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Buyer Beware: Lessons From the Malibu Triathlon Debacle

Photo Credit: Darren Wheeler – supertri

The nearly two-year long saga of who will run a triathlon event in Malibu, California has come to an end, with the Zuma Beach Foundation and its Zuma Beach Triathlon prevailing over supertri, the rights holders to the Malibu Triathlon name.

The Foundation is spearheaded by Michael Epstein, the founder and original race director for the Malibu Triathlon. Epstein sold the intellectual property and rights to the event in 2017 to Motiv. Those rights were later transferred to supertri. Following a challenging 2023 event, the City of Malibu created an Ad Hoc Road Race Committee to review race permits. Both supertri and Zuma Beach Foundation submitted proposals during the RFP process; Zuma Beach won that permit in 2024. Following a cancelled race for 2024, the RFP was re-opened.

And now we are here: the people who bought the race, and its history, have lost out. It begs the question: when you buy a race, what are you actually buying? That’s what we’ll look through today, for both race directors — and the athletes that are their customers.

Intellectual Property

This is the most obvious stuff you’re acquiring or transferring. It’s stuff like the race name, logos, maybe even the company name if you went and bought a whole series of races from someone. It’s the thing that is most recognizable to the general public. For example, supertri owns the name “Malibu Triathlon.” It’s why there’s an entirely new set of IP that Zuma has had to establish for their event later this year.

It also can be other tangible digital assets — a race website, for example. Customer data, like email lists or prior race registrant contact information, are also things that might transfer over to a new owner. On occasion those email addresses might be the most valuable asset, with some services able to fetch upwards of $1.00 per confirmed email address.

Notably, though, a race course itself isn’t one of the things that is copyrightable. It’s why the Zuma Beach Triathlon’s course, unsurprisingly, is much the same of that of the former Malibu Triathlon. But other items, like Athlete Guides or course maps, are indeed pieces of protectable intellectual property.

Equipment and Services

When you buy a race, you might also be picking up all of its “stuff:” traffic cones, bike racks, generators, pop-up tents, etc. Some of that stuff may shock you in terms of its expense these days; for example, a decent six gallon insulated cooler can run you more than $40 per if you procure them at retail. You could also wind up buying all of the leftovers from prior years, such as medals, shirts and other swag.

The big question mark is usually around timing equipment — some race directors have their own. Many others use a third-party service to provide that for them. For example, for all of the races Kelly and I have produced, we have relied on a third-party timer for all but one of them; we hand-timed our first year of our youth triathlon. (Never, ever doing that again.) But, be aware: timing systems are extremely, extremely expensive.

Non-Competes

When you acquire a business, you can have the seller sign a non-compete agreement. Agreements in this context are far friendlier to the buyer than, say, a non-compete or non-solicitation agreement in the context of an employment contract. Notably, even in the Federal Trade Commission’s recent push to ban most non-competes, a specific exemption remains for when a “noncompete clause is entered into by a person pursuant to a bona fide sale of a business entity, of the person’s ownership interest in a business entity, or of all or substantially all of a business entity’s operating assets.” 

So, for example, if you purchase a race from a race director, you can have language that would prohibit the former race director from setting up a similar event in the same town for a period of years. Or, in locations where race permits might be easier to come by, you may craft the agreement so that the former race director might be able to put on some other event at a different point in the year than the event that has been transferred.

There are limits to non-competes, of course. They need to be limited in scope and in duration. In the case of business sales, they need to be tied to an actual business transaction. What is particularly fascinating in the case in Malibu is that the race changed hands multiple times, from Epstein to Motiv to supertri; whether there was any type of non-compete in the original transaction, and whether Motiv’s rights to it would pass to supertri, is an unanswered question.

In Summary

Race directors (or others in our industry, for that matter) looking at potential acquisitions need to closely examine the set of assets that they are looking to acquire, as well as to protect themselves from activity by former owners in the space. Meanwhile, those looking at succession planning or selling their businesses should know that some of their assets, particularly their digital ones, may have significantly more value than they initially thought.

But it’s also a cautionary tale: athletes also signal what they value with their entry dollars — and that’s often comfort with the “brand” behind the events. When IRONMAN left Penticton in 2012, Challenge was never able to gain a foothold in the city that once hosted one of the most popular long-distance races in the world. There, it was a sizable disconnect between what someone thought they had, versus what was actually going on (it was IRONMAN and the city/course together that was valued, not one nor the other). The value proposition evaporated nearly overnight. Even a return by IRONMAN couldn’t resurrect the popularity of Penticton amongst athletes, and now that race is gone entirely.

That’s not likely to happen in Malibu, but the two-year-long saga around that race does provide some valuable lessons to those in the industry.

Tags:

Malibu TriathlonRace DirectorsupertriZuma Beach Triathlon

Notable Replies

  1. What were the challenges in 2023?

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