there are great things that can be done with it.”
The PTO was established in 2016 by a group of triathletes seeking a greater say in the running of non-Olympic disciplines, and has been seeking new investment over the past 18 months. It now has around 100 members, with Alistair Brownlee, Great Britain's two-time Olympic gold medallist, one of the board members.
The Collins Cup The PTO and Moritz have already shown their ambition with plans for The Collins Cup, a Ryder Cup-style team competition involving sides representing USA, Europe and Internationals, the first edition of which is due to take place in Slovakia on 29 and 30 May, with a prize fund of $2 million, and which is being promoted as an exciting new showcase for triathlon.
Adamo is keen to deliver global exposure for the event and believes the most efficient way to do so is through over-the-top streaming platforms, with talks under way with potential rights partners.
He said: “That [negotiation] is starting now and I think at this point we will have a fairly wide-ranging broadcast. We are going to be doing this very quickly. It [The Collins Cup] is at the end of May. So from our perspective, we are in a great opportunity because with OTT, you can reach your audience pretty easily and pretty quickly.
“So I think that is our goal right now, we will find a bunch of different platforms to have it on to reach our audience and deliver to them a product that in triathlon does not really exist right now where you have fairly high-end broadcast standards, which is where the space has struggled a little bit. It has not invested in making the events something that is interesting to watch and that is why we modelled the Ryder Cup where you have the patriotism associated with it.”
Adamo added: “There is a fair bit of competition out in the broadcast market for decent content. At this point, we just want to get the best content out there through the best channels and then we will move on from there as we demonstrate the size of our audience, because our audience is actually quite sizable, and they're desperate for content.
“There is just not any good content out there, so once we are able to deliver this, then we will be able to size up and demonstrate the size of our audience.”
The triathlon calendar already features regular events staged by the International Triathlon Union, as well as Super League Triathlon, the Singapore-based professional triathlon series.
However, Adamo believes that The Collins Cup and future PTO events will be distinctive enough to stand out, and ultimately benefit the sport as a whole.
He said: “This is what is probably part of the problem with the triathlon space in general, and probably what the UFC dealt with originally as well. It is too fragmented. Very infrequently do you get the top people all racing. There are too many races, so there is no attention that galvanises the audience, so we fit very well in it.
“We are going to help everybody. We are just one member of the triathlon community, we are going to focus on having the biggest events, the Super Bowl, the World Cup-type event, the Ryder Cup, Wimbledon, and just display all the greatness of the sport and it will obviously help all those entities.”