Love the financial breakdown John. I think a lot of people simply don't think about Crossfit in a dollars and cents way. People need to remember that Crossfit is 100% controlled now by private equity interest, which means they will continue to get creative to reduce overhead (costs) and increase revenue, and they will mask the financial motives in a wrapper that makes it look to the average community member like the business is doing something "better" for them.
It appears that CrossFit's primary focus is on safeguarding its financial interests and major sponsorships (Dave Castro's role in this is likely significant, hence his continued employment), rather than prioritizing the health and safety of its members and affiliated gyms. Saludos desde México
I agree with everything John noted, but one. The Community Cup idea is a good one if you’re 10 years old and like participation trophies. Granted, a lot of CrossFit adults aren’t that competitive and will welcome a pat on the head to move forward after the Open. But for those of us who trained so damn hard in the past to make it to the Quarterfinals and Semifinals, I don’t think overall you are going to see massive participation in the “Great Job Timmy/Cassie,” errrrr I mean, Community Cup. I’m speculating of course, but I can’t imagine even 25% of the Open community doing this lame event. If that’s the case, then CrossFit’s longer term financial planning strategy is not going to work. But what do I know, and it will be very interesting in any case how this plays out. Thanks for the very informative thoughts John.
They got roughly 50% of quarterfinals participants to sign up last year. If they got that number and charged as little as $30 they’d still make 2 million more on the Open than they did a year ago.
If they want to focus on "strong" affiliates, the strategy could include giving financial incentive for growth and/or consolidation, such as reduced fees for multiple gyms. Strong gyms would be encouraged to open secondary sites and/or buy struggling or marginal affiliates, and bring their more successful model to more locations. It would be relatively easy to do the financial modeling on this.
@@constantlyvariedconversations I ran a bunch of scenarios years ago to show the value of competing strategies for CrossFit profitability. Simple algorithms. I would be highly disappointed if they did not do the same. But no winning strategies were forthcoming from HQ.
Thanks @johnwooley. As always, your comprehension of the financial landscape, along with your easy-to-follow explanations, has struck home with me. HQ is a for-profit entity, owned by PE, and as such it should be considered an existential threat to anyone who isn’t “on board” with their agenda. By the way, I am not offended by or opposed to that agenda - we live in a capitalist society, and CF is privately owned, so IMO they can do whatever they must to survive. I appreciate your insights, and look forward to future updates on the matter.
John, what're your thoughts from the buyer's perspective? As the past seven years have demonstrated, there are really two businesses: affiliates & sport, and neither business is complementary. If I'm a buyer, especially if long-term rates stay above five percent, then I'm looking at the affiliate side of the house as the cash cow and want nothing to do with sport. Think the ideal solution for the community is for the PE group to sell the affiliate portion, along with the CrossFit brand, to a private buyer who will look to reverse the affiliate churn and carry the health mantel forward. The sport side of the house, along with the CrossFit Games brand, is then sold to a group looking to add to their portfolio of live sporting events. That group then works with the myriad of international, national, and local events create the infrastructure for a true CF sport league/season. This will require major investment from a group willing to lose money the first few years, but given the demand for live sport content, and the potential global structure, think there is a path for this to happen.
Not a bad idea but Id be worried if I sold it to allow the Games to continue to use the CrossFit brand name for fear of another event like the last one impacting the affiliates. There would have to be some guard rails in place.
What’s does “worked back into the affiliates” mean? I know you said it was vague. But just wondering what you think it might mean? My initial thought was lower affiliate fees, but it sounds you don’t think so.
I actually hadn’t considered that until you asked but that would be the easiest way to credit an affiliate with a fee rebate. I would imagine they plan to credit the affiliate in some way based on number of members who sign up for the Open/community cup but Dave didn’t give details
The HQ changes rules and format more often than that of a chameleon. I hope they sell since they are no longer equipped to do anything right . Gone are the days when the games or the organisation were appalling.
I would imagine it will require little to no effort by HQ since they won’t need to review videos but the real savings is the fact that everything is online and the in person comps are outsourced.
@constantlyvariedconversations what's funny? Cutting QF's will cost them money. They will get far less paid participation in the cup, people will just do the wods, and not pay. Everyone who goes to a box knows this is how online comps work. Moreover, exchanging 1 online comp for another is obviously not a cost saving measure.
lol all they do with this system is create more work for Affiliates. Affiliates do the work and they get the profit and we nned to pay affilate fee and work foe them to make more.
Lol who is overlooking QF being eliminated? Literally every online community I've seen that is THE talking point 😂. Hate when people just make shit up for the purpose of a video
@constantlyvariedconversations i disagree. Literally every online community I've been in is saying exactly what you're saying here. This is essentially a video about what is so painfully obvious to everyone, although there is humor in the idea that HQ presumably thinks they're being sneaky.
@haldendoerge there is but it would be so improbable. Another company would have to purchase CrossFit. We would need state athletic boards for CrossFit as well.
@@woodshcc5 That's what they're desperately hoping for: someone to buy this albatross. We'll see what happens, but even if someone does, Rouge is already miles ahead of them in terms of fitness sports, and others will be coming out of the woodwork over the next year. The days when the Crossfit games could plausibly crown "the fittest on earth" are over and never coming back.
You can't complain that dave cASTro is staying as leader of CROSSFIT, IF YOU VOTED FOR A OONVICTED FELON TO LEAD THE USA, LOL, yes everything for the next decade will be compared to that.
He is only a criminal because they decided to target him as one. Based on that standard at least the last 10 presidents could have been charged for serious crimes but they havent been.
Doing this video in a Hyrox t shirt is bold 😅
It wasn’t unintentional 😂 plus I love the sweatshirt
It’s sad. Seams like the sport is coming to an end.
Not the sport; the company. And that is a good thing.
Love the financial breakdown John. I think a lot of people simply don't think about Crossfit in a dollars and cents way. People need to remember that Crossfit is 100% controlled now by private equity interest, which means they will continue to get creative to reduce overhead (costs) and increase revenue, and they will mask the financial motives in a wrapper that makes it look to the average community member like the business is doing something "better" for them.
It appears that CrossFit's primary focus is on safeguarding its financial interests and major sponsorships (Dave Castro's role in this is likely significant, hence his continued employment), rather than prioritizing the health and safety of its members and affiliated gyms. Saludos desde México
Classic communcations strategy, make 2 big announcements, and use the second to deflect attention from the first.
I don't think many people will sign up to the community cup. seems like it's just another version of the Open
Pretty good analysis thanks 👍
I agree with everything John noted, but one.
The Community Cup idea is a good one if you’re 10 years old and like participation trophies. Granted, a lot of CrossFit adults aren’t that competitive and will welcome a pat on the head to move forward after the Open. But for those of us who trained so damn hard in the past to make it to the Quarterfinals and Semifinals, I don’t think overall you are going to see massive participation in the “Great Job Timmy/Cassie,” errrrr I mean, Community Cup.
I’m speculating of course, but I can’t imagine even 25% of the Open community doing this lame event. If that’s the case, then CrossFit’s longer term financial planning strategy is not going to work. But what do I know, and it will be very interesting in any case how this plays out.
Thanks for the very informative thoughts John.
They got roughly 50% of quarterfinals participants to sign up last year. If they got that number and charged as little as $30 they’d still make 2 million more on the Open than they did a year ago.
If they want to focus on "strong" affiliates, the strategy could include giving financial incentive for growth and/or consolidation, such as reduced fees for multiple gyms. Strong gyms would be encouraged to open secondary sites and/or buy struggling or marginal affiliates, and bring their more successful model to more locations. It would be relatively easy to do the financial modeling on this.
Fully agree
@@constantlyvariedconversations I ran a bunch of scenarios years ago to show the value of competing strategies for CrossFit profitability. Simple algorithms. I would be highly disappointed if they did not do the same. But no winning strategies were forthcoming from HQ.
Except Crossfit HQ doesn't give financial anything to anyone. It only exists to collect.
@@haldendoerge what I am saying does not require "giving." It is a net gain.
Serious question… who would be candidates to buy CF? Apparel company, wealthy individual(s), someone else?
For its build in audience that has been created over 2 decades. You could safely argue a fan base of 10 million plus. Thats a lot of buying potential
You left out memelord!! The cahooting loot these guys roll in is astounding!! ;-)
Thanks @johnwooley. As always, your comprehension of the financial landscape, along with your easy-to-follow explanations, has struck home with me.
HQ is a for-profit entity, owned by PE, and as such it should be considered an existential threat to anyone who isn’t “on board” with their agenda.
By the way, I am not offended by or opposed to that agenda - we live in a capitalist society, and CF is privately owned, so IMO they can do whatever they must to survive.
I appreciate your insights, and look forward to future updates on the matter.
Always interesting
I’m giving $0 and zero fucks towards CrossFit HQ.
😂
John, what're your thoughts from the buyer's perspective? As the past seven years have demonstrated, there are really two businesses: affiliates & sport, and neither business is complementary. If I'm a buyer, especially if long-term rates stay above five percent, then I'm looking at the affiliate side of the house as the cash cow and want nothing to do with sport. Think the ideal solution for the community is for the PE group to sell the affiliate portion, along with the CrossFit brand, to a private buyer who will look to reverse the affiliate churn and carry the health mantel forward. The sport side of the house, along with the CrossFit Games brand, is then sold to a group looking to add to their portfolio of live sporting events. That group then works with the myriad of international, national, and local events create the infrastructure for a true CF sport league/season. This will require major investment from a group willing to lose money the first few years, but given the demand for live sport content, and the potential global structure, think there is a path for this to happen.
Not a bad idea but Id be worried if I sold it to allow the Games to continue to use the CrossFit brand name for fear of another event like the last one impacting the affiliates. There would have to be some guard rails in place.
What’s does “worked back into the affiliates” mean? I know you said it was vague. But just wondering what you think it might mean? My initial thought was lower affiliate fees, but it sounds you don’t think so.
I actually hadn’t considered that until you asked but that would be the easiest way to credit an affiliate with a fee rebate. I would imagine they plan to credit the affiliate in some way based on number of members who sign up for the Open/community cup but Dave didn’t give details
Could you guesstimate the running costs for the 2023 crossfit season please?
I’ll work on it
@constantlyvariedconversations see 1 hr 13 min onwards of recent TEF podcast
I cannot believe an organization can be so deplete. The best way to run a business is do the polar opposite of HQ
The HQ changes rules and format more often than that of a chameleon. I hope they sell since they are no longer equipped to do anything right . Gone are the days when the games or the organisation were appalling.
Most people will not do community cup
Nice Hyrox shirt!
I noticed that too!
I love this sweatshirt!!
It’s a subtle message to shift to Hyrox - now that CF is dying
Nailed it.
So how does cutting quarterfinals, but adding a larger comp (community cup) cut costs?
I would imagine it will require little to no effort by HQ since they won’t need to review videos but the real savings is the fact that everything is online and the in person comps are outsourced.
@constantlyvariedconversations we disagree.
Lol. Ok 👍🏻
@constantlyvariedconversations what's funny? Cutting QF's will cost them money. They will get far less paid participation in the cup, people will just do the wods, and not pay. Everyone who goes to a box knows this is how online comps work. Moreover, exchanging 1 online comp for another is obviously not a cost saving measure.
Yup. Standard practice for private equity.
I’m a dummy and I understood all of this. It’s like this guy works at a bank or something.🙃 Welcome CF’s CFO….
😆 Thanks!
lol all they do with this system is create more work for Affiliates. Affiliates do the work and they get the profit and we nned to pay affilate fee and work foe them to make more.
No report, no participation. I’m done with this dumpster fire.
Move over CrossFit Hyrox has arrived
Lol who is overlooking QF being eliminated? Literally every online community I've seen that is THE talking point 😂. Hate when people just make shit up for the purpose of a video
That isn’t what I said but go off King 😂. My point was people were overlooking the financial reasons which was really the entire point of the video
@constantlyvariedconversations i disagree. Literally every online community I've been in is saying exactly what you're saying here. This is essentially a video about what is so painfully obvious to everyone, although there is humor in the idea that HQ presumably thinks they're being sneaky.
point me toward these online communities because I can’t seem to find anyone focused on the financial side of the business of CF.
Sssh don’t tell them it’s a mad house😅
They know 😂
Crossfit is dead.
Dying*
@@woodshcc5 Technically yes. But there's no mathematical way for a comeback at this point. Go Rouge!
@haldendoerge there is but it would be so improbable. Another company would have to purchase CrossFit. We would need state athletic boards for CrossFit as well.
@@woodshcc5 That's what they're desperately hoping for: someone to buy this albatross. We'll see what happens, but even if someone does, Rouge is already miles ahead of them in terms of fitness sports, and others will be coming out of the woodwork over the next year. The days when the Crossfit games could plausibly crown "the fittest on earth" are over and never coming back.
@haldendoerge you are right, Rogue did an amazing job!!!
Nah
First 🤪
You can't complain that dave cASTro is staying as leader of CROSSFIT, IF YOU VOTED FOR A OONVICTED FELON TO LEAD THE USA, LOL, yes everything for the next decade will be compared to that.
Bruh. You’re hyperventilating
Came down linda!
He is only a criminal because they decided to target him as one. Based on that standard at least the last 10 presidents could have been charged for serious crimes but they havent been.