Kevin Vermaak – race founder, Cape Epic

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http://www.moneyweb.co.za/moneyweb-upper-echelon/kevin-vermaak--race-founder-cape-epic

 

Kevin Vermaak – race founder, Cape Epic

 

From a dream to the Absa Cape Epic. The turnover now for the race is about R50m.

 

HILTON TARRANT: Our guest in the Upper Echelon this week Kevin Vermaak, race founder of the Absa Cape Epic. Kevin, perhaps some listeners and readers aren’t too familiar with the Cape Epic, how would you describe the Cape Epic?

KEVIN VERMAAK: Well, fundamentally the Absa Cape Epic is a two person team mountain bike stage race where they ride through a different course every year totally offroad around the mountains of the Western Cape and it’s particularly tough. In terms of a physical effort one could compare it to potentially riding the Cape Argus Cycle Tour twice per day every day for eight days in a row.

HILTON TARRANT: So given that it sounds very tough it is, I guess, one of the more strenuous cycle races in the world?

KEVIN VERMAAK: I think most people who take on the challenge they sign up a year in advance, our entries opened the day after the race finished this year and they sold out immediately for riders that are wanting to ride exactly a year in advance. I think for that they often need that much training and preparation time before the event and so it’s obviously a massive goal for them, it’s looming on the horizon for often a year or even more, they might have a longer plan in terms of getting into the race and then finishing it. So it’s this massive physical endeavour and it leads to a phenomenal feeling of accomplishment and satisfaction when they actually get to the finish line. Ja, certainly most of the amateurs that take part in it many of them will say that finishing the Absa Cape Epic is one of the highlights of their lifetime achievements.

HILTON TARRANT: Kevin, cycle races I guess a dime a dozen, where did the idea of the Cape Epic come from, this specific race, this specific type of challenge?

KEVIN VERMAAK: Well, I’d graduated from UCT and then left South Africa immediately and never worked in South Africa. I went across to London and did an eight year stint in London. At the end of those eight years I was looking for something new to do with my career and I went off to Costa Rica with some friends and we did a three-day mountain bike race in Costa Rica and it cost a lot, well, I thought it cost a fair amount for three days. People were travelling from all over the world to get into this race, you could say it was one of the original mountain bike stage races out there; it’s the one with the longest history certainly. We paid a lot and it was okay and I thought that South Africa was a far better destination for folk to travel to from around the world to do a mountain bike race. Personally I thought that I could probably organise it better than what I was seeing in Costa Rica and I thought that South Africa had far better services. In the year that I started the Epic we were putting on the Cricket World Cup, people were lauding that and saying it was one of the best World Cups ever. So I thought South Africa’s got the potential to be that pedestal event, the mountain bike race that all mountain bikers aspire to do. So we set about achieving that, I resigned from my job in London and spent about another three months in London. Well, I resigned actually after I’d done a bit more market research in London and pretty much kicked it off in London, quit my job, moved back to Cape Town and that was ten years ago and now we’re celebrating ten years of the epic this year.

HILTON TARRANT: Given the background in Cape Town and at UCT was it always going to be a Cape-based race in your mind?

KEVIN VERMAAK: That’s an important distinction to make because the name of the race is the Cape Epic, so Cape and riding in and around Cape Town and the Western Cape is core to our brand effectively but also the fact that it was a choice not necessarily because I was South African and I wanted to come back to South Africa, it was more the fact that actually the Western Cape is a phenomenal destination to stage an international mountain bike race. So it was always about creating an international race in the Western Cape rather than creating a race in South Africa that eventually evolved into one of international stature. It was a choice to do it in the Western Cape and also to weave the Cape into the core of the brand. So we’ll do for example the prologue on Table Mountain, we’ll do the registration at the Waterfront, which is the most visited tourist attraction in South Africa, second on the African continent. These are all images that certainly go down incredibly well internationally. When you show a mountain bike race finishing off with a finish line at Table Mountain in the background and, in fact, we’ve now progressed it to the point where we have a day of live TV coverage with Table Mountain in the background. These are images that are incredibly well received internationally and it’s also something that international participants can relate to, they know exactly where Cape Town is and they know what they’re getting into when they’re riding the Cape Epic.

HILTON TARRANT: Ten years on, TV coverage, a number of big sponsors and we’ll get to that but in those early days, the first couple of races, maybe the first two or three I’m guessing things were pretty tough back then? I doubt the business was exceedingly profitable at those early days; did you ever contemplate giving up?

KEVIN VERMAAK: Every day for probably the first six years, it was the sixth event before we actually turned a profit on an annual basis. We racked up losses, multi-million rand losses, and one might think, well, a mountain bike race, does it need to be this loss-making and this big but my goal was always to be the biggest and the best in the world. When I say biggest we definitely don’t measure the size by the number of athletes in the race but ja, in the early years we racked up about R8.5m in accumulative losses. Ja but I think it’s paid off now because in those early years we certainly hid the fact that that was the scale of the losses because I don’t think people would have entered a year in advance because there was this massive perceived threat, for the participants and everyone involved in the race we just exuded this perception of incredible success. We sold out every year from the first year, the first year we sold out in three days, then it was five hours, then we had a lottery that was massively oversubscribed. Ja, I think when we finally made a profit in the sixth year and we managed to increase the entry fees by 50% overnight and the demand…we’d certainly created this…well, I think we created a market in South Africa that was the first thing because mountain bike stage races didn’t exist when we launched, now there are over 50 on the calendar bur certainly be created the market in South Africa. Now we’ve got to a point where our race is certainly one of the most aspirant events around the world and it’s very desirable and it’s allowed us to increase the entry fee. I think in the last four years now it’s over 200% that we’ve racked up the entry fee. Ja, so since the day we were in a position to do that the business started making a lot more sense and it certainly one might think…well, certainly in South Africa we’re quite an expensive event compared to other mountain bike stage races, which are now on the calendar as well. But the reality is that we’re certainly delivering value and it’s definitely not overpriced because the race sold out this year for next year’s event, so 12 months in advance, the race sold out in 34 seconds, everyone pays their money within 24 hours of entering and it’s R46 000 per entry to ride the race. So there is huge demand for it and I can say it’s getting more and more, the type of people from around the world that I’m seeing entering the race or aspiring to do the race to be honest the actual cost of the entry is insignificant to their cost of taking part in the race and actually we can charge whatever we want for probably about 20% of the field. The price is absolutely irrelevant at the moment; it’s so desirable that they want to be doing to race.

HILTON TARRANT: Kevin, in the background obviously there’s a team that’s putting this all together and that team has grown over the past decade. It’s almost difficult to comprehend that there are full-time staff members working all year round to put on what is effectively a race that lasts just over a week. Did the team and growing that team, growing the business, has that been a learning process in and of itself?

KEVIN VERMAAK: Well, I think the team is something that I focused on from the very beginning. I’ve got this great acid test every year that I would go about specifically recruiting new staff in around December because they’d hit the ground running, they’ve got four months until the event and they either fit in and succeed and enjoy the pressure and in which case they would stay on as permanent staff or they’d suffer under the pressure the three months before the event. So every year we recruit three, maybe drop one staff member on contract and we’ve built up the team now to about, well, exactly 21 staff that work 12 months of the year on the event. Whenever you say that, in the early years for sure people would ask me individually, wow, do you work on this race the entire year and the question is now how do you fill the time of 21 staff members to work on the race throughout the year. Certainly there are definitely other races around the world and in South Africa that you can get by with three, four, five folk that could work on a race of eight days but I think when you’re trying to be cutting edge and pioneering and always pushing the boundaries and doing something new that’s actually what takes an amount of time. To give you an example, right now we’re signing on a new sponsor based in Switzerland that is the ultimate premium cycling apparel brand in the world and they don’t want to produce any type of cycling kit, they want to do the ultimate leader jersey for a bike race and I’m not talking about just any mountain bike race, they want to create the best leader jersey for any bicycle race in the world. So that’s a long process, it’s a question of spending time with them in Switzerland, it’s a question of doing a works team with them. If you didn’t have the aspiration to be the best and to do something new cutting-edge then for sure you could do it with a lot less effort but we’ve applied that to every element of the business and what can I say, it takes a lot of time to achieve that. Luckily I’ve managed to attract sponsors that want to support that vision to be the best and to try new things and as well as riders who want to pay for the experience. We give a lot of things that one would never get at any other sports event, let alone a mountain bike race. That’s the type of event I want to present and luckily there are riders from around the world who want to pay for that experience.

HILTON TARRANT: Was it tough to sell to sponsors in the beginning?

KEVIN VERMAAK: I think the reality is that selling sponsorships is difficult, so it’s not a question of was it difficult at the Absa Cape Epic, the reality is just selling sponsorships is difficult. You see that even in the World Cup, even the Fifa World Cup in South Africa at the eleventh hour they sold some really cheap sponsorships to fill the inventory. So ja, sure, it’s never easy. What I can say is that Absa seem to love the event, it works very well for them. But the reality is I ran it for two years without a title sponsor, they came and bought it in the third year. Ja, I had spoken to all four of the banks and Absa bit, and now they value it very highly as one of their pedestal events. It would be inconceivable to think that mountain biking would be alongside the Springboks and the Bafana Bafana sponsorship and the Absa Currie Cup sponsorship in the portfolio of certainly one of the biggest sponsors of sport in South Africa, it was inconceivable ten years ago. So I’m happy that we could first of all create a sponsorship property that is attractive to such a major sponsor of South African sport and also take the sport of mountain biking…that’s not done on the back of only the Absa Cape Epic but the reality is that mountain biking as a sport in South Africa has certainly grown to the point where three of the four banks are sponsoring probably three of the biggest races in the country. So mountain biking as a category has definitely become more attractive to sponsors. But to go back to the original question, selling sponsorship is never easy and we’ve always got sponsorship inventory that’s available for sponsors, we’ve never really entirely sold all our inventory.

HILTON TARRANT: As far as TV coverage is concerned I’m guessing that was an equally hard slog?

KEVIN VERMAAK: Absolutely, once again it was a situation where we’re pushing the boundaries. TV coverage of mountain biking is particularly expensive. In Beijing in 2008 – and I don’t know the statistics for London 2012 – but the TV production for the two mountain bike events in Beijing, the men’s and ladies’ races, were the most expensive TV hours in the entire Beijing Games because it’s two races of an hour and a half each and it’s generally a very expensive business filming mountain biking. It’s different to road cycling because the action doesn’t all take place in the front in one peloton, it’s happening all over the entire field and often in very remote areas where it’s very difficult to get helicopters in that can relay the signal back. So we’ve pushed the boundaries there, we were the first mountain bike stage race in the world to do a daily highlights package and it gets syndicated and distributed globally every day of the race. So what you see on SuperSport at ten o’clock at night in South Africa, in many countries around the world in their local language you see the same coverage. Then we’re the first and still the only mountain bike race to have live TV coverage and that’s been a particularly challenging job as well. Our TV coverage has been very rewarding for us because the images of household names – remember mountain biking is a far bigger sport in Europe than it is in South Africa and cycling in general – so when you have Olympic gold medalists and world champions that are household names in European countries cycling through the Western Cape, in some cases through big five game reserves with elephants in the background or Table Mountain in the background these are images that just are absolutely welcomed on European television screens. Also at that time of the year the sports calendar is somewhat open, so ja we’ve been incredibly lucky. We are the most televised mountain bike race of all time in the history of the sport. Ja, we’ve shown in typically over 4000 hours of global TV coverage, we’ve shown in about 175 countries every year, 22 different languages. Now we’re starting to attract a host of international stations that are actually coming to the event themselves and creating their own packages, which is giving the TV coverage real integrity, they’re not just taking our syndicated distribution. Ja, it’s something that we’ve invested in heavily, from the first year of the event we had Adidas International onboard as a sponsor, I engaged with them when I was still in London before I came back to South Africa. They pushed us towards sending out TV out internationally from the first year. It was a very expensive procedure and one never got returns in the early years. Ja, the situation today is still as such that mountain biking is not football, you don’t sell your TV, it’s a question of we actually pay distributors around the world to give it away for free and if they do well and give it away to even more countries then we pay them even more as a bonus. But the idea is that we actually monetise that investment, our TV distribution, through sponsorship return. Ja, at the moment our major cash sponsors, the likes of the Absa’s the Exxaro’s and Telkom Business this year they’re obviously looking for a return in the South African market but we’re starting to get traction internationally in terms of the international sponsors, more on the product level but we’re attracting absolutely premium brands internationally that want to be associated with the race. Ja, we’re finally getting a return from our investment in TV.

HILTON TARRANT: Kevin, what’s the end game? Is the plan to just keep growing the Absa Cape Epic to be the very best and the very biggest even not in terms of absolute numbers or is there perhaps a plan beyond just the race?

KEVIN VERMAAK: Well, first of all if you look in the South African market one would think…well, the turnover now for the race is about R50m, it’s not a small sports event by South Africa standards I think. When we started the biggest races on the calendar were the mass participation road races like the Argus and the 94.7. We’re five times the size now in terms of budget. So in the South African calendar certainly we’re a big race but in terms of comparing us to global sports events and iconic sports events with a proud long history we’re a little pin prick that’s so small. So ja, I think that there’s certainly a lot of fresh air in front of us, there’s a lot more growth for the Absa Cape Epic if you compare it to international iconic events that have transcended the sport, the category, in which they exist. So I wouldn’t want to get complacent and think that we’ve achieved something great in ten years, we’re actually very small and very young. So ja, for me personally I feel that I’ve still got a lot of value to add to the event and I still get excited by it, every year I see it I get new ideas of how we can grow it. I’d hate for the Epic not to achieve what it could achieve if I were to step out too early. So that’s my take on it, I’d love to see it grow to its full potential and I feel I’ve got a lot to add to be able to achieve that. It doesn’t mean though that we might not partner with international agencies or sports agencies that can take it to the next…or work with us to take it to a much higher level than what it is at the moment.

HILTON TARRANT: What keeps you awake at night?

KEVIN VERMAAK: A five month old baby in fact [laughing]…

HILTON TARRANT: [Laughing]

KEVIN VERMAAK: …but from a business point of view ja it’s actually am I growing fast enough actually. That’s the biggest challenge on my mind at the moment. We grow the Epic now comfortably at 20% a year but in the early years it was over 100%. So I’d love to find something that allows us to take another…leapfrog us onto the next pedestal where we grow at a much higher percentage than 20%.

HILTON TARRANT: Finally, Kevin, what motivates you?

KEVIN VERMAAK: I’d love to leave a legacy, I’d love to leave a legacy that’s way more than financial and I like creating something. Certainly with the Epic we’ve created something out of nothing. There was no pedestal mountain bike race in the way that Wimbledon is to tennis or the Dakar Rally is to motor rally or the Tour de France to road cycling. That event did not exist in mountain biking, it’s such a young sport, it’s only got a 20 year history, the first Olympic Games in ’96. There wasn’t really a well monitised, very commercially successful mountain bike race out there and ja that was my goal to create it. So it’s been my motivation from the start actually to create that global iconic event in the sport of mountain biking.

HILTON TARRANT: Kevin, it’s been a pleasure. Kevin Vermaak, the race founder of the Cape Epic.

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