After Castro, what will happen to the Games?

Posted by Rollo
11 minutes
After Castro, what will happen to the Games?

After Castro, what will happen to the Games? There are many concerns that at this point do not concern only the Games themselves, but the whole system of CrossFit LLC and its affiliates who did not take long to express their dissent.

There are some aspects of the entire scenario related to CrossFit that must be taken into consideration, at least to understand the choice to replace the Ex Navy Seal with the 39-year-old Justin Bergh , former general manager of the Games since 2013 and a collaborator of Castro. 

Because CrossFit Games are a strategic asset

The big leap of CrossFit Inc was certainly the partnership with Reebok in 2011 which allowed both companies to grow in terms of numbers and visibility thanks to the resources that the Adidas group, owner of Reebok since 2006, put in place for the relaunch of the brand. . It was an almost mandatory placement choice after Adidas shelled out $ 3.8 billion to save a struggling Reebok after Nike replaced it as the official NFL supplier. 

In 2009, or three years after the acquisition, the Adidas plan still did not take off and indeed, due to negative sales trends in the shoe sector, Reebok devalued by € 265,000,000 . At that point the last solution that the Germans put on the table was precisely to approach CrossFit which was certainly the emerging phenomenon of the moment, an alternative to sponsoring top athletes in other sports. Basically the idea was to create a new sport in which to dominate as a brand.

The partnership was launched in a big way and caused a lot of hype starting with the largest 3D illustration project in the world, carried out in London, in Canary Warf on over 1,000sqm. which holds the world guinness rankings by extension. In practice, a virtual box suspended over a canyon with a waterfall.

The aim was to bring the brand back to a broader and less specialized market than the one it had been targeting until then. In January 2012 Adidas therefore decided to inject more money into Reebok by betting on the growth of CrossFit and on Games. 

And at that moment the “the sport of fitness has arrived” campaign was born by the agency Dentsu-mcgarrybowen which then generated so much confusion in the following years, de facto de-stabilizing the very DNA of CrossFit. Who does not remember the commercial spread across all digital media in 2012 and the launch in Toronto?

Everyone agrees that Adidas/Reebok’s investments contributed to the growth of CrossFit Games both in terms of popularity and in terms of economic-financial value; just think that the prize pool alone went from $ 25,000 in 2010 to $ 1,000,000 the following year with $ 250,000 in prize money for the first place.

Starting from the Games, CrossFit and Reebok, thanks to the visionary Castro, increased the popularity of CrossFit both among affiliates and among Millennials who were not long in leaving the old training methods to join CrossFit in one of the many boxes that in the time they were born all over the planet. This is why CrossFit Games have always been considered, even now, a strategic asset. At least from CrossFit because on balance for Reebok it has never been a very good deal.

It is also important to always keep in mind that CrossFit and Millennial have been inextricably linked since the early 2000s and that this generation is the one that is most similar to the profile of the athlete that Glassman defined at the beginning of the CrossFit Inc adventure and from whom over the years the company has grown further and further away. After all, the times coincide perfectly and the two “movements” were born and raised together, permeating together the pop culture of an entire generation.

Covid – George Floyd and the new CrossFit

It goes without saying that a launch like the one 10 years ago would be unthinkable today and probably even a little scary since both people’s consumption habits and their approach to fitness have changed a lot in the meantime. CrossFit Inc. has been hit hard for various reasons, starting with the fact that no one would have expected such great success and that no one, in fact, was really ready to handle it. Least of all Greg Glassman who, although brilliant, was also a somewhat controversial and unmanageable character. But after all, the company was his and therefore he could do what he wanted and how he wanted; his brand, his rules.

Covid has contributed significantly to exhausting the CrossFit Inc plant as it had gone on until 2020 but it was not the only reason. The disappearance of CrossFit from some social media and the downsizing of the company’s media division were two other factors that weighed on the weakening of CrossFit Inc, as well as the rather rough organization of the company, centered almost exclusively on the protection of the brand which, although it is in fact the only real existing asset, has not been adequately supported on various fronts related to communication and relations with affiliates who, in practice, are a sort of minority shareholder of the organization.

In the meantime, relations with Reebok have also deteriorated over time for various reasons related to royalties on sales, reporting and other facts well known in the financial news of the last five years, which have deteriorated relations between the two, taking them to court in 2018.

To this we add a descending interest from Reebok whose coffers filled up less than expected, causing the great Bavarian leaders of Herzogenaurach to turn up their noses until the decision to free themselves from the heavy burden matured during COVID and finally deployed to August 2021, which will be finalized by March 2022 with a loss of 1.5 billion euros. Can you imagine how a possible new partner for CrossFit is little encouraged by this situation that establishes how the partnership with CrossFit was in fact a bloodbath?

Glassman’s release on social media in the Flyod case gave the final blow to CrossFit’s reputation in free fall, already involved in various events of racism, harassment and bullying, all attributable to Glassman. And when you reach a certain size, even if you are the head of a private company, you cannot afford to tarnish your reputation. 

This is where millennials and their predominantly progressive values ​​come into play and in blatant contrast to everything that Glassman and CrossFit with him represent. Most of the Box Owners belong to this generation, as well as their members and their weight in terms of influence of commercial trends, especially in the USA is decisive. In short, with Glassman in the lead, CrossFit wasn’t going to have a great future, adding it all together. If you are forward thinking, know CrossFit and have the right hooks ready to whip up some cash, this is the perfect storm.

And here appears, Eric Roza who sees the opportunity to relaunch CrossFit, appropriately repositioning the brand and of course making us some pennies, or rather a lot of pennies. So after offering Glassman a decent way out, even if no one knows at what price, this sort of restructuring of CrossFit has begun, taking the direction of popular fitness, much more than it was in the Glassman era in which talked about Elite Fitness, excluding from the outset a number of players potential sources of revenues. 

And so from the figure of the somewhat crude and Spartan CrossFitter who trains with little but works as hard as a marine, we came to the grandmother who trains in the living room with bottles of water. Not that it’s bad, but it kind of destroys that somewhat heroic and exclusive image that we, early CrossFitters, had of what we were doing.

Incidentally, Roza did not buy CrossFit with his own money but with those of a fund that entered into a venture with him. In other words, someone has given him some money which he wants to get back into after a certain period of time, based on a business plan that on paper offers good guarantees of success. A risky operation, precisely a “venture” in which those who put the money into it do not lend them but aim to recover them if the plan on which they have bet works; if all goes well everyone earns it, if not we have thrown away a few million. Which is exactly what investment funds operating in the world of venture capital do. 

Now the point is that although a fund swears not to interfere in the choices of the boards of directors, in fact it and its money have a huge weight on every decision as the shareholder always gets the better of everyone. To understand this, strategic decisions are strongly influenced by the fund beyond what is established in the business plan and this can change everything at any time, in spite of business plans; his money, two rules.

Typically a fund establishes an index called the IRR which determines how much its investment should return before leaving the business. Yes, because the funds are speculative entities and they certainly don’t care more about the fate of the companies than they care about their investments. Then, when the fund believes it has created enough value, at best, it sells its stake to someone else. In the case of CrossFit there are rumors of a management buy out operation even if personally, after having had the funds at home for over 15 years, I am more inclined to think of the more traditional of IPOs. I don’t elaborate here because that’s not the point.

Returning to the good Castro and excluding that he was killed just because maybe someone was unpleasant, it is quite obvious that after Glassman he was the second head to be blown up and thinking like a fund, I also try to explain why. Castro represents the CrossFit Games of the super athletes who served CrossFit so much until the problem was raised of evolving and growing on the market in a more inclusive and engaging way, not only but in fact he was the creator of it and in a certain sense of the guarantor of continuity, even in bad times like those of Covid. 

To ensure that the Games remained a strategic asset, it was necessary to eliminate the one who represented the old course and put a new and fresh face there, perhaps a former affiliate, empathically more expendable than a navy seal, able to bring the other affiliates to consider the games as an opportunity to create a community and not as an annoying task that upsets the life of the Box.

One wonders what the next Games will be like, but this is another story and in any case there is a podcast of 2020 in which Roza told her vision that was not already going in the direction of that of Dave Castro. Understandable from his point of view but not for this reason acceptable.

From the point of view of his public life, Castro has always given the idea of ​​being somewhat the master of the Games, doing good and bad times and this is not in line with the vision of a company that bases the his choices on the liking of affiliates. Let’s say that like everyone else in there, he didn’t know how to manage his personal branding in the best possible way. Furthermore, Castro, with his predilection for weapons, is certainly not a virtuous example in a country, the USA, where the subject is always at the center of media and congress attention. 

In short, strategically Castro was a kind of bulky loose cannon, beyond the fact that he is actually a very good person. The point is that this type of separation is never consensual and beyond the joint press releases, which in this case have never even seen the light, it is always the sign of a divergence of vision between the subjects involved. And whoever pays is always right, regardless. I repeat, his money, his rules.

So here is the new face of the new CrossFit Games, Justin Bergh, 39, a former affiliate, graduated in sports management from Flaglert College and present in CrossFit for more or less 10 years. In practice, the perfect link between the past and the future: old enough to know the machine and qualified enough to improve it in light of its repositioning on the market.

After Castro, what will become of the games?

And here we are again with the initial question. I have an idea but I would like to know yours since so far I have provided you with several elements to make an opinion. Certainly there will be changes and news, perhaps not exciting, perhaps not already from 2022 and certainly not drastic but introduced slowly, making sure that they are accepted by most as not necessarily popular, but certainly functional to the final purpose: to increase the popularity of CrossFit. and corporate value because no one invests only for passion but to make money.

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