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Jeff Matlow
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April 01, 2020

COVID-19: From the Annals of an Industry on the Ropes (aka The Day The Revenue Stopped)

I wrote a piece last week about the financial impact of the COVID-19 crisis on the endurance business. Since then, things have changed dramatically.

Mostly for the worse.

 

The Day The Revenue Stopped

Not but three weeks ago, endurance events happened. Less than twenty days later and we are locked in our homes, offices have turned remote, retail businesses have closed down, Amazon Prime shipping takes much longer than we're used to and the fear of all things holy is put in our mind if we even so much as think of taking a breath within 6 feet of another human being.

Every endurance event in March and April has been cancelled or postponed. Most of the May calendar is currently being decimated and the June events have begun to collapse as well.

When we look at the 80 day period between March 12 and May 31, here's what it appears has already happened in the United States:falling revenue

~5,300 endurance events cancelled or postponed
~2,300,000 athletes impacted
~$135m lost in registration dollars

Keep in mind, this all went down over the past 2-3 weeks and it doesn’t include the May events that have yet to be canceled or postponed.

15% of our industry has disappeared in just a couple of weeks. Poof. Gone.

March 15, 2020 is the day the revenue stopped in endurance sports.

 

Summer Events are Toast

The Mayor of Los Angeles recently announced that we will have a Stay-at-Home order through the end of May. Most likely longer. I'm guessing the rest of the country will follow suit. That means we can say buh-bye to the June events and probably the July races too.

Remember how the 4th of July was one of the most popular running days of the year? Not in 2020

calendar crossed out

Even if we are back on the streets, odds are that the fear of crowds will still keep numbers dramatically low. The sensationalist media will probably help proliferate the fear. That’s what they do.

At least we still have Thanksgiving, right?

 

Cash is King

We are only two weeks into the lock down stage of this crisis and we're not at our peak.

The government’s Phase 3 CARES Act may help some companies bridge the gap, but not everybody. And some endurance sports companies have begun to shut their doors for good.

In times like this, the goal remains the same for every company: hold on to your cash and do whatever you can to ride it out.

Just like in 2008, the companies that survive this crisis will be much stronger because of it.

 

A Calico Cast Study

I heard from Joyce at Calico Racing recently. Joyce puts on 10 races in Nevada. Joyce has been building Calico for 14 years. It is her full time job. She is a one-person show and works from home, so it takes up much of her life. The money generated from the Calico events is the money that helps her survive. calico logo

Like everybody else in this industry, all revenue stopped for her on March 15th.

She makes absolutely no money to survive right now. She's already canceled 2 of her races, and no revenue is coming in for her summer, fall, and winter races.

Understandably, participants are waiting to register until they see how dystopian our future will become.

That, in itself, brings up more problems. How the heck can Joyce properly forecast shirts, medals and all other similar race needs without having any sense of registration cadence - or even if there's going to be any more events this year.

What does she do?

The recently passed Phase 3 Stimulus Package CARES Act does little to nothing for home-based one-person entities like Joyce, as they are ineligible for most of the relief package. They can't even apply for unemployment so this graph here doesn't account for the self-employed.

Unemployment Claims

Joyce’s entire livelihood has been obliterated. She will survive, because that's what you do when you're an entrepreneur building a company for 14 years. But it won't be pretty.

Therein lies the problem... our fragmented industry is built on thousands of mom-and-pop companies. And mom-and-pop companies in the US are crumbling quickly right before our eyes.

 

Fragmentation Is So 2019

The historic fragmentation of the endurance industry does not help our most vulnerable. Our strength as an industry is how we value our weakest members in time of need.

So here we are. We now find ourselves in a situation where we have to work in harmony in order to survive. We have to put aside our petty differences about “your event date is too close to my event date so I don't like you”.

So far we've seen a disjointed approach towards getting help. But trust me when I say it's coming together in unity and focus. I see it happening.

I know many of you are getting restless, wondering who is going to help you and when. You're asking what you can do.

There is movement to create a unified message; a plea to Washington DC to help us. It's coming close. I will tell you when it's here because things are moving quickly.

I am hopeful.

I trust there will be a call-to-action for all of us soon. And believe me you, I will be yelling it from the mountain tops when it's ready.

It's almost time to rally. We can't let it all fall apart.

The shoes are on, they are being laced up... it's almost time to run.
Start stretching.

 

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