Negotiations to finalize a deal with the Challenge Family to bring their long-distance triathlon to Penticton should be complete within the month.
According to city manager Annette Antoniak, the city is in the final stages of sealing the deal with the Challenge Family, based on the binding letter of intent they negotiated last month.
“What we are finalizing now with the society is the licensing agreement, all the little operational details of putting on the race and how the Challenge Family does things,” said Antoniak, adding that while the course is the same, Challenge puts on a festival as well as having certain expectations for pro athletes and the prize money.
Since the change from Ironman to Challenge was announced last month, city representatives have been talking about how the new race was going to be of greater economic benefit to the region.
Antoniak said the city still isn’t able to release full details of the deal, but did say that Penticton will still be putting the same amount on the table in terms of in-kind donations, which includes items such as road closures and bleachers, and is estimated to cost about $105,000 for this year.
But another cost, a marketing fee imposed in 2009 by the World Triathlon Corporation, is definitely not going to be part of the deal.
“We will not have a marketing fee; that will no longer happen,” said Antoniak. “There is a licensing fee that was negotiated as part of the letter of intent, very reasonable, less than the marketing fee was, that will be paid for the by the new society.”
The licence to run a Challenge Family long-distance triathlon will be held by the newly formed Penticton Triathlon Race Society. Once the deal is final, Antoniak expects the society to hold a public meeting to discuss the changes.
“It is the full intent of the chair, Paul McCann, to have a public meeting,” she said. By then, Antoniak continued, the society’s structure should also be in place.
From the business side of operations, the major difference between the Challenge and the Ironman is that the community, in this case the race society, owns the race.
“The society will have control over the merchandising and the sponsorship, which never stayed here,” said Antoniak, explaining that in addition to the licensing fee, Challenge Family will also be collecting a small percentage of the registration.
Penticton Mayor Dan Ashton said their understanding was that almost all Ironman registration fees went into funding the race.
“It’s the merchandizing and the sponsorships that are the valuable commodity to somebody putting on a race, and that is now what the community, through the governing body, now owns,” said Ashton. “I think it is the intent of the society to engage local merchants and local suppliers.”
That means, he said, unique merchandise for Challenge Penticton, quite different from the way the World Triathlon Corporation handled Ironman merchandising.
“It’s always been kind of a cookie cutter,” said Ashton, explaining that he has been told that identical merchandise, barring a name change, is available at each of the Ironman events.
Ashton and Antoniak admit that this seems to be an awfully sweet deal for Penticton. The Challenge Family, they said, was eager to place a race here.
“They wanted North America, and they wanted Penticton. They had 30 other communities, they told us, that contacted them wanting the race in their community,” said Antoniak. “But they particularly wanted Penticton, because of our history, because of our volunteers and because of our community.
But the direct financial benefits, Ashton said, are just part of the deal with switching to Challenge Family. He expects economic spinoffs from the race to grow as well, with competitors staying in the region longer.
Looking back over the last few years of Ironman, Ashton said the city has been seeing the opposite, with costs rising and spinoffs decreasing. Using the awards banquet as an example, he points out that attendance has been dropping — three years ago, it was almost full, but last year attendance had dropped to 1,200 as competitors left sooner after the race.
“This year, to try and keep people and get them to come to the awards banquet, they moved it to lunch. I can tell you, they would be hard pressed to tell me there were 1,200 people at that banquet at lunchtime,” he said. “Our costs have risen; our economic generation from this race has been going down.”
But with the Challenge Family being based in Europe, he expects Challenge Penticton to be able to draw on European competitors, rather than just North America. Ashton expects those to make a longer trip out of it.
“It’s likely that we will get people coming to the race that won’t just stay for a day or two; they are going to stay for a week or longer,” he said.
Antoniak concurs, though she cautions it will take time to grow the race to its full potential. Ironman regularly saw 2,500-plus competitors; so far 1,000 have signed up to take part in the 2013 Challenge Penticton.
“The economic spinoff will grow substantially. While it might not happen in year one, over the course of a few years, you will see that,” said Antoniak.
The new race society will also be responsible for liability and other operational issues involved in setting up Challenge Penticton, like working with Ministry of Transportation to secure roads, pay for engineering reports and other factors.
“Because we collect the registration in advance, we’ve got that as a security,” she said. “The intent is to go to the bank and get a line of credit, secured off the registration.”
The Challenge licence also includes a couple of other goodies, including exclusivity for Canada.
“We own Canada, which is terrific to have exclusivity. Compared to what happened with Ironman, where we owned Canada and they slipped another race in, at Mont. Tremblant,” said Ashton. “The city took the high road and said OK. They did that, then they opened up Louisville, Ky. on exactly the same day we have. So that took our southeast U.S. athletes. Now they are opening up another race in California. We have over 400 athletes that come from California.”
Along with exclusivity, the licence agreement also puts Penticton in the running to host a world championship for long distance triathlon.
“Now that they have Canada, and I am sure there intention is to have a race in the U.S., we are going to see a world championship,” said Antoniak. “We have that in our agreement too, when they do that, we want Penticton on the roster to hold a world triathlon championship, which is huge.”
That would raise Penticton’s international profile considerably, said Ashton; something he said had been dropping with Ironman.
“We used to be No. 2 or 3 in the world and we dropped to five,” he said. “There has been a decrease with Ironman about the chutzpah of this race.”