Good morning and welcome the Morning Chalk Up. Some good news in an avalanche of bad: Volkswagen signed Sara Sigmundsdottir as a brand ambassador, Justin LoFranco has more. And, the local affiliate community faces an uncertain future, but so does CrossFit Inc. Today:
Sara Sigmundsdottir signs with Volkswagen.
Tommy Marquez poses three big questions facing CrossFit Inc.
Emily Beers profiles the gym that earned the designation “essential service” during the coronavirus quarantine.
“I am only one, but I am one. I cannot do everything, but I can do something. And I will not let what I cannot do interfere with what I can do.”– Edward Everett Hale
Sigmundsdottir Signs with Volkswagen
At a time when the global sports world has ground to a halt and the CrossFit Games season inches closer to being canceled altogether, Sara Sigmundsdottir is making major news after inking a deal to be Volkwagen’s new global brand ambassador for their sporty R line.
Sigmundsdottir: “Signing this contract is one of the milestone moments in my professional career. It has been a long time coming and I lack the words to describe how happy and grateful I am. I fully realize that the timing of this announcement comes at a time where there are far more important issues going on in the world but at the same time I feel that it can be a source of encouragement and hope to show that wheels are still turning and deals are still being done.”
Why it matters: Volkswagen’s decision to sign Sigmundsdottir speaks volumes to her marketability on a global scale but also the appeal and recognition of CrossFit Games athletes in marketing. Though this is only a toe in the water, this is the largest company to enter the CrossFit market and begins to pave the way for other non-fitness companies to enter the space.
Volkswagen’s annual revenue in 2019 was just under $275 billion dollars. To be that in perspective, that’s nearly 7x the annual revenue of NIKE in the same period.
One big thing: To our knowledge, this is the first CrossFit Games athlete in history to be a global brand ambassador for a car company. We’re not talking about a local dealership partnership, but one of the largest car companies in the world with a near-limitless marketing budget.
For Sigmundsdottir, the deal also demonstrates how widespread her marketability is, adding to an already impressive list that includes:
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Three Big Questions Facing CrossFit Inc.
The world has effectively pressed pause on many industries and businesses, and the CrossFit community has been circling the wagons in an attempt to mitigate the toll within its ranks. Affiliates, and individual communities are not the only ones bobbing and weaving against the ropes. All water leads to the ocean, so any sustained hardships by the community will eventually make its way to the top.
This puts CrossFit Inc. at a crossroads as well, and taking a look at the bigger picture, there are three crucial questions that need to be answered going forward.
1. What does the financial future of CrossFit Inc. look like?
The elephant in the room with regards to the CrossFit Inc.’s future is what financial health for the company looks like long-term. In the short-term, CrossFit recently laid-off more employees, and the COVID-19 pandemic has seriously impeded various revenue streams for the company; with the full ripple effects unknown at this point.
Seminars are a significant source of revenue, but they’re halted for the time being and probably won’t be up and running at full speed anytime soon. CrossFit still provides a host of online courses, and Dave Castro mentioned on Talking Elite Fitness that they’re adapting the L1 and L2 courses to the online formats. Even with a quick adjustment though, there are 53 scheduled courses during the month of April alone that CrossFit could be missing out on as a result of global shelter in-place, and isolation restrictions. We’re talking a potential seven figure loss for the month in seminars alone.
Affiliate fees are by far the largest source of revenue for the company. 15,000+ affiliates worldwide at its peak amounts to around $45 million annually. CrossFit Inc. is doing the noble thing by helping its affiliates during this time in announcing that they will be alleviating some of the burden of affiliate fees for gyms, but there is a potential larger issue looming. Affiliate numbers broke the 15k barrier in 2018 and have remained relatively flat since, but in recent months the number finally dipped back below that mark, and the current financial implications of a pandemic could mean more affiliates go by the wayside. Some long-standing affiliates are closing for good, which is another dent in the armor.
The CrossFit Games season is in flux, which introduces a pandora’s box of situations depending on if or when the remaining events actually take place. Saving those issues for later, the biggest evergreen factors financially for the Games are the declining participatory numbers, and the Reebok contract. Considering the 2018 Open had roughly 416,000 registered athletes, the past two Opens account for a combined loss of nearly 239,000 athletes comparatively, and $4.78 million dollars of lost registration fees that could be used for a rainy day. The ten-year title sponsorship contract with Reebok worth millions in royalties and prize purse money annually is set to expire as well, which leads to the next question.
Meet the Gym that is an Essential Service and is Staving off the COVID-19 Financial Hit
Not only did 60-year-old Will Powell dominate the men’s 60-plus division during the CrossFit Games Age Group Online Qualifier this March, his gym is now crushing it despite the growing worldwide COVID-19 pandemic.
Powell, who won three events in the AGOQ and finished with just 15 points overall, is the owner of Powell Fitness Training and Wellness Studio in Greensboro, N.C. His facility operates as part personal training studio and functional fitness facility that offers group classes, “much like a CrossFit affiliate,” he said.
However, unlike most CrossFit affiliates in the United States at the moment, Powell’s facility is still open because it’s considered an essential service. He has worked hard to achieve this status by working closely with the Dean of the Public Health Department at a local university, as well as his personal MD and his lawyers.
“Most of our clients come here because doctors referred them,” he explained, adding that approximately 30 to 40 percent of his clients come in with Type 2 diabetes, high blood pressure, or with other degenerative chronic diseases, such as arthritis.
Being an essential service means his 28 coaches can continue to train their clients as long as essential services are legally allowed to remain open through this pandemic.
Powell assured the Morning Chalk Up that he and his team are taking careful precautions right now, including diligent sanitation. They have also reduced the number of people allowed in the facility at once.
“There are only ever three trainers and their clients in the studio at once, so only six people. And it’s a 10,000 square foot facility,” Powell said.
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Ever wonder what would happen if your favorite CrossFit athletes stepped into the squared circle? Sean Woodland and Tommy Marquez have the answer. It’s CrossFit Wrestlemania 2 on TEF. Who will survive the No Holds Barred Masters Living Room Battle Royale? Can the Grundler Brothers hang on to the tag team titles? Will Tia Toomey exact revenge on the Dottirs of Destruction? Strap in, hold on and have some fun!