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Friday, Apr 12, 2024

Still In It to Win

Competitor Group is used to bringing like-minded companies together. It has acquired 17 companies in the endurance sports space during its five-year history.

The business is also used to expanding its franchises quickly. In 2013, its Rock ’n’ Roll Marathon series will reach 32 cities, including six in Europe. That’s up from five races in 2007, when Competitor bought race organizer Elite Racing Inc.

So acquisitions and organic growth are par for the course.

It’s a rare day at the company, however, when one private owner hands it off to another.

That happened at the end of 2012, when New York-based Falconhead Capital LLC sold the business to Calera Capital for undisclosed terms. Falconhead said simply that the investment “generated a very attractive return.”

Calera, which was formerly known as Fremont Partners, has offices in San Francisco and Boston, and $2.8 billion of capital under management.

Competitor Group, in short, is a special interest media and event company focused on running, cycling and triathlons. It publishes a number of traditional and digital titles, produces “hyperlocal grassroots events,” in the words of CEO Scott Dickey, and offers an event registration system.

It’s in a popular space.

Dickey says Competitor Group has experienced a compound annual growth rate “north of 25 percent,” with most of the growth being organic.

“We’ve had a nice run over the last five years,” said Dickey, who retains a stake along with Steve Gintowt, the business’s chief operating officer and chief financial officer.

It was in late 2007 and early 2008 that Peter Englehart and David Moross put together a core of companies including Elite Racing, Competitor Publishing, Triathlete Magazine and Inside Communications. The first three were based in San Diego. Inside Communications was, and remains, in Colorado.

Dickey said Falconhead took a risk to establish a presence in “a highly fragmented industry that was experiencing tremendous growth.” There was no real market leader with reach and scale in the endurance sport industry, he said.

Today, Competitor Group has five print publications — Competitor, Inside Triathlon, Triathlete, Velo and Women’s Running — and a stable of websites. It produces 83 events, including the Columbia Muddy Buddy series and the TriRock Triathlon series.

Those businesses are more tightly bound together than they appear.

Samir Husni, a journalism professor who runs the Magazine Innovation Center at the University of Mississippi, said that magazines can work as springboards for other businesses, such as events. A magazine can serve as a cornerstone for building a conference, he said, adding that a publication on a coffee table can serve as a tangible, constant reminder of an event.

Specialty magazines are also able to deliver certain demographics to advertisers, said Dean Nelson, director of Point Loma Nazarene University’s journalism program. “Advertisers want to be able to target specific kinds of groups,” he said. “The clearer your market definition, the better you’ll do.”

Competitor Group touts its audience as educated, young and affluent, claiming that it reaches households with an average income of $102,000. It’s an upscale group able to buy expensive products, Nelson said: “Advertisers kind of drool over that group.”

Helping the business, Dickey said, is what he calls “‘The Biggest Loser’ phenomenon” — a heightened interest among individuals and employers regarding health and nutrition, which is reaching inward from the coasts to the heartland.

The company’s most recent additions include Women’s Running magazine, acquired in May. The firm bought Virginia-based RaceIt.com, an online event registration service, in 2011. RaceIt will process more than 3 million registrations this year in more than 5,000 events, Dickey said.

RaceIt competes with another San Diego-based event registration company, Active Network Inc.

Competitor was previously a big client of Active Network. “We got to a certain scale and size where it made sense for us to control the dialogue with the consumer on the front end of that decision tree … the decision-making process of committing themselves to an event. It made sense for us to control that relationship on the front end ourselves,” Dickey said. “And that’s when we sought to acquire an existing competitor or technology in the marketplace that we felt could suit our needs.

“We’re still a client of Active internationally,” Dickey said.

Active Network, which went public in May 2011, reported $325.2 million in revenue for the first three quarters of 2012, up 24 percent from the same period one year ago.

Competitor Group occupies 56,000 square feet of space in a building off Mira Mesa Boulevard, and its local workforce numbers 185 people. (It has 245 employees in total.) The local space includes editorial offices, a digital television studio and a warehouse with all the gear needed to throw a Rock ’n’ Roll Marathon. According to company spokesman Dan Cruz, Competitor Group ships Rock ’n’ Roll Marathon necessities by the truckload. It shows up with seven to nine big rigs full of gear, including tables, tents, signage, merchandise, medals and Gatorade.

Dickey maintains Competitor Group thrived in spite of the recession by fueling people’s passions.

“In times of recession and people reducing discretionary spending, I think these passion points are the last things to leave the household budget,” he said. “Kids are always first, but then you’re always going to have your one little thing that’s yours, that helps you get up in the morning, and I think we’ve benefited from that.

“I would never say that we’re recession proof, because advertising and corporate sponsorship and marketing dollars are always impacted by downturns in the economy. But in terms of true consumer spending, discretionary spending, we didn’t necessarily feel the recession.”

Asked whether there is still money to be made in publishing, Dickey said yes.

“The publishing business is interesting,” he said. “I find it really fascinating that Papa Doug Manchester is investing in newspapers because he believes in the long-term value of that channel of distribution. And I would argue that he’s spot on. …

Specialty Publications

“Clearly mass media or mass distribution of magazines is not a great place to be, versus the heyday of maybe five to 15 years ago. But that doesn’t mean that those business units and business dynamics aren’t incredibly attractive still. Especially when you look at vertical interest,” Dickey continued, referring to specialty publications.

Calera invested in Competitor Group as part of its fourth fund. The private equity firm maintains a portfolio that also includes business services, building products, consumer and retail, financial services, health care and industrial manufacturing.

When Calera Capital bought the company, it announced that Competitor Group could make more strategic acquisitions.

The business certainly has the resources to make purchases, Dickey said. However, he said that Competitor Group will likely work on organic growth in the year ahead.

One project is the “Back to Football 5K” run series. In 2012, Competitor Group piloted it with four teams, the New Orleans Saints, the St. Louis Rams, the Tennessee Titans and the San Diego Chargers. The local event climaxed with a run through the tunnel into Qualcomm Stadium and a sprint across the playing field. The 50-yard line was the finish line.

For the 2013 season, Competitor Group is lining up events with 16 NFL teams. Dickey said the company hopes to roll out the series to the entire league in 2014.

“I think if you focus in on what people are really passionate about,” Dickey said, “there are lots of ways to monetize that relationship — and to benefit, mutually benefit.”


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