Race to the bottom?

It is a sad day when any business is forced to close.

People are affected, staff, families of staff, people who relied on the business for their income are affected. So to are the creditors of the business, people who are owed money for services, or maybe are owed product or service for which they have prepaid.

It’s a messy situation no matter how you look at it.

Yesterday one of Ireland’s up and coming businesses was forced into receivership. Precision Timing stopped trading. They are a chip timing business which is also involved in race entry and results publishing. It is a local business, started in 2007 in Co. Clare and servicing many, many races over the years that it has been trading. But that is over now.

Why?

Well it is impossible to know without an inside line but nothing gets in the way of “conjecture” or “educated guesses”.

Speaking to Race Directors over the past number of years, as Precision Timing became more involved in smaller local races, it has become apparent that PT were providing the cheapest option for chip timing at events.

Cheapest =/= profitable, remember.

The pressure on races to have official timing and chip timing regardless of size has been a growing phenomenon as running has exploded around the country. There used to be a guideline cut off of 2-300 entries before chip timing could be a feature of an event – it has to be feasible for the event AND the business to make a profit.

When you see small local events promoting chip timing you know the critical mass is not there and someone is going to be at a loss. It won’t be the event (in the short-term), so the timing company is losing money which has to be addressed somewhere else.

How?

You take a proportion of the entry money to make up the balance. This you achieve by having a web portal for race registration.

Clever!

You get 5-7% of the entry fee other sites charge this so you are seen to be competitive with them, you are doing the chip timing and can have the results up on the net pretty much instantaneously (another expectation from entrants) so it is a WIN, WIN for all involved. Less work for the RD, you are taking care of it, entrants are happy, they get chip times & results by text and hopefully you make a few bob out of the deal, or at least roll over costs to live for the next event that delivers the right number of entrants.

Oh, yeah that is the big thing to consider. RD’s plan for x500 entrants, participants were promised chip timing etc but only x250 turn up. Who loses there? Yep the chip timing company, paid per chip. Your turnover is halved but your costs are the same.

With the entry portal you are adding a string to your bow though. You can now use this as a promotion tool to reel in races. “RD’s by going with us you have 10,000 runners that can be targeted with email updates about your race”, traffic to the website means you can sell advertising space but at the end of the day how much money can that make? Not enough if you are hemorrhaging money in the costs of day-to-day driving around the country and overnight stays.

It all goes pear-shaped when the money train stops.

End of a season, busy by all accounts, but suddenly the costs catch up with the income and it is all over, overnight in many cases. High cost, high turnover, no profit does not make a sustainable business model.

Unfortunately, many clubs mostly athletic clubs (Triathlon and cycling clubs use their governing body portals mostly) are going to get burned for entry funds which are tied up in receivership or which are long spent in shoring up the business. Charity events are not going to get their money either.

Who’s to blame?

Bankers! Possibly but not really. Maybe we are all partially to blame. silly expectations of chip timing at all events? Looking for cheaper and cheaper races but still want the bells and whistles?

At the end of the day a man was trying his best to make a business work for him and his dependents, it is easy to get caught in growing a business but missing the important bit. They say the best entrepreneurs don’t make the best business managers, this is true as the skills to grow a business don’t always match up with the skills to manage a business.

It’s a sad day and I wish the PT guys all the best for the future and I hope that everyone (clubs, events and participants) come out of this process without too much damage and we all become a little more realistic about the races and costs behind them.

Like it or leave it, please let me know what your views are.

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