When Frankie Ruiz designed the course for the inaugural Miami Marathon in 2003, he knew the picturesque route — over causeways, under tree canopies, along the ocean and bay — would be a selling point for the race. But he never envisioned just how successful the race he co-founded would become.
Last month, Life Time Fitness Inc., a billion-dollar publicly traded company, bought the Miami Marathon and a host of other races throughout the country from US Road Sports and Entertainment Group. The purchase price has not been disclosed.
“It makes me humbly proud that something I helped create has attracted a big company to the Miami market,” said Ruiz, who will stay on as the event’s chief running officer. “People think of Miami in terms of real estate and tourism, but not necessarily from a business investment standpoint. This shows that outdoor events, major fitness events, have turned a corner in Miami. They are sustainable businesses.”
A sellout pack of 25,000 runners will participate in Sunday’s 12th annual Life Time Miami Marathon and Half Marathon.
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The event has changed names and title sponsors over the years, from the Toyota Prius Miami Tropical Marathon (2003-’05) to the ING Miami Marathon and Half Marathon (2006-’13).
This year marks a double milestone for the Miami Marathon: It’s the first time the event has been owned by a publicly held company, and it’s the first time a South Florida marathon has survived for 12 consecutive years. Previous incarnations, including the Miamithon, the Orange Bowl Marathon and the Metro-Dade Marathon, fizzled out due to a lack of revenue.
“Our model was always to avoid the financial issues that troubled prior events,” Ruiz said. “The OB and Metro-Dade marathons depended too heavily on municipal support. We wanted to make sure our event had a fiscally responsible balance between sponsorship and entry fees and other funding. The last thing we wanted was to be begging the commissioners for money every year.”
Begging likely isn’t on the minds of Life Time Fitness’ executives. The Minnesota-based company operates 109 fitness clubs around the country, including one in Boca Raton, with about 1.5 million dues-paying members. Life Time also produces more than 100 running, cycling and endurance events. It reported 2012 revenues of $1.13 billion, an 11 percent increase from the previous year.
Life Time, taglined “The Healthy Way of Life Company,” opened its first fitness club in 1992. By 2002, it had begun to branch out to competitive outdoor races, mostly near Minneapolis, said Kimo Seymour, the company’s vice president of events. Seeing the profitability of such events, Life Time has taken “a more aggressive” approach to acquiring races in recent years, he added.
“Our larger growth strategy is to be more than a company with big boxes where people go to work out then go home,” Seymour said. “We provide avenues for people to engage in a healthy way of living, and outdoor events are part of that.”
The company paid $70.3 million in 2011 to buy several athletic events and businesses across the country. It also acquired businesses that handle race registration and timing. Life Time made $35.7 million in revenue in 2012 from races and similar events, more than twice the $12.4 million it made from such events in 2011, according to the company’s most recent annual report.
It’s unclear exactly how much revenue the Miami Marathon will add to Life Time’s coffers. The break-even point is somewhere around $2 million, which is about how much Ruiz said it costs to put on a race the size of the Miami Marathon. That includes paying the 200 staff members and 400 police officers who work the event along with about 2,500 volunteers.
A big chunk of marathon costs is usually offset by sponsors, including the title sponsor. Although the price for Miami’s naming rights have not been disclosed, those rights would typically cost “in the low six figures,” according to William Chipps, senior editor of IEG Sponsorship Report.
Financial-services firm ING dropped its title sponsorship of the Miami Marathon last year after an eight-year run. Life Time is considering a number of offers from potential title sponsors for next year’s race, Seymour said.
As marathons increase in popularity — about 500 timed U.S. marathons attracted more than 500,000 participants last year, according to several running organizations — so do their economic impact and marketability.
Jeremy Jordan, an associate professor and director of the Sport Industry Research Center at Temple University, has researched the Miami Marathon since 2006, when he taught sports administration at the University of Miami.
Marathon organizers commission Jordan’s team to compile an annual look at the event’s economic contributions. He estimated that last year’s marathon added about $54 million to Miami-Dade County’s economy through hotel stays, restaurant meals, shopping and more. Jordan said that number, which has grown steadily since he began analyzing the event, reflects the affluence of marathon participants.
“What makes these events valuable to big companies and corporate sponsors is that they attract a highly desirable demographic,” Jordan said. “Most of the participants you see at marathons are fairly affluent, educated, between the ages of 25 and 45. That represents a huge opportunity to capture a target market for products or services.”
Seymour agreed, saying that Life Time caters to “higher-end” consumers.
“Our brand strives to deliver a Whole Foods, Lexus, Neiman Marcus-type experience,” Seymour said. “What sets our events apart is that we deliver a premium-quality experience.”
Life Time achieves that by paying for nicer race T-shirts, more portable toilets and a larger police presence and other expenditures. He added that Life Time’s upgrades to Miami’s race will be minimal thanks to the “phenomenal event” that Ruiz and race director Javi Sanchez have developed.
“The first year or two after we acquire an event, we see its revenues rise and the bottom line shrink. We call that the Life Time Effect,” Seymour said. “Eventually it pays off, because more people want to come to your race if it’s a quality experience.”
More people than ever will take part in this marathon weekend, which includes Saturday’s Tropical 5K and a health and fitness expo in Miami Beach.
Fewer than 5,000 people turned out for the first Miami Marathon and Half Marathon in 2003, each paying an entry fee between $60 and $90. The number of runners swelled past 11,000 in 2008. This year, 25,000 participants paid between $100 and $140 to run.
“When you consider the growing numbers of events and participants each year, coupled with the increasing registration fees, all signs point to marathons being quite a profitable business,” Jordan said.
One thing has decreased over the years: the prize pool. Runners competed for scoops of a $50,000 pot in 2003, including $10,000 each for fastest man and woman. This year’s two top winners will each get $2,000; the total pool is $15,000.
Most of Sunday’s runners won’t be racing for money, but they will be spending it. Jordan noted that nearly 70 percent of Miami Marathon participants come from outside Miami-Dade, from all 50 states and about 80 countries. That makes the event all the more attractive to a national brand like Life Time, as well as to local businesses.
“Because Miami is such an international destination, we’ve found that people coming to the marathon tend to stay longer and spend more money than they do in other cities,” Jordan said. “The economic impact of the Miami Marathon is definitely greater than of other events its size.”
That’s happy news to the Greater Miami Convention & Visitors Bureau, which counts the Miami Marathon as a major destination event, on par with Art Basel and the South Beach Wine and Food Festival.
“From a tourism and marketing perspective, the Miami Marathon is another great pillar of our calendar,” said Rolando Aedo, the bureau’s chief marketing officer. “To have a homegrown event like this grow to the stature it has — a world-class, global event — is something we’re all very proud of and happy to see.”