BRAIN spoke with Life Time's Kimo Seymour about the acquisition announced Tuesday.
Q: Why did Life Time want to acquire Sea Otter?
Seymour: We expanded our event business really rapidly when I came to Life Time about 10 years ago. Then we took some time to settle in for a few years. And I'll be honest with you, we didn't do a great job of integrating them as we made those acquisitions. So I spent a few years downsizing and streamlining the business and focusing on our biggest brands offering the greatest experience. In the end, we are an experience business and for a time I felt we weren't providing the greatest experience or service. We had gotten a little too big. But over the last couple of years we gotten interested again in expanding. But we are only interested in acquiring events that are great brands, offer great experiences, are well known, and we like iconic locations. Think of UNBOUND Gravel, which we acquired a couple of years ago; Crusher in the Tushar, obviously the Leadville race series, the Chequamegon race festival up in Wisconsin, we have the New York City and Chicago triathlons. These are big iconic brands in great locations with great experiences. And Sea Otter is one of those in the cycling industry, and that's where we have put a lot of our energy in the last three or four years. Sea Otter has been part of the growth and transition of cycling in North America. We thought of Sea Otter, for lack of a better analogy, as kind of a hub in our ecosystem related to cycling.
Q: In your opinion has Sea Otter become more of a festival than a race event?
Seymour: No, I don't see racing and race participation as taking a backseat at Sea Otter. I see racing as core to these events, especially Sea Otter. I think UNBOUND is the second largest cycling event on the calendar, and it certainly has become a large mass participation event with a sizable industry presence. To some degree, Sea Otter is the inverse of that—it has a large industry foot print. And Frank and I see growth continuing to come in the expo itself. What Life Time might be able to bring, because we are much stronger on the participation event side, the racing side, is that I think we can grow racing and race participation. I still think that's core to the experience of Sea Otter.
Q: Given some of the space issues at Laguna Seca, how much can you grow the expo?
Seymour: In talking with Frank and the team—and I don't know enough about the business behind the scenes yet—but I've been to the venue to look around. We do believe there is still opportunity for growth. There are space concerns and parking concerns. For exhibitors, we think it's about at 60 percent capacity, and that's coming from Frank and his team, so there is some room for growth. But then there's also room for bringing in more festival participants, attendees if you will, but that will probably take more complex transportation planning, bussing people in, finding places off-site to park, so we have to be really careful. We don't want to wind up with a thousand vendors and the same number of attendees. Your attendee per vendor could get diluted and that's not a great experience for exhibitors. So we know if we're going to grow exhibitor capacity, we also need to have a plan in place to grow attendee capacity. And we know it's tough to get people in and out of Laguna Seca.
Q: Where do you see an expansion in attendees coming from?
Seymour: You know I'd like to think that that is one of the potential synergies between our businesses. Life Time, as a company, has a couple of million members around the country and probably a million athletes in our data base from the past five or six years of events. So we have a fairly broad reach and a connection to potential Sea Otter attendees. And that's been one of the synergies that Frank and I have discussed. At Life Time we should have the ability to drive a little more demand in places that Frank may not have reached otherwise. Maybe I am naïve to think this, but Monterey and Carmel are beautiful destinations and when the event is back in April, and by reaching out and marketing to our members, our event participants, I think there is some synergy there; that we can drive some demand and get people to travel to Sea Otter.
Q: How do you view the October event?
Seymour: You know, and I'll be honest with you, we hadn't been sure what to expect of the October event. It's like every business out there, we've been scratching our heads trying to figure out how businesses will evolve coming out of COVID. Our expectations weren't super high, but from what Frank tells me things are going really well. There are some exhibitors still at the point where they're not willing to have their people travel and be at an event. There are a handful of exhibitors who have asked to defer until April, but all-in-all the trends look good. The opening of registration went well; camping registrations and event registrations went well. I am cautiously optimistic that the fall will be fairly good. What Frank has said all along is that he considers this a recovery event and we should temper our expectations. But right now things are sound good.
Q: How long has Life Time been eyeing the acquisition of Sea Otter?
Seymour: I think the first time I connected with Frank was three or four years ago. And at the time, Frank said he appreciated the interest, things were going really well, but to give him two or three years and he could be at a point where an acquisition might make sense. Of course, nobody saw COVID coming, but true to his word we stayed in touch. Over the last few years my approach to the acquisitions we've done has been to develop a relationship with the founders and owners. To be honest, there are buyers who say they will write a check and in 90 days you can go away and live on the beach somewhere. We have not had much success with that approach. I prefer to keep the team in place and hopefully keep them around as long as they are willing.
Q: Monterey County and Laguna Seca in particular pose some regulatory issues. Can Life Time deal with them?
Seymour: We are prepared to deal with some of those challenges, so the short answer is yes. We understand there are definitely some challenges on our radar. But compared to some of the other uses at Laguna Seca, Sea Otter's impact is much less. And we deal with similar issues at many of our events around the country, so it doesn't scare us away. I think, as a company, we've been a little more progressive on these issues and at the end of the day it's the right thing to do. We can reduce our environmental impact. We have a lot of participants at events all around the country, add in Sea Otter, not including the attendees, just the athletes racing, we will have 130,000 to 140,000 participants across our portfolio of events this year, and that has an impact. So we've done a lot of work on what our environmental impact looks like and how we can reduce it. So I think we've been fairly progressive in tackling that issue.
Q: Will Life Time continue to hold a conference prior to Sea Otter's opening day?
Seymour: Let's just say Frank and I have had lengthy discussion on whether we should host some sort of a conference. At this point we believe we should. We need to figure out what that would look like. As you've seen at Sea Otter, it's really expanding beyond purely cycling-related types of exhibitors. So we think there might be an opportunity that we could do something focused more around the outdoor industry versus just purely cycling. But we don't have any definitive plans yet.
Q: E-bikes are fast growing aspect of the industry. Will we see e-bike racing at Sea Otter and other venues?
Seymour: We want to embrace e-bikes, actually. We know that e-MTBs, for example, are controversial when it comes to public lands, but we're looking at e-bikes across our portfolio of cycling events and we're working on a plan right now. We want to embrace it. We think it's cool. It's just providing access to people who thought they couldn't get out and compete at some sort of event. I think e-bikes are amazing. We had actually entertained, with a sponsor, hosting an e-bike event this year at UNBOUND. But again, because of capacity constraints due to COVID, we had to hold off, so we're now looking at next year. I need to tell you, though, that I think it's unreasonable to ever put e-bikes in with human-powered bikes, if you will. But I think there's some great opportunities with them and that's a market we need to address for sure.
Q: Road racing seems less popular in the U.S. What are your thoughts on those types of events?
Seymour: I'm going to say, unfortunately, that road racing as we know it is . . .I don't foresee it coming back. You see the trends and you know the numbers. We've become a country of automobiles and cellphones and, if you put the two together, I have a hard time thinking that we're going to get back to traditional open road racing. I think the future of road racing right now is in criteriums. What we're seeing is a small resurgence of criteriums with closed courses that are spectator friendly. I think that's probably the future. It's also challenging today to get approval to shut down roads or even to impact roads with rolling closures. It's gotten more and more challenging. I think the reality is—for the foreseeable future—we won't see growth coming back to road cycling, and that's from my perspective. Some years ago Frank did a downtown criterium and that could be pretty fun.
Q: Will you also take over Sea Otter's international events?
Seymour: We are not taking them over. Part of our agreement with Frank is that he will continue to own and operate them as Sea Otter International, which offers a license to producers in Girona, Canada and Australia. Frank will continue to operate them independently. Life Time is primarily a North America-based company, and didn't make sense to be involved in putting on events in Europe, Canada or Australia.
