Life Time Fitness Finds Dollar Signs In Finish Lines
Major foot races have historically contributed to charitable causes, rather than companies’ coffers. Consider the iconic Boston Marathon, run by a nonprofit since its 1897 inception. But Life Time Fitness, known for its more than 100 health clubs, has assembled a sizable portfolio of racing events, which it hopes will not only propel its brand but bolster profits.
In January, the Chanhassen-based company acquired 15 races from Texas-based US Road Sports & Entertainment Group for an undisclosed sum. The races include full and half-marathons in Florida, Georgia, Utah and New Jersey, among other markets.
The package added to an existing roster of 60 events, about a dozen of which are held in the Twin Cities. They attract more than 220,000 participants annually and range from the casual, like Turkey Day 5Ks, to the seriously strenuous, including triathlon and endurance mountain-biking series.
Staff at six offices produce the events, which present opportunities for member acquisition and retention, vice president of athletic events Kimo Seymour says; just one in 10 event participants belongs to a Life Time club. The bulk of revenue comes from registration fees, the rest through sponsorships and merchandise sales.
Life Time’s ancillary businesses—comprising racing and media properties such as Experience Life magazine—generated roughly $50 million, or 4 percent of total revenue for 2013, and Seymour says the division is growing at a 20 to 30 percent year-over-year rate.
The company expects races to turn a profit in 2014, although it declined to specify how lucrative they are or break out racing revenue. Regulatory filings suggest associated expenses are on the rise, although Seymour says the new races “will allow us to achieve economies of scale with the overhead we have in place,” adding that Life Time is “always looking at good opportunities” for additional acquisitions.
The uptick in for-profit races bodes well, says Virginia Brophy Achman, executive director of Twin Cities in Motion, the nonprofit that oversees the Medtronic Twin Cities Marathon. Twin Cities in Motion brought in an estimated $172,000 in net income for the latest fiscal year, representing about 4.5 percent of revenue. Earnings fund after-school and scholarship programs, among other philanthropic efforts.