Earlier this week, the Swiss running shoe company On announced that it was starting an elite training group in Boulder, Colorado, called the On Athletics Club. It’s safe to say that this doesn’t seem like the most auspicious time to invest in professional running. Even though the Diamond League—the world’s premier track and field competition circuit—is scheduled to begin an abridged summer season on Friday, this year has seen an unprecedented number of race cancellations and it’s difficult to predict when the bleeding will stop. International Olympic Committee President Thomas Bach has already gone on record saying that the Tokyo Games, which have been postponed to summer 2021, will not be delayed a second time. If they can’t be staged next August, the Olympics will be canceled outright, thus depriving track athletes of their quadrennial moment in the sun.
According to Steve DeKoker, On’s Global Sports Marketing Manager, the company has long been looking to develop an elite running team and the Boulder-based group represents the most significant move in that direction to date. For now, the On Athletics Club consists of eight runners, all of whom are in their 20s and were standout NCAA athletes (the University of Colorado’s Joe Klecker and the University of Wisconsin’s Alicia Monson are the headliners). Recently retired Olympian Dathan Ritzenhein will act as coach. It has been disclosed that these athletes will be signing multi-year deals with no reduction clauses (i.e. performance quotas)—a risky move, perhaps, but one that On might currently be well-positioned to make thanks to a potential pandemic-inspired uptick in recreational running.
“Running is kind of experiencing this second boom,” DeKoker told Letsrun.com. “We’ve got all these folks at home who are struggling with different issues, but running is a viable activity for them. Whereas if you’re Nike, and you’re in 50 different verticals, running might be a positive one, but you’ve got a bunch of other sports that are hemorrhaging right now.”
There has been some evidence to bear this out. Nike has reported a 38 percent decline in total revenue through May 31. More specifically, last week, the market research company NPD published an article noting that prominent brands (Nike, Adidas, Under Armour) had an overall sales decline in athletic footwear in the first half of 2020, while several running-focused shoe companies had fared conspicuously well. Hoka One One and On, in particular, saw year-over-year sales increases of 75 and over 50 percent, respectively. (An On representative has confirmed this, and added that the brand had recorded its highest ever sales month in June 2020.) Matt Taylor, the co-founder and CEO of the independent running apparel brand Tracksmith, told me that “there’s been a noticeable uptick in people running over the last few months,” and that Tracksmith was “seeing this trend reflected” in its business.
While the running industry will never be entirely insulated from the state of the overall economy, there is some logic to the notion that the sport is well-suited to weather a financial downturn. To use DeKoker’s term, running is a “viable activity” for many people because it is relatively cheap, accessible, and offers both physical and mental health benefits during times of uncertainty. The most recent running boom occurred during the years immediately following the Great Recession; starting around 2008, there was a continual increase in running event participation, culminating in 2013, when a record 19 million runners took part in U.S. road races.
Of course, from a running perspective, one of the uniquely cruel aspects of the COVID-19 recession is that the pandemic has precluded the staging of most mass participation events. The New York Road Runners, the largest non-profit running events company in the United States, laid off eleven percent of its employees and furloughed an additional 28 percent in July. Hence, any discussion about how the pandemic might end up “benefiting” the running industry in shoe or apparel sales must be weighed against this freeze of running events.
For professional runners, meanwhile, the cancellation of big-ticket races signifies a loss in prospective appearance fees and prize money. Some athletes might also be contractually obligated to run a pre-set number of races, which, needless to say, has not been so easy in 2020. That’s why this has been the summer of intrasquad competitions, in which training partners take part in de facto time trials that have been spruced up just enough to qualify as official meets. While some of these events have yielded impressive performances—most notably Shelby Houlihan, of the Bowerman Track Club, breaking her own American record in the 5,000-meters—there have also been farcical scenarios where world-class athletes phoned it in, presumably so that they can reach their race quotas. (Last week, reigning Olympic 1,500-meter champion Matthew Centrowitz “raced” an 800... and ran 3:08. His personal best in the event is 1:44.)
It’s not a coincidence that the most prominent examples of these sham races have involved Nike athletes. After all, the Oregon-based company sponsors far more runners than any other brand. They have the funds to do it, but casting a wide net might also make it more difficult for Nike to offer elite runners the contractual perks of smaller, running-focused companies like Oiselle, On, and, recently, Tracksmith. For now, reduction clauses still seem to be the norm for the typical Nike track athlete. (A Nike spokesperson told me that the company does not comment on athlete contracts.)
Hawi Keflezighi, an agent whose clients include his brother Meb Keflezighi and recent U.S. Olympic Trials Marathon champion Aliphine Tuliamuk, agreed that this was likely to be the case. “I think Nike deserves credit for all the athletes and events that they sponsor, but at the same time, within that business model, if you have a lot of athletes, you can’t be as flexible as when you only have five or ten athletes on your roster,” Keflezighi, whose brother was a Nike athlete for years before signing with Skechers in 2011, told me. He added that, while it’s typical for companies to reassess which athletes they want to sponsor at the end of an Olympic cycle, the current uncertainty surrounding the fate of the Games, and looming recession, mean that conditions for athletes are even more cutthroat than usual.
“I think the bigger brands definitely have tougher decisions to make, just because they have a bigger investment overall,” Keflezighi says. “The athletes with those brands, especially if they are not medal contenders or in a great position to make the US Olympic team—under this environment, those athletes’ contracts are a little bit more vulnerable. If you have a smaller roster of athletes, you might be able to say, ‘Hey, you know what? Let me give that athlete an extra year or two.”
DeKoker echoed this sentiment. “Obviously, performance is going to be a key element, but it’s not the only element with On,” he says. “I do think that, at some of these other companies, it’s much more of a numbers game and unfortunately some athletes are going to be on the losing end of that.”
What will the “numbers game” look like in a worst case scenario where next year’s Olympics ultimately do get canceled? With any luck, we won’t get to find out.
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