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By Kevin Helliker And Sara Germano
There's a formidable new competitor in the fast-growing footrace market.
Virgin Group Ltd. launched a new division--Virgin Sport--to start and acquire recreational-athletic events. To run the division, Virgin hired that industry's executive star: Mary Wittenberg, the 52-year-old longtime chief executive of New York Road Runners, organizer of the TCS New York City Marathon.
Richard Branson's U.K.-based investment conglomerate has divisions in everything from banking to telecom to travel services and the health club industry. By jumping into races--a market founded and still dominated by local organizers--Virgin is following other big entrants such as Walt Disney Co., Nike Inc. and gym chain Life Time Fitness, as well as private-equity firms like Providence Equity Partners, owner of the Ironman Triathlon races, and Calera Capital, owner of Competitor Group's Rock 'n' Roll race series.
Besides lucrative sponsorships, these companies are reaping profits from an ever-growing crowd of recreational athletes willing to pay three-figure registration fees to compete in footraces, cycling events, triathlons and obstacle-course races. Between 1990 and 2013, the number of U.S. road-race finishers soared nearly 300% to more than 19 million, according to Running USA, an industry-sponsored research organization.
Whether the Virgin launch will cause other big-race organizers to look over their shoulder remains to be seen. "It's a big world and growth is explosive," said Competitor Group president Josh Furlow, adding that he sent Virgin a note on Tuesday calling Ms. Wittenberg "a great hire."
U.K. lender Virgin Money, part-owned by Virgin Group, is the title sponsor of the London Marathon. But the company operates no races, so Virgin Sport will start with an empty portfolio. It plans to launch its first event or events in the U.K., while scouting opportunities in the U.S., South Africa and Australia, said Ms. Wittenberg., under whom NYRR grew rapidly.
"We anticipate leading with running followed by cycling," she said. Asked about triathlons, she said, "For sure."
When asked if Virgin Sport, to be based in New York, would seek to launch a marathon in competition with the famous New York race that Ms. Wittenberg oversaw the past 10 years, she answered: "Absolutely not."
"Mary has assured me and the board that she and Virgin have no intention of going head-to-head against our 45-year-old New York City Marathon," said George Hirsch, NYRR chairman.
Operators of local races might be intrigued by Virgin's announcement that it will grow in part by acquisition. "Established races that have several thousand participants can be valued at several hundred thousand dollars," said Jean Knaack, executive director of the Road Runners Club of America. Of the 9,000 races its members stage each year, about 7,000 are the work of local nonprofits, she said.
Steve Lastoe, founder of NYC Runs, a for-profit Brooklyn-based race operator, said he could certainly see selling ownership or an equity stake down the line, potentially to an outfit like Virgin Sport. "Virgin's got a great portfolio--I mean, they have rocket ships for crying out loud," he said.
At NYRR, Ms. Wittenberg's successor as president and CEO will be Michael Capiraso, 52, who joined the organization in 2010 and most recently served as chief operating officer. Peter Ciaccia, 61, a 14-year NYRR veteran, will replace Ms. Wittenberg as race director of the New York City Marathon, the world's largest.
Write to Kevin Helliker at kevin.helliker@wsj.com and Sara Germano at sara.germano@wsj.com
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