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Good Thursday Morning. This will be the last SBP of the 2023 year. We are taking some much needed time off for the holidays and will be back to drop some knowledge in the new year!

Here’s the rundown of this week’s Sports Business Playbook:

• 📰 This Week’s Topic: We have an SBP first this week, with a company profile and founder interview for one of the most unique sports organizations in the world — Spartan.

• 🍸️ Impress Your Friends at Cocktail Party: Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? Hit the “Impress Your Friends at Cocktail Party” section at the bottom for a CliffsNotes of this week’s topic

Hey team,

This week’s issue is different from other Sports Business Playbook editions.

Instead of analyzing one of the biggest business stories in sports, we’re going to share the story of an exceptional sports company — Spartan.

In a Sports Business Playbook first, I had an opportunity to sit down for an interview with the Founder and CEO of Spartan, Joe De Sena, to help tell that story.

As you’ll learn in this piece, De Sena is one tough customer (and an absolute quote machine), and he’s on a mission to bring the Spartan lifestyle and mindset to 100 million lives.

This week’s issue has it all:

1. How the brand is more than photos of people covered in mud on Instagram

2. Yoga in 1970’s Queens

3. How to effectively build a true community

4. Raising $1 million dollars in a weekend to stay afloat

5. The continued ascension of niche sports into the mainstream

6. And most importantly, an overall compelling story of mental toughness, resilience, and a mission-driven business.

It’s one of the most challenging, but fun, pieces I’ve gotten to write (definitely appropriate given the subject matter here), and as we head into New Years resolution season, I hope there are nuggets that each of you can take from the piece and apply to your personal and professional lives.

Without further ado, let’s jump in — thankfully, there is no mud or icy water around right now.

This is Sparta(n)

What do you think of when you hear the word “Spartan”?

I wouldn’t blame you if you first went to one of these things:

1. The movie 300

2. The barebones lifestyle we had when living in an expensive city fresh out of college

3. The “little brother” team that Michigan beat 49-0 in football this year (had to do it!🤷‍♂️).

For 10 million+ people around the world, though, Spartan represents something much different: a global phenomenon, community, and series of intense, grueling obstacle course races (OCRs) and other forms of fitness challenges — i.e., trail running, paddleboarding, and mountain biking — that push participants to their absolute physical and mental limits.

The brand has been on an Odyssey-like journey since its founding in 2010:

1. Overcoming early struggles to reach the pinnacle of OCR, bringing in nine-figure revenues per year

2. Almost losing everything during COVID

3. Now emerging on the other side as a stronger, more resilient business that embodies the key principles that it built its community on in the first place.

Coming off of a 2023 business year that included key partnerships with major fitness brands, acquisitions of other extreme races, and several major announcements in OCR, Spartan is back to firing on all cylinders.

But, the company has its sights set on even bigger goals: building a platform business that “impacts 100 million lives” by pushing people out of their comfort zones and getting them to embrace their inner Spartan.

As Joe De Sena, Spartan founder, fitness firebrand, and I suppose the Bernard Arnault of pain, told me during our interview, “we want to be the LVMH (French luxury goods conglomerate Louis Vuitton Moët Hennessy) of hard sh*t.”

Spartan’s Origins

Spartan was founded in 2010 by De Sena, a hard charging former Wall Street trader from Howard Beach, Queens with a passion for extreme endurance events.

While he grew up in an area most famous for being the organized crime capital of the world and embraces many of the principles that we all think of when someone says “they’re from Queens”, De Sena has much more depth to his story.

Thanks to his mother, he was exposed to alternative health and wellness techniques – yoga, meditation, and health food – from an early age, which was incredibly avant garde in 1970’s Queens. While he would come back to those alternative training methods later in life, what he really learned was seeing things through a different lens and going against the grain.

After starting a successful pool cleaning business and then spending a number of years building his wealth on a Wall Street trading desk, De Sena felt burnt out and wanted more.

So, he moved from New York to his Vermont farm full-time and began to think of new, creative ways to empower people to get outside — literally outside; De Sena believes we all spend way too much time indoors — and maximize their potential.

In addition to hosting corporate training exercises for the likes of Nike, Google, and Goldman Sachs, he began to host extreme fitness challenges on his property and push individuals to do more.

Having completed over 50 “ultra race” events himself, De Sena knew the limits, both physical and mental, that extreme races push people to, and it set the vision for what would become Spartan – to bring the determination, discipline, and resilience of ancient Sparta into people’s daily lives.

The inaugural Spartan event took place on De Sena’s farm in Vermont in 2010, featuring a challenging course with obstacles that tested participants both physically and mentally.

An obstacle course race essentially means a long run – anywhere between 3 to 30 miles depending on the type of race – with a bunch of challenges to overcome in the middle. Example challenges include jumping over fire, climbing under barbed wire, wall climbing, mud crawling, and throwing spears.

The obstacles look like they have been pulled from a variety of sources that could either be a military training course or a Dan Bilzerian Instagram flex, but there is a common thread: it’s going to be physically and mentally taxing.

The responses to the first races in Vermont were overwhelmingly positive and Spartan began to develop a cult following, but it took some time to truly grow the business.

De Sena and his team labored for a few years to get things stabilized, and there were a few close calls, including a “I need $1 million this weekend or that’s it” phone call to a friend.

But, through a combination of the team’s resilience, a burgeoning grassroots Spartan community, and the luck of social media catching fire as they were growing, Spartan began to get people’s attention.

And once the word got out, the dam broke.

Spartan quickly expanded its reach, organizing events across the United States and then around the world. By the end of the decade, Spartan had reached a peak of 250 events across more than 40 countries on six continents and was doing over $150 million in annual revenue.

How did they do it? Community.

“We Look Like an Airport”

The company's unique combination of challenge, camaraderie, and its general ethos of “breaking down barriers” appeals to a diverse audience, attracting not only seasoned athletes looking to win races but also individuals seeking a transformative fitness experience.

This community-driven approach has contributed significantly to the brand's loyalty and retention, and Spartan’s site is covered in testimonials and in-depth stories of people who have transformed their lives through these events.

Spartan is not for everyone, and De Sena has not been afraid to speak out on polarizing issues over the years, including COVID and the recent Hamas-Israel conflict. But for those who buy in, they buy in all the way.

This community strength is highly attractive to prospective sponsors who also tap into the ethos of Spartan’s community.

Spartan counts Athletic Brewing Company, 5.11 Tactical, and Reign Energy Drinks as major sponsors, and it’s continuing to grow its portfolio as it returns to peak business shape following COVID.

De Sena believes there’s a great story to tell for brand managers looking to get their products and services in front of an engaged — and sometimes “captive” if the sponsor does an on-site race activation — audience.

This resilience and “find a way” mentality of Spartan and its community would be put to the test when the world stopped.

“We Got Punched in the Face”

In February 2020, Spartan acquired the other main obstacle race brand – Tough Mudder – out of bankruptcy for $700,000 cash and taking on the distressed company’s $10 million in debt.

Bringing the second largest OCR brand in the world under the Spartan umbrella that was exploding looked like a logical, savvy business move at the time.

No one could have predicted what would happen next month.

As COVID-19 began to spread around the globe in March 2020, the sports world came to a halt, and participation event organizers like Spartan saw almost all of their revenue streams shut down in an instant.

To put the economic challenge in context, the Endurance Sports Coalition, which includes groups like Spartan, Ironman, and USA Triathlon, has a $3 billion annual economic impact. This figure was cut to nearly zero for several months in 2020 as race entry fees were refunded or postponed and sponsors pulled out in droves.

After 10 years of building the business into a market leader, De Sena and his team were back to scrapping for every dollar to make ends meet.

Spartan had to furlough 75% of its team after losing several million in profits, and there was a looming hurdle rate they’d need to clear with revenue even after things reopened because of outstanding tickets and prize money for the races that were postponed.

As De Sena noted in a Sports Business Journal article from earlier this year, “we had sold 450,000 entries by the time COVID really took hold. We couldn’t deliver on those entries, so we had 450,000 people pissed off.”

“We gave everybody two tickets, so we gave away $90 million worth of tickets. We somehow hunkered down and survived, but burned an enormous amount of cash while we were shut. And when we reopened, the first $90 million of revenue didn’t exist because we had given away those tickets.”

Like a number of companies in the health/wellness space, Spartan turned to digital formats to mitigate the cash crunch. The company created curated, at-home workouts for aficionados to continue to train and even ran “virtual races”, but the community is what really kept them afloat.

In addition to keeping the community engaged by hosting speaker series and forums with key stakeholders and thought leaders, high net worth individuals whose lives had been positively impacted by Spartan donated funds – sometimes into the seven figures – to help the company keep the lights on while the world was shut down.

The resourcefulness of the team and the generosity of the community helped Spartan to weather the storm and emerge on the other side a leaner, more resilient business.

Running the Long Race

A few years removed from peak pandemic, Spartan is back to 90% of its pre-COVID business and has regained profitability.

This can partially be attributed to more macro things — the world getting back to normal, COVID outdoor fitness habits carrying over, etc. — but it’s also Spartan’s doubling down on its core fundamentals.

The brand had over 1.2 million race participants across its race formats in 2023, and it has now turned its attention from recovery to growth across all facets of the business.

To put it in De Sena terms, that LVMH of hard sh*t model is starting to take hold.

Events

In addition to continuing the digital products developed during the pandemic, Spartan’s core Race events are back in full swing and flourishing. The company secured a three-year renewal earlier this year to host its Race world championships in Abu Dhabi, held events at renowned US sports venues – i.e., Notre Dame Stadium, Fenway Park – as a part of its Stadion Series, and acquired the Obstacle Course Racing World Championship (OCRWC) series.

But along with the mainstay Spartan and Tough Mudder events, the company has developed new concepts like DEKA — the indoor functional fitness programs/competition — and rolled up smaller endurance race events in other modalities – examples include the long-distance hiking series Highlander and the Molokai 2 Oahu (M2O) Paddleboard World Championships – that were still struggling to recover from the pandemic.

The crown jewel announcement, though, was the recent announcement that obstacle course racing would be included as a part of the modern pentathlon event at the 2028 Olympics.

In De Sena’s mind, this gives OCR, and by extension Spartan, the stamp of approval to move more into the mainstream and get people to try out the events.

Partnerships

Spartan is actively rebuilding its sponsorship portfolio, and it also struck two separate deals this year with fitness giants CrossFit and F45 that focus on cross-selling and upselling these like-minded communities. These activations include:

• Marketing and offering discounted rates to the others’ events during competitions

• Offering special workouts for those training for Spartan at gym locations

Spartan is also thinking locally in this approach, though. The brand is seeking title sponsors in all markets to fund a crossover program that enables local gyms to partner with local charities in an attempt to re-energize the community and get people more active.

Impact

In addition to the general health of the business, De Sena has an incredible passion and appreciation for the military, and he believes Spartan can be a great recruiting tool for the armed forces — something that is much needed right now, as the number of Americans actively serving is down 39% from its peak in 1987.

Spartan has partnerships with a number of the military branches and other uniformed services, and the company has a goal to create even more military-specific activations.

Using this “military for day” technique, De Sena estimates Spartan could help 100,000+ young adults recognize that they may want to explore a career in the military.

All of these elements come back to Spartan’s ultimate goal – changing 100 million lives.

And that means continuing to grow Spartan into a lifestyle. The organization does not believe everyone will do a race, but people can adopt specific training methods, dietary suggestions, and/or mindsets that will have a positive impact on them.

It’s what De Sena considers his life mission, and he’s all in on making it happen.

Takeaways from the Finish Line

Whew, congrats — you made it all the way through. Now at the finish line, here are my three key takeaways on the story.

Drop me a note with any others that resonated with you!

1. It’s incredibly cliche, but a brand that truly embodies its values will win every time. Marketing expert Seth Godin has a great quote about brand ethos: “If Nike opened a hotel, I think we would be able to guess pretty accurately what it would be like. If Hyatt came out with sneakers, we’d have no clue because Hyatt doesn’t have a brand, they have a logo.” Spartan falls into the former category, and its community persona is its biggest moat.

2. Business — and life for that matter — will punch you in the face. It is inevitable. How you respond is what matters

3. Pushing yourself outside of your comfort zone — both personally and professionally — enables deeper change, better results, and overall more fulfilment

A special thank you to Joe De Sena for his time and to Charlie Bernard for helping get us together to tell the story of Spartan.

🍸️ Impress Your Friends at a Cocktail Party

Want to show off your sports knowledge in a public setting but don’t have time to read the deep dive? This section is the CliffsNotes of this week’s topic

• Opener: Spartan is a global phenomenon, community, and series of intense, grueling obstacle course races (OCRs) and other forms of fitness challenges — i.e., trail running, paddleboarding, and mountain biking — that push participants to their absolute physical and mental limits. The brand has been on quite a journey since its founding in 2010, having reached the pinnacle of OCR and bringing in nine figure revenues per year, almost losing everything during COVID, and now coming out on the other side as a stronger, more resilient business that embodies the key principles that it built its community on in the first place. DeSena wants to build the platform company of extreme races that push people to their limits: “the LVMH of hard sh*t”

• Shot: Spartan was founded by Joe DeSena, a former Wall Street trader from Queens who wanted to empower people to get more out of life. An extreme race enthusiast himself, he began holding races at his Vermont farm in what would become Spartan. After a few years struggling to get off the ground, the business caught fire, and by the end of the decade, Spartan had reached a peak of 250 events across more than 40 countries on six continents and was doing over $150 million in annual revenue.

• Chaser: One of the biggest selling points of Spartan is the community. The company's unique combination of challenge, camaraderie, and its general ethos of “breaking down barriers” appeals to a diverse audience, attracting not only seasoned athletes looking to win races but also individuals seeking a transformative fitness experience. This 10 million strong group of people is the lifeblood of Spartan, is incredibly attractive to sponsors, and they stepped in when Spartan needed it most.

• Chaser: During COVID, participation events like Spartan completely shut down. Faced with an unprecedented challenge, Spartan went online to create digital workouts and virtual races, and some high net worth individuals donated significant sums of money to help it stay afloat. It was a brutal stretch, but the company survived.

• Chaser: Now on the other side of the pandemic, Spartan is back to 90% of its pre-COVID revenues, has regained profitability, and is focused on moving from growth to recovery. The brand’s core events are flourishing, it has several new types of races, and OCR will be added to the Olympics in 2028. Sponsors are coming back, and Spartan recently announced partnerships with CrossFit and F45 on co-marketing activations. Most importantly, though, it’s able to focus on impact. De Sena wants to use Spartan to help the armed forces grow their recruiting base, and even more broadly, he wants to impact 100 million people’s lives.

• Bonus: Be sure to read the Takeaways at the Finish Line above!

Thanks for reading! Let me know what feedback you have.

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Until next time, sports fans!

-Alex