Monday, September 26, 2016

The business of Obstacle Course Racing


Obstacle Course Racing, commonly referred to as OCR, is an event typically organized in an outdoor setting that takes participants, traveling on foot, over the course of 3 miles and up to 15 miles or more while navigating various man-made and natural terrain physical challenges placed in their path.  The challenges are referred to as Obstacles.  These courses can be walked or ran.  A standard 3-mile course can typically take on average 1 to 2 hours but there is no time limit except for the hours of operation of the specific event.

OCR began in 1987 in the United Kingdom with an event called Tough Guy.  A few events popped up in the United States, such as the Camp Pendleton Original Mud Run that started in 1992, however popularity did not become widespread in the United States until the late 2000’s when companies like Warrior Dash, Tough Mudder and Spartan Race developed and starting having events in multiple locations around the country.  Participation levels in 2009 was around 100,000.  In 2015, participation levels were approximately 5 million spread across approximately 1000 events around the country with about 300 companies.  These numbers are approximate and very difficult to determine because many of the events are not timed and do not publish numbers of participation.  The number of events hit a high around 2014 and have been on a slight decline since.  In my opinion, this is due to a complete lack of understanding on the part of the companies as to what their market consists of and how to market their product.

The market of OCR is unlike anything else in the country as it truly can be accomplished by participants of any age or level of fitness.  The running industry, for example, is limited to only people that run.  Very few running events accept or allow people to walk.  OCR allows participants to complete the event in any fashion necessary. 

There are a documented 30 million runners in the United States and approximately 17 million of them will participate in an organized running event every year.  Since the market of OCR is more broad, we need to consider the population of the US as the market.  There are approximately 212 million people between the ages of 18 and 65.  If we conservatively remove half of them due to medical, financial or geographical restrictions, we are left with 100 million people capable of participating in OCR.  More than 3 times the potential market for traditional running events.  Considering the fact that only 5 million people are currently participating, the industry is currently operating at a 5% capacity with plenty of room to grow and expand.

In 2012, OCR participation was approximately 65% female.  It was about this time that many companies in the market started to change the focus from fun and challenging to ‘you might die’ if you try this.  In the fall of 2013 BattleFrog entered the market with a Navy Seal theme and was quickly noted as the most difficult OCR in the industry, continuing the changing trend of the demographic.  As a result, in 2015 the market had changed to 65% male participation.  In retrospect, this was an industry wide mistake.  This trend presents an opportunity to change public perception of OCR from ‘you might die’ to ‘it’s recess time, let’s go play’.  I firmly believe it is possible to focus on the remaining 95% of the potential market without the loss of quality or difficulty for the current market.  Any company that would have this focus would yield great gains.

Most OCR companies currently have themes of ‘Tough’, ‘Warrior’, ‘Savage’, ‘Death’, ‘Battle’, etc. and they market specifically to people that take extreme interests in health and fitness, like Crossfit.  This is counterproductive to their individual growth and the growth of the industry as a whole. 

Most of these companies operate every weekend as a ‘race’.  Properly, OCR is an event and the companies that exist in the market are event production companies.  This is only a ‘sport’ to about 1% of the population, yet most OCR companies promote their events as ‘you might die’.  I believe the potential market of people looking for ‘outdoor fun’ is enormous in comparison to the small market of people that are looking for that ‘near death’ experience.
Obesity in the United States has grown to epidemic levels.  There are very few opportunities to inspire people to get off the couch, get fit and stay fit.  Running isn’t for everyone, in OCR running isn’t required.  I firmly believe Obstacle Course Racing, or Mud Runs, can save this country.  Unfortunately, the people running the businesses of these events are ruining this opportunity for these people.  Many people see these events and think, “I could never do that” because the name sounds to ‘Tough’ or the description can be summarized into “you may die”, or the only pictures these companies use for advertising show the most physically fit people on the planet.  I guess that works if you only want to market to people in Crossfit but why would you limit yourself to such a small crowd?  Remember, the industry is currently operating at a 5% capacity and is on the decline, unless these companies change their strategies.

The typical OCR event will bring in a wide range of participation numbers from as low as 300 to as high as 10,000 and some events will bring in 10,000 people per day for an entire weekend.  What remains constant with these events are the averages of who the participants are.

The numbers may vary by a few percentages depending on the company but on average, OCR participation numbers are comprised of the following:
  • 80% of all participants are only out for a fun time and a great Facebook pic and are typically ‘One and Done’.
  • 25% will attend events from multiple production companies as long as it’s within an hour or two from their home
  • 20% will return as a repeat customer to your event that is within an 90 minutes from their home
  • 3% will travel up to 4 hours from their home to events
  • up to 5% participate for the competitive aspect.
  • another 5% will also participate for the endurance aspect.

The costs of producing an obstacle course race vary greatly from the once-a-year, mom-and-pop local events to the large travelling road shows with a full time staff.  The local events tend to be owned and operated by one or two people that spend the whole year building obstacles and planning just that one event.  They typically own the land they use or have some incredible agreement with the landowner that their event is held on.  They will sometimes get sponsors from the local lumber yard to supply the wood to build the obstacles and they get the local shirt shop to provide the shirts.  You get the idea.  These events can cost anywhere from $10,000 to $100,000 to produce and will bring in a few hundred to a few thousand participants.

The companies that put on an event every month, or sometimes every weekend, in a different location around the country have huge amounts of overhead.  They will typically have a corporate structure with corporate headquarters and many full-time employees.  The average cost for one of these companies to put on an event typically ranges from $200,000 to $400,000 but have been known to reach as high as $600,000.

What makes up these costs?  Following is an example of the corporate overhead costs and an estimated cost for each event build.

Corporate overhead could include the following: Corporate manger(s), Human Resources, Accounting, Marketing and Sales, Social Media, Registration, Customer Service, Volunteer Coordinator, Sponsorship Director, Director of Race Operations, Build Crew Leader(s), etc.  Overhead would include the costs for websites and other technology like timing chips.  There’s a cost for designing and building obstacles that can be assembled and disassembled and taken from location to location.  All of these costs, and many more, don’t forget your precious finisher’s medal and t-shirt, could range anywhere from $1,000,000 to $1,500,000 and way beyond.

Each event would be made up of, but not limited to, the following costs:
  • $10,000 to $40,000 for the use of the land
  • $25,000 to $50,000 in travel expenses for personnel
  • $10,000 to $20,000 in transportation costs to move everything to the event location
  • $20,000 in equipment rental
  • $40,000 in labor
  • $6,000 to $10,000 in water and snacks for the runners
  • $1,000 to $10,000 in marketing per event
  • $2,000 to $10,000 in photography per event
  • $5,000 to $15,000 in day-labor if you don’t get enough volunteers to staff the event.

Assuming the company wants to have only 10 events in one year.  If you add up all these costs, and more, then divide spread the overhead costs out evenly, you end up with an approximate cost of $300,000 to put on an event.

Documented averages show that 5% to 10% of participants register for Competitive or Extreme options for events.  The price for this level of participation varies greatly from company to company but let’s say it has an average cost of $125.  82% register for Open at an average price of $85 and 9% of the registration is for Kids at an average price of $30.  50% to 70% of all participants use a discount of some sort.  Using these numbers, the average price per registration would be around $75.  With a cost of $300,000 just to produce the event there would need to be a minimum of 4000 attendees just to break even.  Are you in shock yet?  Are you still whining about how expensive these events are?

Between 2012 and 2014, there was a spike in the OCR industry of events being held and companies trying to break into the market.  Some local and some travelling road shows.  Too many people look at the perceived success of Spartan, Tough Mudder and Warrior Dash and think, “I can do that!”, “I’m going to be RICH!”.  They think “If I build it, they will come” and droves of millions of people will come flocking out of the corn fields just to run their event because they told someone on Facebook about it. 

To succeed as a company that can compete in this industry, the following should be considered.  Following these methods will bring anywhere from 3000 to 10000 participants to an event depending on how much effort you put into it.
  1. Brand the company with something that is fun and relatable to the larger percentage of the population.  Avoid all things related to ‘Battle’, ‘Tough’, etc.  The masses don’t want to feel like they could die at your event.  They just want to have fun and be a kid for a day.
  2. Theme the event so that all participants can feel as if they are a part of the production and can have fun.  I say this jokingly but there is a lot of truth to it.  If certain events were to change nothing but their name and branding to something like the ‘Rainbow Run’, people would come out by the thousands.  Don’t inherently limit yourself with bad branding.
  3. Make the event obtainable and achievable by the greater percentage of the population.  In the United States, the greater percentage of the population doesn’t even want to do a 5k.  Keep it short and attainable.  Distances greater than 5k will once again inherently limit your participation levels.  You can have the Competitive athletes run multiple laps but DO NOT focus on the 5%.
  4. Utilize the resources of the venue as much as possible to reach their customer base.  These events are quite often held on ATV Parks or Ski Resorts.  Take advantage of their following to drive your participation levels.
  5. Market to everyone but make females between the ages of 25 and 40 your main target market.  Without intentionally offending the ladies I will make the following statements.  No woman ever goes anywhere alone.  Women are the decision makers, especially for weekend activities.  For every one woman that buys a ticket, you will sell one to five more registrations.
  6. Make the event family friendly.  These events bring people together.  Parents struggle to get their kids outside and away from the electronics.  Have a family friendly atmosphere with a kid’s event and you will win.
  7. Use all means of online promotion from social media to websites.  Most event production companies utilize Facebook, Instagram and Twitter fairly well.  Where they fail is to utilize websites such as the local convention and visitor’s bureau or the local running store.  For every event you should be able to find anywhere from 50 to 200 websites that reach people locally within an hour or two of your event.
  8. Create press releases for every event and target all local media sources.  Hardly anyone does this.  For a minimal cost of $100 per event, you can reach tens of thousands of potential customers and get your event on the cover of the local Gazette.
  9. Promote locally to your events within a 50-mile radius.  This is done by traditional guerilla marketing using printed flyers and posters.  Radio and other local marketing tools may be considered on a case-by-case basis but only if you can target your audience.  The circus never came to town without letting everyone in the city know about it by plastering the town with flyers and posters.
  10. Create relationships with all forms of Convention & Visitors Bureau’s
  11. Familiarize yourself with and befriend the fanatic groups around the country depending on the geographic region you wish to operate in.  Groups like the Crazy Mudder Muckers, New England Spahtens and Weeple Army represent thousands of people that will help spread the word for you and become your ‘street team’.

Additionally, the event production companies need to consider collaborating.  There are certain areas of the country, such as Ohio, where there’s an OCR event practically every weekend.  The local producers have started working together to ensure they are not competing with each other by not planning events on the same weekend.  Cross-promoting each other’s events is an excellent way to increase the participation numbers.  Local events in some areas have even gone as far as creating incentives like a special medal or commemorative t-shirt if you run multiple events from multiple companies in a certain region.  The ‘big boys’ of the industry could learn a lot from these smaller organizations instead of intentionally planning events on the same weekend within 30 minutes of each other.  Actions like that do nothing but show ego, not intelligence.

The competitive side of the business is something that should still be considered, but remember what was said about the competitive participants.  Whether you refer to them as the Pro wave, Elite wave, Competitive or anything else, those that run for money make up 1% to 10% depending on the event.  They should not be the main focus.  In reality, 90% of those that run in these waves should not even be in these waves.  For most of these events there are only 3 podium spots.  If you have no chance of coming in the top 3 of these waves, or even the top 10, you have no business being there.  Competitive waves typically have around 100 participants but have been known to go as high as 600.  With that being said, the competitive waves cost more and the organizers of these events are doing everything they can to stroke the ever-growing egos of those that choose to run in these waves, even if they don’t stand a chance of making it to the podium, it makes them feel good that they actually participated in the Elite wave and they will gladly pay the extra amount to be there.

The single biggest mistake made by any event production company is to have a ‘Pro Team’.  There is no return on the investment.  Zero, zilch, nada.  Several organizations have sponsored athletes that they pay to go out and run these races with the hopes that they will get on the podium.  One of the biggest mistakes in the industry is paying pro team members to run your own race.  Spartan Race is notorious for this and BattleFrog used to do it as well.  What good does it do to pay a monthly stipend to an athlete to be your pro team member, pay to have them decked out in professionally branded gear, pay all the expenses for that athlete to travel to your event, give them free entry to your event and then pay them the podium amount if and when they get on the podium?  All this just so a small handful of people that check out the awards ceremony get to see a BattleFrog pro team member win a BattleFrog Race.

Remember the numbers of participation mentioned before?  Remember that a minimum of 80% of those participating are only out to have fun with the hopes of getting a decent Facebook photo.  They don’t know anything about any of these competitive runners.  They don’t care and never will.  This once again points to the fact that this is not a true sport but an event.  People play sports like basketball or baseball at the park.  People watch them on TV or go to a game and people know who the players are.  The only people that know who the ‘players’ are in OCR are the players themselves and a small group of fanatics.  Yes, a select few of the very top athletes have graced the cover of magazines but they aren’t being featured on ESPN.  If these athletes want to run for money, let them, but for event organizers to sponsor them and pay them is nothing but a money drain.

In the end, the business of Obstacle Course Racing is very demanding, difficult and ever-changing.  Most of the people that are in it, are in it because they love it and the people that come to the events.  The community is incredible and the events are life-changing for the positive.  The feelings and emotions range from a sense of accomplishment to experiences that are borderline religious.  It’s one of the few addictions that are good for you and everyone around you.  I only hope the industry continues to grow in a positive direction, allowing the remaining 95% to experience it.  I have heard it said many times, “if the rest of the world treated each other like the people participating in an OCR treat each other on the course, the world would be an incredible place.”




12 comments:

  1. It has been one hell of a roller coaster to watch. That is for sure. I remember when we started mudrunfun.com to promote mud runs and races only came around once a year, then every six months and finally 2 or 3 a weekend just in your area.

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    1. Yes. Back when half the people came in costumes

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  2. I agree with most of what this says but it has one issue. If you push the events to be just for anyone, making things easier, you will alienate the life blood of the sport. Yes you might get a big number the first year or maybe two, but these people that do it just for fun do it as a once in a life time event. They will never come back. To me that is why you see the decline in the sport from 2012, it’s the fact that everyone has done it already. You have to keep these “events” more sports like to keep the regulars like me that come back every year, sometimes twice a year. I have run some races that are just for fun or not managed well and will never go back. I know it’s not perfect but I want to push myself and be timed and not just have a laugh. To me the best would be a mix of both worlds. Make it so the serious runners can take this on like a real challenge and then later in the day the fun people can just have fun. Or maybe have two sets of obstacles right next to each other, one more challenging and the other easier. I don’t want to be sitting there waiting in line for people that are just having fun on an obstacle. Also not everyone can pay the extra $30 for the elite races and not all races have this option. Unfortunately, I do think the sport will die out. I have had 2 races canceled this year. I will hate it as I love the sport but as you have stated it needs larger numbers to survive I hope someone can come up with a long term answer.

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    1. At no point did I say it had to be easier. You and I both know that we aren't going to die but the public perception is that way because of the marketing. You are correct that people have done it and moved on. This is the purpose of the article. OCR is first and foremost a business. If your product is not a commodity or a necessity then you need to constantly be trying to attract new customers. This is where the companies in the industry are currently failing. BattleFrog had the best method with the 3 levels of difficulty at each obstacle. It enabled everyone to complete the obstacle.

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    2. I disagree with your rational. I NEVER intended to become an OCR Junkie....I wanted to do one (1) so I could say that I had done it...oh and get the good pictures for Facebook! But I had so darned much fun, I ended up doing 42 "Events" last year, including a Spartan Trifecta accomplished at the Beast in Tahoe "The World Championship" I traveled > 8 hrs to get there and spent 3 days in town at a hotel, acclimating to the environments and then resting after the event. The "Entry Level" events are a TON of FUN and that is what gets people hooked. By the way, I am a 58yr young grandma! Look for me on the course, I go by the moniker "Crazy Granny" Please help me over a wall, drag me to the finish line, and/or throw me over the fire jump! Teamwork is the key to the fun!

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    3. @ Crazy Granny .. that simply means you are one of the 20% or less. You just didn't know it. I contend that there will always be the converts that take this on as a personal challenge and then get addicted. It's the reason the industry has a chance to grow and further proves my belief that we are operating at a 5% capacity. We simply need to reach the remaining 95% and convince them that they can do it.

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  3. A very well-written, objective and insightful article. Bravo!

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  4. Amen to most of what you wrote here Kevin...nice piece! It made me go back and look at something I wrote 3 years ago about the present and future of OCR. Outside of a few TV shows, nothing really has changed and they still haven't turned the corner on becoming a sport. I think that underscores your point on the Pro Teams. No one knows, or cares much apparently, who they are. Without that, you have no following...you have no sport...just an event. See you in Okeechobee?!

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    1. Thanks John. It's a business to all the organizers or they wouldn't do it. It's a one-time event to more than 80% of the participants. No different than going to the circus or a concert.

      I'll be at the World championships not at Okeechobee. Good luck

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    2. John, how are you? I'm back in Louisiana, building prototypes with the system. ...been taking a break, and just building for fun. ...obstacles for my kids. Cajun

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    3. John, how are you? I'm back in Louisiana, building prototypes with the system. ...been taking a break, and just building for fun. ...obstacles for my kids. Cajun

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