I have done nothing but praise Andrew Messick’s leadership of his business.
I applaud his maneuvers for his owners in using legal techniques to pay over the top dividends to his shareholders. I disagree that within his business, pros don’t effect his bottom line.
I believe proper use of the pros will see the sport grow 4 fold in revenues. We disagree here.
That is his CEO opinion against mine. We agree to disagree, and we did so very cordially in a face to face meeting. Yes we have met, and yes I did like him.
My argument is simple and it’s not for the pros, just good business. With a world class pro circuit they will attract the blue chip sponsors.
Here is my view: Any business worth supporting spends at least 10% of gross revenues on marketing. That same business spends between 10 and 15% on research and development. WTC spend a pittance on advertising. WTC spend none on r & d. Zero. Development can and does mean business development. They don’t need to research much, I give you that.
Lets once again play low ball, and say that general turnover from all areas is $500 million – although people it has to be much more to secure a 1/4 billion loan as there is no real infrastructure. So the deal has been granted on the back of existing cash flows.
So lets say it’s not a sport. Lets say it’s another business.
10% of the $500 million is $50 million to be spent on business development to increase the revenue and value of the business. This is normal practice.
This 10% spent in the pro race series ($50 million) would put it, if well thought out, on the same level of most individual sports, except for the majors in golf or tennis.
Most don’t realise the massive money in these sports purses are in the majors, and oil fueled promotions. The rank and file tournaments are not huge, and their satellite tours are suffering the same problem as triathlon. Playing a tournament with a 132 in it with total prizemoney of 10,000. I kid you not. The difference though is the depth.
So I see no reason why the business doesn’t invest in development. I don’t see why the equity company doesn’t insist it does.
If Mr Messick continues to carry his misguided thought, that a strong pro series would not help his business grow, then and only then would I question his judgment of how he is running this business.
I would suggest, he at present is standing too close to the cool aid fountain, where all the ex old athletes are hanging out, and listening to their small minded thoughts on the sport.
The sport would be better off completely if the CEO really did run it 100% as a business. With a $50 million pro circuit, he would have a one billion dollar business.
How would I do it if asked? Well as one athlete put it, ‘your ideas are too shallow’. Of course the genius doesn’t know any of my ideas, but lets keep this simple and shallow for everyone.
A world ranking top 100 men and top 100 women would receive a minimum wage, say $50k. For that they must race 10 times in the year. That is $10 million allocated.
Then a minimum $30 million goes into prize money, at minimum. I’d break this prize money down as follows:
* 4 races. * Each with $5 million purse. * One race each in the USA, Europe, Asia Pacific region, Americas.
* Then have $5 million for the normal world circuit with 10 great paying races.
* Then have $5 million for a satellite circuit. This being a pure development race circuit. Either 25 races with $200k per race, or 50 races with $100k per race. This circuit would be for the development of those that are not yet good enough to do the first 2 circuits.
Yes very shallow. Yes very simplistic. Ladies and gentlemen, it is not rocket science. It is just good plain business logic. It would make this a billion dollar sport. That is my position.
Cheers The doc
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