DEBTHURDLER

National Post (Latest Edition) - Financial Post Magazine - - FP ENTREPRENEUR -

JesseFul­ton’s365S­ports­faceda$1.3-mil­lion­holeafter­ju­s­tone­sea­son of­op­er­at­ing5kFoamFest,buthas­fig­ured­outhow­to­keepi­ton­course

Theac­co­ladeswere­pouring­i­nattheend of 5k Foam Fest’s first year in Canada. De­spite a se­ries of hur­dles, in­clud­ing the bank­ruptcy of the U.S. en­tity that owned the­brand­name­fortheob­sta­cle­cours­er­aces, there­sult­ing­poor­pres­sandthe­sub­se­quent cash crunch, Jesse Ful­ton, the founder and pres­i­dentof365S­port­sInc.,knewhe­hada good­pro­duc­ton­his­hands.“The­feed­back was­sopos­i­tive,thestaffthoughtithadlegs, Ithoughtithadlegs,ev­ery­body­had­fu­nand we ac­tu­ally raised some money for char­ity whilewew­ereatit,”hesays.Ju­s­toneprob­lem:Along­withtheac­co­lades,the­bill­swere pour­ing in as well —$1.3 mil­lion of them. “Everys­in­gleper­so­nandtheirdog­told­meto cut­my­loss­esand­moveon.ButIwaslike,No way­man,I’mgo­ingtofig­urethiso­ne­out.”

Ful­ton’s prob­lems re­ally be­gan when RoundHouseRac­ing,theU­tah-based­com­pany that sold him the Cana­dian rights for the5kFoamFest­name,aswellasa­lotofthe in­fras­truc­ture­need­ed­to­holdther­aces,went un­der in 2014. Al­ready op­er­at­ing un­der a tight­dead­line,the­bankrupt­cy­cameasasur­prise,but­per­hap­sit­shouldn’thave.

A few weeks be­fore the event, Colling­wood,Ont.-based365S­ports­didn’thavethe in­flat­able water­slide, fans, foam ma­chines an­dotherequip­ment­worthabout$250,000 that it had pur­chased through Round House.“We­had­to­take­work­ing­cap­i­ta­land buy­atono­fouras­setst­wice­and­had­to­ex­press a lot of those ob­sta­cles into Canada,” Ful­ton­says.“Ship­pinga4,500-pound­slide air­freight­is­notcheap.”

De­spite the bad PR — Round House’s bankrupt­cy­madeFoxNewsandFul­ton­got thou­sands of calls and emails from an­gry Amer­i­can­swho­hadreg­is­tered­foreventsin the U.S. that were be­ing can­celled with­out re­funds — he says he couldn’t change the race’snameashe­hadal­readys­pent$50,000 on­brand­ing.Flags,tents,ban­ner­sande­ven themedals­borethe5kFoamFest­name.

Ful­ton,atleast,wa­sused­toen­coun­ter­ing ob­sta­cles.Be­for­estart­ing365S­ports,he­was apros­now­board­er­for13years,coachedthe Cana­di­anO­lympictea­matthe2010games and founded Shre­d­u­ca­tion, a train­ing pro­gram that pro­duced 28 na­tional team ath­lete­sand­morethanadozenO­lympians.

The orig­i­nal idea for 365 Sports was to op­er­atea­multi-ac­tion-sport­fa­cil­ity,but­later mor­phed into host­ing ac­tion sports events, which­led­toop­por­tu­ni­tiesto­dosome­con­sult­ing,brand­ing,con­cept­de­vel­op­men­tand ex­pe­ri­en­tial­mar­ket­ing.In­turn,Ful­ton­came across an op­por­tu­nity to jump into the fun run mar­ket by li­cens­ing the 5k Foam Fest name.“Fun­run­san­dob­sta­cle­cours­erac­ing is the fastest-grow­ing par­tic­i­pa­tory sport inthe­world,”hesays.“It’snow­big­gerthan triathlon­sand­marathon­scom­bined;15to20 mil­lion­peo­pleayear­doit.”

Ful­ton’s first race in Lon­don was a desul­to­ryaf­fair,but­thesec­on­doneinToronto came­with­in­min­ute­sofnot­be­inghel­datall when the venue’s land­lord pointed out he hadn’tre­ceived­his$20,000feeyetan­difhe didn’t get it later that day, the event was off. Ful­ton­had­some­fund­she­could­drawupon, but­get­tingth­em­would­takea­cou­ple­of­days. “Our­in­tern­pipesu­pand­goes,Hey,Ijust­got ap­proved­fora$20,000li­ne­of­credit.Let’sgo tothe­bankand­gra­bit,”Ful­ton­re­calls.“We gotit­totheguy­with­sixmin­utestogo.”

The­com­pa­ny­didn’tmakeany­moneyon theob­sta­cler­aces­dur­ing2014an­dend­edup $1.3mil­lionin­debt,butFul­ton­man­agedto as­sure­sup­pli­er­sand­cred­i­torsthathe­could turn things around. For 2015, 365 Sports bumpedthenum­bero­feventsupto12,got some­spon­sor­ship­sto­bal­ance­out­theover­head and man­aged to get to a breakeven po­si­tio­nand­pay­off­some­ofthedebt.This year, the com­pany, which has 15 full-time staff, 35 full-time sum­mer stu­dents and hire­sanad­di­tional1,500part-timers­forthe events,plansto­host14races.

Ful­ton says the com­pany still owes money, but it’s now a man­age­able amount and he’s in­vest­ing in new event prop­er­ties, such as ac­quir­ing the ac­ti­va­tion rights and part-own­er­shipoftheOb­sta­cleCourseRac­ingCham­pi­onship,which­hosts7,000ath­letes­from30­coun­triestom­akeit­the­biggest such event in the world. He’s also buy­ing mor­e­in­fras­truc­ture,in­cludinga1,000-foot slide­thatwill­tour­sixOn­tar­i­olo­ca­tion­sthis sum­mer,set­tin­gu­pa­ma­rathon­inAus­tralia and­de­signinganewof­fice/ware­hous­es­pace. “I love the adren­a­line of the events and the cre­ativ­ity we can put into it,” Ful­ton says. “As long as the phone keeps ring­ing with newop­por­tu­ni­ties,I’ma­hap­py­cam­per.”

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