Tuesday, May 7, 2013

The Running Racket

They ran in the eerie quiet of Christmas morning, through Van Cortland Park in the Bronx, the authorities in hot pursuit. But it wasn’t what these fugitives were running toward that was so notable. It was what they were escaping. Namely, the skyrocketing entry fees for the New York Marathon.
“It’s a stick-up, that’s what it is,” says Michael Arnstein, a 35-year-old Manhattan e-commerce entrepreneur. He’s a top competitor in 12-hour, 100-mile ultramarathons, and finished 29th in New York in 2011, but says the prices have gotten so high that he’s retiring from most organized events. “They’re just gouging everyone.” As an alternative, he helped launch a series of underground competitions in the Bronx to help recapture the purity of competitive running, but those drew the unwanted attention of authorities, who came bearing demands for permits and insurance.
Arnstein is just one in a growing pack of hardcore runners fed up with spiraling fees for road races that were started largely as fundraisers for local high-school track teams but have now attracted global conglomerates such as Disney, venture-capital investors, multimillion-dollar IPOs, Ticketmaster-style commissions, and cash-strapped cities with their hands out for a cut.
The average entry fee for the top 25 U.S. marathons has gone up 35 percent since 2007, to $112—three and a half times faster than inflation—according to the industry association RunningUSA. For the top 25 half marathons, which have become hugely popular, the average price has more than doubled, to $94. And while (today’s) Boston Marathon cost a comparatively cheap $150, the New York Marathon rose from $80 in 2004 to $255 last year, a 219 percent increase. This year’s price has not been set.
That marathon blames higher charges from the police and other municipal departments for services the city used to provide for free. But the main reason prices are rising so quickly is that the number of runners is rising even faster.
Running “has become a victim of its own success,” says Larry DeGaris, director of the sports marketing program at the University of Indianapolis. “It’s a community movement that’s grown into a business.”
The number of marathon finishers broke half a million last year, up 47 percent since just 2000, RunningUSA says. The number of half-marathon finishers more than tripled, to 1.6 million. In all, 14 million runners finished road races last year, three times as many as 20 years ago. Some events now fill to capacity in minutes.
Numbers like those have drawn investors who see vast profits in a sport once dominated by nonprofit organizations like New York Road Runners, which organizes the New York Marathon, and Boston Marathon parent the Boston Athletic Association.
The new behemoth of the industry is the San Diego-based Competitor Group, assembled by one private-equity firm and sold in November to another, which buys up poorly attended races and turns them into destination runs—it calls them “participatory event assets”—including the Rock ‘n’ Roll Marathon series, the TriRock Triathlon Series, and the Muddy Buddy Series, which together Competitor says attracted 600,000 entrants last year at up to $175 apiece.
Runners also have to pay growing commissions to middlemen like the Active Network, which, Ticketmaster-style, charges an average “technology fee” of $3.01 per online registration. Fresh off a $113 million initial public offering, Active last year made $257.8 million from various registration fees alone, company documents show, and expects the market to only grow. (So lucrative is this end of the industry that Competitor Group has now bought up its own online-registration company, RaceIt.)
“It’s just big business for everyone involved,” says Michael Oliva, a New York runner. “They basically extort people for as much as much money as they can get.”
Even Disney is getting in on this action. It now organizes one marathon, five half marathons, a 10-miler, and two 10Ks, with marathon and half-marathon entry fees of up to $190, or $380 to run both events in one weekend that, this year, attracted 60,000 people. The pasta dinner costs an extra $47.50, a commemorative pin $14.93, and watching from a VIP viewing area, up to $165. While Disney hasn’t yet announced next year’s prices for all of its marathon add-ons, it has previously charged another $105 for pre- and post-race amenities, $10 for a 10-minute massage, and $59 for a “finisher basket”—all before the cost of traveling to, and staying at, a theme park.
“When I look at the prices, it kind of appalls me,” says Rick Nealis, a runner and former Marine and director of the Marine Corps Marathon in Washington, whose entry fee he makes a point of pride of keeping under $100. (It’s $99 this year.) “I’ve got to believe that eventually people are going to say, enough is enough.”
That was the reason Arnstein and some friends organized their holiday marathons in Van Cortland Park. But they were shut down last year by the Parks Department, which said the group would have to sign a contract, get a sheaf of permits, and pay for access to the paths. “We just wanted to put on races for the local community in a public park,” Arnstein says. “And the city government said, ‘You can’t do this any more, because we want a cut.’”
They remain undaunted. Using social media, some runners have started gathering their friends for underground road races at random times and places.
“There will always be people who can pay to play,” says Jeffrey Lin, a runner and medical student. “They think the fees suck, but they’re still going to do it. Then there are a lot of us who are, like, we don’t have to do those races any more. We can put on our own.”

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