The Economics of Running & Racing

Credit: image.envision.com

When I heard in early February that the Tokyo Marathon was cancelled, it hit like a thud. Tokyo hosts a desired marathon, one of the largest with 35,000+ runners participating. Due to coronavirus popping up in Tokyo, the race was cancelled for all non-professional runners. Would this be the beginning of dominos falling? Indeed, it was.

Over the following months, nearly every race ranging from trail ultramarathons to big-city marathons to small town 5Ks was cancelled or postponed. Along with the disappointment felt by many runners who may or may not have been offered a deferral, the longer lasting economic difficulties caused by COVID-19 will take some time to surmount.

Mega races like the Tokyo, Boston, and New York City Marathons have incredible financial investments in their events. Large venues are reserved for packet pickups and expos, sponsorships are immense, numerous hotels are fully booked, restaurants and entertainment packages are sold, and vendors of numerous brands of running gear take the opportunity to display and sell at expos.

Some of the largest racing organizations have formed a coalition to lobby for assistance for the industry. Road racing and other endurance sports have not had the prominence of the NFL, NBA or NHL, but they are a significant contributor to the economy. Some of those organizations have recently developed an endurance sports coalition to make their case.

Bringing all of that down to a smaller scale, I have yet to visit any community where I couldn’t find a local race happening during my stay. Using my small-city community as an example, the economic hit during the pandemic will be somewhere between uncomfortable and consequential. Below are some of the consequences that have occurred to me.

Nonprofit Fundraising In addition to the opportunity for runners to compete, the vast majority of local races are held to fundraise for a specific cause. Those causes vary from particular medical research areas, to education, to foods banks, to the arts. Generally, volunteers make up the greatest staff needs for local races, so the net proceeds benefit the organization. In this difficult climate, nonprofit organizations will no doubt need to make adjustments based on the loss of the race revenues.

Sponsorships – I’ll add here that sponsorship names you see frequently on a running shirt are an important portion of fundraising for races, be they direct donation or donating a service during the race. Sponsors may be supporting a race to show their support for the healthy lifestyle or in support of the particular cause. Sponsors may also be reaching out to the particular demographic that a race represents. What the long-term ramifications are for securing sponsorships after this difficult year is hard to assess.

Municipal Permits My community has some favorite go-to race courses where at least one municipal permit is required. The cost of the permit will generally vary (think $100’s to $1,000s) depending on the course, race distance and whether patrols at road crossings will be needed. For at least ten months of the year, races from 5K’s to the marathon distance are held at least once a week. This is revenue the local governments will not see most of this year.

Insurance – Various types of insurance are mandatory for races, depending on where your race is being held as well as the size of the race. Insurance companies that specialize in this type of insurance have seen cancellation of policies usually issued on an annual basis.

Timing Companies The folks who, within seconds after you cross the finish line, almost magically provide your finish time down to multiple digits of seconds are essential to any but the very smallest races. Some of these companies have fewer than five employees. They have the responsibilities of any business with employees to pay, equipment to maintain, vehicle expenses and rent to pay. Having worked with some of them in setting up races, I think of them now with concern for how they are faring with months of scheduled contracts cancelled.

Porta Toilets – Don’t laugh. Woe is the race that does not provide porta-potties. Race events in this area, noted above at least once a week, will order anywhere from five to 100 portable toilets for each race. Multiply that number again by the above figure of at least one race a week and it is a serious loss of business over a sustained period of time.

Bling – and I’m using that term liberally, to include race shirts, race bibs, overall and age group awards, finisher medals and many other items runners are pleased to find in their race packet. The companies that manufacture and printed those shirts, and manufacture the medals and awards are having a very lean year.

I say all of this to point out that the running community over the past decades has developed from an occasional race with mostly elite athletes to a major community movement of a healthy lifestyle for runners as well as walkers. It should not be overlooked for its contribution to the economy.

The Running USA 2019 Trends Report estimates that 18.1 million runners entered road races in the USA in 2018. That’s a lot of benefit to local communities. Cancellation of races is a loss for businesses that support those races.

Although the racing businesses and running community will also be impacted for a longer period of time, from the start of the pandemic of the (please, soon) end of it, runners always find a way to run and support their community and causes. Look for more discussion of that topic in an upcoming post.

How has the cancellation of races impacted you? As a runner, as a business owner, or as an employee?

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