Has the MTB Stage Racing bubble finally burst?

[Underachiever]

That carbon frame might cost 1k to manufacture in terms of material and labour, but how much R&D has gone into making sure it has the required robustness in the right places with just the right amount of flexibility. All this before production even gets planned.

Then there is the warranty and backup of the manufacturer should things go wrong. They will need to have the required spares available and technical knowledge employed so that they can back up their warranty.

The manufacturer needs to make a profit to keep its doors open and keep producing new products.

The distributor needs to make a profit to keep its doors open and be able to buy enough stock to give him some buying power with the manufacturer.

The retailer needs to make profit to keeps its doors open and service its customer base that buys the bike from him.

And in between is SARS wanting their pound of flesh.

 

The same can be said about cars. That Discovery you bought a few years ago, whilst very capable, is probably not as good as the new one. Buyers keep wanting more tech in the vehicles, with better safety features, better abilities etc. all this take R&D which costs big tom. 

Discovery used to be a rather unreliable vehicle, people demanded it be reliable, R&D required again.

You take your Disco in for a problem and you expect a qualified competent technician to fix the issue, fast, and right the first time. That technician needs to be paid more the more qualified he is.

That Disco requires parts, someone has to pay for those parts to be in storage

 

Then add to the fact that our government did nothing favourable for the exchange rate and you have costs of the new good rising.

 

It might not be a value proposition to you, but enough people are buying them at over R1m to justify LR still doing business in SA.

Fully agree with what you say, but these demands from the consumer is nothing new.  I work in FMCG, and the cost of compliance, SHEQ, R&D, distribution, etc, etc is not lost on me.

 

The consumer wants good value for money - whatever they believe the value proposition to be. I just think that the group of people that can afford the high end stuff are getting smaller.  

 

We see it in our sales numbers and the growth of the categories we play in - we sell the premium range of products in a "basic product" arena.  More evidence, I walked into one of the high end shopping malls in JHB on Sunday and was shocked to see how many shops have closed down.  At least 10-15 on one floor.  Have never seen that in 20 years.   

[mazambaan]

I think it is teetering; just on demographics and the economy (falling per capita GDP in USD). I'm off races, might do Sani next year due to nostalgia from others but small organised trips with friends are beckoning and I'd love a "Morzine" week or so before I get too decrepit. What is the cut off age?

[kosmonooit]

Things have def. tightened up, for me for sure at the very least. 5 years ago I would think nothing of a 600 km round trip for one days mtb in the mountains or bush, once a month at least. Now a treat to myself is a Rond van Suikerbossie 40 km away, every three months if I am a good boy.

 

About the malls and empty shops, yes that is very noticeable and that bubble is very much bursting but that is those greedy corporate head-in-the-clouds phucks own fault - one too many malls have lost the plot and tried to go way too upmarket, squeezed out the small independents who offered flavor and value, I talk as one of the victims. What was unbelievable was the string of absolute fools deployed to run the show: way too many clueless AA appointments and far too many strings being pulled from HQ in CT.

 

Many a center have lost their character completely, Rosebank CBD as a whole is a case in point. The Zone is a disaster. Yet tall buildings offering A Grade offices and R5m apartments continue to rise. All made possible but the mamparas in City Planning who it should be said have no frigging idea how they are being played by the developers, although the trend has been there is often 'incentives' involved.

[The Ouzo]

Fully agree with what you say, but these demands from the consumer is nothing new.  I work in FMCG, and the cost of compliance, SHEQ, R&D, distribution, etc, etc is not lost on me.

 

The consumer wants good value for money - whatever they believe the value proposition to be. I just think that the group of people that can afford the high end stuff are getting smaller.  

 

We see it in our sales numbers and the growth of the categories we play in - we sell the premium range of products in a "basic product" arena.  More evidence, I walked into one of the high end shopping malls in JHB on Sunday and was shocked to see how many shops have closed down.  At least 10-15 on one floor.  Have never seen that in 20 years.   

100% agreed on the decline on the number of people affording the higher end stuff.

 

I used to work for a non premium brand, played very much in the lower to middle class bracket, the amount of clients coming in with credit issues was crazy. Even folk that are earning in the top % of incomes had credit issues.

 

I'm now at a premium brand. A premium brand that offers better value for money in SA due to us not being one of the "in" brands, so to get market share we have to offer better value.

On a daily basis we get long time clients from the other premium brand visiting us because their brand of choice has now become to costly and they are looking for cheaper alternatives without sacrificing quality and tech.

[Slowbee]

Given all the nonsense about the Epic and money making. As a business model mtb event organisation seems to be rather risky. I mean you are in it for the long haul to make a profit. Maybe make a profit. To offer an event as an ad on to other festivities, that is a different model.

 

The impression I get is "shareholders" aka orgnaisers are looking at big profit %'s.

 

Perhaps a re-evaluation of what % profit you are willing to work for might change the way events happen.

 

I like the idea of mass participation events open to all. But then to pay a premium I expect safety and decent water tables and general organisation. Events like this do not happen overnight so as a business model it is tricky.

 

BUT, what is affordability for one, is not affordable for another. I mean we are not all tenderpreneurs.

[GLuvsMtb]

http://www.2oceansvibe.com/2018/05/24/end-of-the-road-for-hopelessly-insolvent-melissas/

Another seemingly good business model up in flames. I’d like to see what the liquidators report notes as the root cause for the solvency issues that are terminal. The last audited AFS and the going concern review in particular would also make for good reading. Anyone know who their auditors are/were?

 

 

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[BigDL]

I have sympathy for the riders and the organisers. I love entering events and one of the many things I miss about living in SA is the opportunity to ride multiple events every year, rather than the one or two available to me here, at least one of which requires travel to another country [emoji23]. However, I also recognise that cash flow is becoming tighter and tighter in SA and that prioritising cycling must be becoming harder and harder.

 

It’s hard to measure value in a product that has so many variables. Your cost base will vary dramatically depending on whether you are running events full time, with full time employees, office space etc, or organising a charity style event once a year, relying on volunteers.

 

Assuming that you are running as a business, then you have to make the events that you run pay the costs of the business for all the days that you are not running events. Every employee, vehicle, square metre of office space, phone, computer, printer etc is costing you money 365 days a year that you need to recoup in 10 or 12 events, never mind the cost of running the event and, heaven forbid, a little bit of fat to show for your efforts. Add to that a customer base that thinks that you are robbing them because you want to charge the equivalent of a family visit to spur for your event, but in many cases also want the best goodie bags, water points and medals, and it must be a tough business to be in.

 

As with any market, there will be a balance somewhere. I suspect, like a lot of industries globally, that there will be a move towards more budget style offerings that cater to the masses, with perhaps fewer “premium” events catering to those who can afford them or see value in the perks. Similar to how the fitness, hotel, airline, taxi and many other industries are going globally.

[Thor Buttox]

http://www.2oceansvibe.com/2018/05/24/end-of-the-road-for-hopelessly-insolvent-melissas/

Another seemingly good business model up in flames. I’d like to see what the liquidators report notes as the root cause for the solvency issues that are terminal. The last audited AFS and the going concern review in particular would also make for good reading. Anyone know who their auditors are/were?

 

 

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I lived close to the one on Tableview and only went there a few times. I thought their prices were ludicrous, so not sure about the business model myself.

[Capricorn]

http://www.2oceansvibe.com/2018/05/24/end-of-the-road-for-hopelessly-insolvent-melissas/

Another seemingly good business model up in flames. I’d like to see what the liquidators report notes as the root cause for the solvency issues that are terminal. The last audited AFS and the going concern review in particular would also make for good reading. Anyone know who their auditors are/were?

 

 

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I like the photograph of the owners in the article. solid gold

[Traveler]

I have sympathy for the riders and the organisers. I love entering events and one of the many things I miss about living in SA is the opportunity to ride multiple events every year, rather than the one or two available to me here, at least one of which requires travel to another country [emoji23]. However, I also recognise that cash flow is becoming tighter and tighter in SA and that prioritising cycling must be becoming harder and harder.

 

Why don't you start an MTB eventing company in Ireland? Not over subscribed like in ZA....

 

Perhaps you can start a new bubble.....

[Grease_Monkey]

http://www.2oceansvibe.com/2018/05/24/end-of-the-road-for-hopelessly-insolvent-melissas/

Another seemingly good business model up in flames. I’d like to see what the liquidators report notes as the root cause for the solvency issues that are terminal. The last audited AFS and the going concern review in particular would also make for good reading. Anyone know who their auditors are/were?

 

 

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My parent's were about to pull the trigger on buying one about a month ago, decided against it based on gut feel (books for the branch looked good).

 

I am seriously happy and relieved for them that they did not buy in.

[Bonus]

Having said earlier in this thread that there weren't many races locally (and there still aren't), I read in a Spanish MTB mag yesterday at the Barbers shop that there are actually a ton of MTB races nationally.

 

The problem is just that instead of living on the Spanish equivalent of the West Rand - where races were all within an hours drive, we now live in the Spanish equivalent of "Ogies" . . .

 

 

Note: Only similar in "distance from races", Ainsa doesn't look anything like Ogies, thank God.

[BigDL]

Why don't you start an MTB eventing company in Ireland? Not over subscribed like in ZA....

 

Perhaps you can start a new bubble.....

[emoji23] if I want to lose any enjoyment that I get out of cycling, I will be sure to do so.

[Slowbee]

I just looked at the Stellenbosch MTB ride.

 

Plenty money for 60 odd km ride - BUT limited to 2000 entries.

 

Is this the way of the future? Limited race numbers but a great experience and then organisers can work of exact budgets etc.

 

MMM, so if you pay X rhondts for a ride you can nibble on this table at the water point and if you pay y rhondts you dont get nibbles at any table.

[Bonus]

I just looked at the Stellenbosch MTB ride.

 

Plenty money for 60 odd km ride - BUT limited to 2000 entries.

 

Is this the way of the future? Limited race numbers but a great experience and then organisers can work of exact budgets etc.

 

MMM, so if you pay X rhondts for a ride you can nibble on this table at the water point and if you pay y rhondts you dont get nibbles at any table.

Different classes of entry, like different classes on an airplane. One gets you champers, the other gets you a cold coke and the lowest gets you water.

 

There will be takers I'm sure.

[Skubarra]

I just looked at the Stellenbosch MTB ride.

 

Plenty money for 60 odd km ride - BUT limited to 2000 entries.

 

Is this the way of the future? Limited race numbers but a great experience and then organisers can work of exact budgets etc.

 

MMM, so if you pay X rhondts for a ride you can nibble on this table at the water point and if you pay y rhondts you dont get nibbles at any table.

 

Again, I don't really think cost is the main issue - I have seen many cheap races not getting the numbers.

 

Even if cost is the issue, the argument is always "For the cost of the race I can buy a permit at x and ride their the whole year whenever I want". Even a cheap race cannot compete on price with a permit fee.

 

The race will have to offer an "unique experience" with the bells & whistles for people to part with their money.