Entrepreneurs Race for the Prize

As Americans embrace running, marathons are becoming more complex—and more profitable. And that's spawning a new breed of startup

by Kerry Miller

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Oprah Winfrey's much-publicized finish at the 1994 Marine Corps Marathon helped jump-start the second running boom.

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The Rock 'N' Roll Marathon was the first to include live music along the course. Since then, entertainment has become a crucial element of many racing events.

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Back in the 1970s—the early days of marathons in the U.S.—directing a race often didn't mean much beyond setting your stopwatch. With a few notable exceptions (like Los Angeles and Chicago) most were managed by local not-for-profit running clubs or athletic associations.

In recent years, however, as long-distance running has grown in popularity, racing events have grown more complex—and more profitable. To say that times have changed would be an understatement.

Fueled by an infusion of corporate and municipal dollars, a typical marathon today can encompass an entire weekend of events, including a health and fitness expo, a carbo-loading dinner, three or more races (a marathon, half-marathon, a 5K, a kid's run, a walk), and a finish-line party.

The Oprah Touch

That has created a growing demand for professionals capable of overseeing these monster events, and has transformed race management—a career path that hardly existed 20 years ago—into a lucrative niche for small businesses. Once a cottage industry of former runners working as volunteers or consultants for hire, today's race director is now likely to be backed by a full-service sports-marketing firm capable of building profitable events from the ground up.

Ryan Lamppa of the national non-profit group Running USA credits Oprah Winfrey's much-publicized finish at the 1994 Marine Corps Marathon with jump-starting the country's second running boom, propelling marathons solidly into the mainstream. (They got their first start in 1972, when U.S. marathoner Frank Shorter won the gold at the Munich Olympics.)

Another major factor was the runaway success of fundraisers like the American Cancer Society's Relay for Life and the Komen Foundation's Race for the Cure, which helped transform long-distance races from relatively solitary, Spartan affairs into celebratory social events in which anyone could participate (see BusinessWeek.com, 9/19/05, "Sweating for Dollars").

Running After Profits

Compared to golf and tennis, running has always been a tough sell to big-name sponsors, even though, as a demographic, runners share many of the same characteristics as golf or tennis players. Overall, they're affluent, highly-educated, decision-makers. The reason? Because the sport doesn't have any marketable (read: American) stars, it's difficult to get decent TV coverage.

But even without a "Tiger Woods of running," the charity race bonanza of the late '90s showed that the marathon is actually a marketer's dream: capable of generating awareness for sponsoring brands and cash for charitable causes, host cities, and the race-management pros themselves while promoting a healthful, family-friendly sport. Everybody wins.

The turning point came when entrepreneurs realized that same win-win formula could be tweaked into a profitable business model. An entire marathon could be designed to showcase a city's redeveloped tourism district or a company's new product launch—or both—without harming the event's grassroots, feel-good spirit.

The key to the events' newfound profitability? Pledge programs, which race organizers use to outsource the fundraising component of a race to the runners themselves, allowing charities to make money without cutting into the revenue from sponsorships or registration fees. And charities aren't making off with just small change: The Leukemia & Lymphoma Society's Team in Training program has raised $750 million since its inception in 1988.

Rock 'n' Roll Marathon

Meanwhile, the charitable component makes a marathon more attractive to other corporate sponsors, and city officials and the media are happy to lend their support in the name of a good cause and civic pride. It even cuts down on labor costs, since organizers can rely heavily on volunteers for race-day operations, while the pledge program doubles as a built-in viral marketing campaign.