How Ironman helped Olympic Triathlon debuting in Sydney 2000

Lew Friedland, World Triathlon Corporation's 2nd president and involved in the acquisition of Ironman Hawaii from founder Valerie Silk for Dr. James P. Gills tells from the very early days. The 2016 Ironman Hall of Fame inductee shared some stories with Hallo of Famer Bob Babbitt about Ironman Lake Placid, Florida and Oceanside as well as how he helped get Triathlon into Olympics. He looked back to ongoing lawsuits with International Triathlon Union (ITU) and the then president Les McDonald, the involvement of IOC's Dick Pound, USOC's Peter Ueberroth and secret negotiations. A worthy way back then video on the history of the sport. While watching this interview, a reader should keep in mind, that Ironman was lobbying very hard at that time for inclusion into the Olympics (as well).

Transaction confirmed, Dalian Wanda Group acquires World TriathlonCorporation and Ironman for $650 million

As reported earlier, Tampa based World Triathlon Corporation, Inc. (WTC) confirmed acquisition by Dalian Wanda Group for $650 million from private equity company Providence Equity Partners (PEP) in August 2015. In this price tag, Ironman's debt of around $240 million isn't included. The consolidated price with pending assumed obligations is around the $890 million mark. [1, 2]

The 2015 acquisitions of Ironman and Infront Sports & Media properties have made Wanda Group one of the world’s largest and most comprehensive sports companies. Logo: Dalian Wanda Group

PEP bought Ironman for est. $85 million from former owner, Dr. James P. Gills in 2008. The Gills family paid $3 million to Valerie Silk in 1990. Business value increased around 764% since Providence invested in the company, valuation exploded around 21,666% from first transaction in 1990. PEP invested during their ownership around $216m into WTC, mostly for acquisitions of former independent franchisees with Ironman events around the globe. This would reduce the valuation to roughly 400%, exceeding PEP's minimum goal of 250%.

U.S. Navy Commander John Collins founded the race in 1978 to compare three already existing endurance races. Around 1979 Collins no longer wanted to direct the Ironman race and approached Nautilus Fitness Center owners Hank Grundman and Valerie Silk about taking over control of the race. Following personal circumstances in 1981 Silk received ownership of Ironman. [2]

Davis Noell, Managing Director at Providence Equity Partners, Andrew Messick, CEO of WTC comments on the deal, following lastest Dalian Wanda acquistions of Infront Sports & Media and Atletico Madrid. Surprisingly a Dalian Wanda Group spokesperson didn't released a statement in this press release:

Wanda Group Acquires IRONMAN for Equity Value Of $650 Million From Providence Equity Partners 

Dalian Wanda Group Co., Ltd. (“Wanda Group”), one of the leading Chinese private conglomerates, has reached an agreement to acquire 100% of IRONMAN for an equity value of approximately $650 million from Providence Equity Partners. As part of the transaction, Wanda Group will work with the current lending group and assume IRONMAN’s existing indebtedness. The acquisition by Wanda Group heralds yet another landmark investment in the sports sector following Infront Sports & Media and Atletico Madrid.

“Wanda Group’s acquisition of IRONMAN marks another exciting chapter and opportunity for the future growth of IRONMAN after seven very successful years of ownership by Providence Equity Partners,” said Andrew Messick, Chief Executive Officer for IRONMAN. “Wanda Group is a global-minded organization that shares our desire for excellence and continued growth, particularly in Asia. We are delighted to be part of the Wanda Group family of companies and are excited about the future of IRONMAN as we continue to provide life changing race experiences for athletes of all levels from their first step to the finish line.”

The iconic IRONMAN brand is the largest participation sports platform in the world. Its flagship races are IRONMAN® triathlons, which consists of a 3.9km (2.4 mile) swim, 180km (112 mile) bike and 42km (26.2 mile) run, and IRONMAN® 70.3® triathlons, which consist of a 1.9km (1.2 mile) swim, 90km (56 mile) bike, and 21.1km (13.1 mile) run. From its beginnings on the shores of Waikiki Beach on the island of O’ahu in Hawaii in 1978, IRONMAN has organized, promoted, and licensed triathlon events for 37 years, and owns five exclusive triathlon brands, operating at least 250 events every year around the world.

IRONMAN is expected to generate $183 million in revenue in 2015 and has increased revenue at a CAGR of 21% over the past four years. Due to its unique business model and proprietary intellectual property, the company is expected to deliver strong continued growth going forward.

The 2015 acquisitions of IRONMAN and Infront Sports & Media properties have made Wanda Group one of the world’s largest and most comprehensive sports companies. With these new businesses, Wanda Group now has sports sales, media & marketing, and operational capabilities on six continents with strong positions in North America, Europe, China, South Africa, Australia and New Zealand.

Davis Noell, Managing Director at Providence Equity Partners said, “We have thoroughly enjoyed our partnership with IRONMAN over the past seven years and are pleased with the company’s growth and operational excellence under Andrew’s leadership. We have great respect for Wanda Group and its leading global sports platform and believe IRONMAN is well positioned to continue its success with their support.”

Upd.: According to Slowtwitch all top management staff members are required to stay at WTC a 5 year term. [7]

Dalian Wanda required key employees to agree to 5-year employment agreements as a condition of the deal, and the office is not moving from Tampa, Florida. It seems to want stability and continuity. 

1. Dalian Wanda Group in talks to acquire World Triathlon Corporation and IRONMAN triathlon for USD 850 million
2. Ironman History
3. Dalian Wana Group
4. Providence Equity
5. IRONMAN
6. The New York Times: China's Dalian Wanda Buys Ironman Triathlon Brand for $650M
7. Ironman sold to Dalian Wanda
8. Ironman to be Acquired by China's Dalian Wanda

Number of the month: World Triathlon Corporation takes USD 220 million loan and pays out dividend to shareholders

World Triathlon Corporation (WTC) pays out a USD 220 million didvidend to its shareholdes Providence Equity Partners. The USS 220 million term loan is due for repayment in 2021 and a USD 20 million "revolver" (revolving credit facility) is due for repayment in 2019. Standard & Poor’s and Moody's analysts published their rating following the latest developments.

Fortune's analysis, based on Standard & Poor's rating is harsh, but sees some real company value anyway [1]:

The debt left World Triathlon highly leveraged and earned a “B” junk rating from Standard & Poor’s because of the company’s exposure if the economy sours. But the financing, which was oversubscribed, also reflects all the untapped potential Providence still sees in an investment it is likely to hang on to for a few more years. (An IPO is a less likely possibility given the small size of the company.)  

“It’s exciting. We’ve helped build Ironman into a global sports platform and there’s still lots of work to do,” said Davis Noell, a managing director at Providence Equity Partners and an Ironman board member. 

Ironman has one big advantage any corporation would dream of having while it ramps up: its ownership of the “Ironman” name, the result of years of defending its intellectual property. While anyone can put on a triathlon of the same distance, no one else can bestow on finishers the status of “Ironman,” a near mythical status for triathletes. 

Meanwhile Moody's Investors Service has assigned a B2 Corporate Family Rating (CFR) and B2-PD Probability of Default Rating (PDR) to WTC [2].

WTC's B2 CFR reflects its highly predictable and recurring revenue, strong brand loyalty and good free cash flow generation due to its minimal capital requirements. Moody's also expects WTC to benefit from the positive industry trend of higher participation rates in triathlon races as it expands by offering additional events around the world. These strengths are offset by the company's small scale, low margins, its narrow business focus, lack of tangible assets, reputation risks and high leverage from an aggressive financial policy reflected by the dividend recap.

WTC has experienced strong revenue growth over the past several years by introducing new IRONMAN races to additional locations around the world. IRONMAN races continue to experience strong demand , fueled by a higher rate of participation in triathlons globally. The IRONMAN brand is the most valuable aspect of the company and its strong following and high level of awareness, even amongst non-participants, allows WTC to successfully market and sell out many of its races well in advance of the event date. Additionally, due to the high level of brand awareness, Moody's believes that it would be extremely difficult to displace WTC from its current leading position the world of endurance triathlon.

Pro forma for the transaction Moody's expects the company to maintain moderate leverage going forward in the 4x to 5x Debt/EBITDA range(Moody's adjusted).. However given the company's low capital intensity, Moody's expects free cash flow will be over 10% of debt each year over the next several years.

In 2008, New York based private equity company Providence Equity Partners became the new owner of WTC and bought out forme owner Dr. James P. Gills. WTC was under the umbrella of the then created World Endurance Holdings. WTC made during the 6 years ownership some bold and strong acquisitions and is for sale for some time now. Latest aqcquired companies and races are:

• Auckland Marathon, largest road running event in New Zealand. May 2014
• Lifesport Properties, Subaru Western Triathlon Series. May 2014
• Tritlon Spain SL, Challenge Barcelona and Half Challenge Barcelona. April 2014.
• ChesapeakeMan, race acquisistion from The Columbia Triathlon Association. April 2014
• YWC Sports, races in Denmark like Copenhagen and Aarhus. June 2013.
• USM Events,  Australian triathlons in Cairns, Geelong, Mooloolaba, Noosa and Sydney World Triathlon Series. February 2012.
• North American Sports, U.S. Ironman races. 2009.
• Xdream Sports & Events, German Ironman races. 2009.
• Triangle Sports Promotion, Austrian, South African Ironman races. 2009
• BK Sportpromotion, Swiss Ironman races, 2009.
• etc.

[1]: Fortune.com/2014/06/25/iron-man-triathlon-private-equity/

[2]: Moodys.com/research/Moodys-assigns-B2-corporate-family-rating-to-World-Triathlon-Corporation--PR_302015