Tips from Dave McGillivray

WHO OWNS AN EVENT?

(Updated June 17, 2024)

There was a time when I thought a road race could never be sold.   Who would buy it and what exactly would the buyer be buying anyway?   Today, however, races are now being bought and sold left and right.   Boy, did I miss the bus on that one…well, maybe and maybe not.

The more appropriate question might be, who actually owns an event and can it truly be owned the way a piece of real estate can be or a private business can be owned?   And, what about a non-profit event?  I’m not an attorney so I really don’t know the answer to this question.   However, even if one lays claim to owning an event what, in fact, does one truly own?  And who does the liability of the event rest with?  If there are claims against the event or money owed from the event, who is responsible for all of that?

The easy answers would be that one could own the trademarks or registered marks of the event, that is, the name and the logo.  Additionally, one could own the database of past entrants of the event and other intellectual, race related property.   OK, now what else??   Maybe you are buying some goodwill and perhaps a covenant by the former owner not to compete.  Maybe there are other tangible assets (equipment, supplies, etc.) but generally speaking there really isn’t a lot more you can own that someone else couldn’t easily just bring to the table themselves.

So, maybe the more important question should be, who controls or authorizes whether an event can or cannot take place?   Most events are conducted on city or town property.   We all have to get “permission” in the way of permits to conduct our events.   If we don’t get permission, we don’t have an event…so, what do you then end up owning…maybe not that much in reality.

I once helped out with a triathlon on Cape Cod.  The race had a race director and had a longtime sponsor.   After a few years of working together, they decided to “split” up.   However, both still wanted to put the race on so both individually went into the town office and applied for permission to conduct the event.   However, neither could actually prove that they owned the event.    The Board of Selectmen wanted no part of deciding whose race it was so they asked both of them to leave and resolve this on their own with only one of them coming back in with the request or risk having the event be cancelled entirely.    They resolved the conflict between each other and a permit was eventually granted.  I believe the sponsor simply “paid off” the race director and took control of the event from that point on.   Interestingly, that event does not even exist anymore.

A few years ago, I attended a Road Race Management conference.   There were about 100 race directors in the audience.   One of them asked me, “so, how do I determine what my race is worth?”   In response, I fired two questions back, “has anyone ever purchased a race before?”   Not one hand went up.   “Has anyone ever sold a race before?”   Again, not one hand went up, where upon I responded to the original question of what a race was worth – “well, if no one is willing to buy it, I suppose it not worth much of anything is it?”

However, the road race landscape has changed since then.  Prior to the 2020 pandemic, sponsorship and participation were at an all-time high.  And now, a case can be made that the business is finally “recovering” from the pandemic and some will say we are totally back to “normal.”  The fact of the matter is that the stakes are much, much greater today than they were say 20 years ago.   Venture capital and private equity money has been pumped into the industry.   Whether this is a good thing or not remains to be seen.

Personally, I’m not sure I would ever buy an event.   If I want to direct another race, I can just create it myself.  What if I bought it and then the permitting authorities told me I couldn’t have permission to conduct it?  Now I have nothing.  When I first started my event management business, a case can be made that I own everything I managed because I created it all.  After about fifteen years of this structure, I decided I did not want to own any event and continue to take on the responsibility of the entire event (marketing, communications, participant recruitment along with all the operations).   I decided just to work on events that we were hired to manage operationally but did not “own”.  We were guaranteed a management fee. That seemed like a much less risky approach.

In some cases, the events we were hired to manage were eventually sold by the owner.  As such, either we were let go as we were no longer needed or we were kept on for a transition year or two.   On five different occasions, the events we used to manage were discontinued because the new owner could not increase the field size enough to cover their higher overhead.  So, maybe the original owner made out like a bandit, but this was certainly not a good move by the buyer nor was it good for the running industry at large since runners liked to participate in those races and now they were gone.   Some investors and private equity firms think there is a lot of money to be made in this industry but they eventually find out that this is either not the case or they learned that the amount of work needed to invest in the event to make that happen doesn’t justify the return.

I used to be able to accurately predict what the next year or two might look like in our industry.   Now, it’s next to impossible so I’m taking the less risky route of not owning events and not gambling on striking it rich any day soon.

The point in all this is that getting permission to conduct your event from year to year is just as important or even more important than actually owning the event.  Having a good relationship with the permitting authorities and agencies is paramount.  If you are thinking of acquiring an event, it would be prudent to first be sure you can secure the permit to conduct it for years to come.

Dave McGillivray

DMSE Sports, Inc.