Rent-Seeking and the New York Marathon

Disclaimer: All opinions expressed in this article are my own. While I present the following critique of the New York Marathon’s registration and selection practices, I intend on submitting myself into the 2020 New York Marathon’s non-guaranteed race lottery. Running provides a fantastic medium for me to compete, to meet new people, and to travel, and I will not be deterred by a monopolistic organization.

Running is a great sport where athletes from all walks of life are able to compete and to triumph together in a beautiful way. I’ve ran in packs where the camaraderie was palpable, despite only meeting the fellow runners in the group a few hours prior. Spectators at major races are fans of every runner, and don’t swear allegiance to teams or nationalities. It’s truly a communal sport where there’s no zero-sum element involved. Everyone that crosses the finish line is a winner.

However, the New York Marathon and its organizers threaten the diversity of the sport. Since it’s one of the prestigious World Marathon Majors, elite, amateur, and recreational athletes alike seek out valuable race entries in any means possible. Whereas some of the other marathons in the World Marathon Majors series have a qualifying mark prerequisite, the New York Marathon’s standards are a bit more exclusive.

The Boston Marathon is the world’s oldest annual marathon and is one of the World Marathon Majors. The race is a household name, and many runners seek out the prized Boston Qualification (BQ for short). For the youngest age bracket, 18-34 years old, a male runner needs to run a marathon in 3 hours or quicker, while a female runner needs to run a 3:30 or faster in order to notch a 2020 BQ. Most marathons around the world receive a certification from the United States of America Track & Field (USATF) or the Association of International Marathons and Distance Races (AIMS) indicating that a qualifying time run at the race can be used for a BQ. An athlete with a BQ can submit their name for entry, and the Boston Athletic Association (BAA) reviews each entry, with faster BQs generally receiving entry to the Boston Marathon [1].

Boston’s qualification standards create a meritocracy that rewards faster runners that have gotten the BQ. To ensure fairness, the BAA has worked with other race organizers to verify results at certain races, preventing bib mules (faster runners wearing another person’s bib in order to notch the BQ for the latter party) and other cheaters from achieving an entry unfairly. Furthermore, the USATF and AIMS have not shied away from revoking race certifications if they deem a race’s conditions to be not up to standard.

On the other hand, the New York Marathon’s qualifying standards are more restrictive. In addition to having faster qualification times for every bracket, the marathon restricts guaranteed entry to athletes who’ve achieved the qualification time at one of the sponsor’s affiliated races. Any athlete that runs a qualification time at a non-affiliated race will be added to a first-come-first-serve waitlist, with entry depending on the number of remaining slots after the athletes achieving guaranteed entry have been accounted for. The full qualification rules are as follows [2]:

All applicants who meet the time standards at the following New York Road Runners (NYRR) races in 2019 will be eligible for guaranteed entry in 2020: 

  • 2019 Fred Lebow Half-Marathon, 
  • 2019 United Airlines NYC Half, 
  • 2019 SHAPE Women’s Half-Marathon, 
  • 2019 Popular® Brooklyn Half, 
  • 2019 NYRR Staten Island Half, 
  • 2019 TCS New York City Marathon.

A limited number of time-qualifier spots will be available to runners who met the time standards in a non-NYRR race. These spots will be filled on a first-come, first-served basis. Verification will be completed prior to the 2020 entry drawing.

For the youngest age bracket (18-34 years old), a male runner needs to run a 2:53 marathon or a 1:21 half marathon, while a female runner would need to cross the finish line in 3:13 if running a marathon, or 1:32 if completing a half [2].

However, by restricting qualification to certain races, the New York Marathon’s organizers are able to control the scarcity of qualification marks, effectively monopolizing the qualification process. They funnel runners into their own races, threatening the diverse nature of the sport. Monopolizing qualification allows the organizers to levy higher registration fees, and to homogenize the demographics of the athletes. The qualification guidelines reward local athletes with deeper wallets and ability.

For the most part, running races welcome athletes agnostic of physical ability. Athletes with disabilities race in wheelchairs, whizzing through the streets in tightly knit pelotons, reaching speeds upwards of 40 kilometers per hour. The International Paralympic Committee (IPC), classifies athletes based on their range of ability. Athletes with disabilities competing in a wheelchair usually fall under the T51, T52, T53, or the T54 classifications, meaning that they have some or full use of their arms but have limited or no trunk function.

Although the New York Marathon doesn’t indicate what the qualification marks are for the different IPC classifications, it’s safe to assume that there are similar qualification guidelines for IPC athletes. Disabilities charge interest. A T51-54 athlete wishing to compete in a road race not only has to pay the registration fee as any other runner would, but also has to arrange intricate arrangements in order to bring their specialized equipment to the race’s start line. The New York Marathon’s restrictive qualification guidelines severely damage an outside athlete with a disability from attempting to qualify. For instance, an athlete with a disability living outside of New York, should they desire to qualify, would have to make an extra trip to and from New York to compete in an accessible NYRR sanctioned race, as opposed to finding a race closer to home that may be readily available to them.

New York isn’t the only World Marathon Major to impose restrictive entry conditions for outsiders. The London Marathon gives preferential treatment to United Kingdom residents, considering them first for the lottery and charging them a cheaper registration fee than they do for international hopefuls. While it’s unfortunate that the London organizers inject nationalism into their registration flow, they aren’t alone. Many other smaller races also institute similar stipulations. However, these practices pale in comparison to New York’s qualification standards. An international competitor eager to compete in the New York Marathon would have to arrange for 2 different, disjoint visits to the United States – one to attempt a qualifying mark at an NYRR sanctioned race, and another for the actual New York Marathon itself.

Large races provide a significant economic boost for the host city. The 2014 New York Marathon was estimated to have produced a $415 million economic impact for the city [3]. Even smaller scale races still inject sizable economic boosts to their hosting community. The Monterey Bay Half Marathon, a personal favorite race of mine, attracts a smaller field of 10,000 runners annually, but provides an annual $8 million impact to Monterey County.

New York Road Runners (NYRR) is an established non-profit that organizes the New York City Marathon and its associated qualifying races. Charity Navigator, an independent non-profit that evaluates the efficacy of other non-profits, awarded NYRR an overall rating of 91.66 / 100 based on their financial filings and transparency. Taking a closer look at their financial filings, we can see that in FY 2018, the NYRR garnered $98,575,384 in total revenue, with total expenses of $95,489,937 [4].

The NYRR CEO, Micahel Capiraso, received a compensation of $479,195, while the President of Events & RD, Peter Ciaccia, received a salary of $487,105, both well within America’s top 1% of individual earners. These remuneration packages amounted to 0.5% and 0.51% of NYRR’s total annual expenses [4]. Thus, these two individuals personally received 1% of all registration fees for all of the races that NYRR organized.

Excluding the previous year’s New York Marathon, the other sanctioned qualifying races attracted more than 75000 runners. Assuming that each runner paid a $150 registration fee on average (fees increase closer to the race date), the New York Road Runners club stood to earn more than $11 million in registration fees alone. This does not include the additional expenses that runners would have paid for their race photos or for gear purchased at the race expos.

For the sake of argument, let’s say that as a result of the restrictive qualification standards, runner registration increases by 10% since new athletes are hoping to secure the guaranteed entry to the marathon. This would amount to an additional $1.1 million in registration fees, with Capiraso and Ciaccia pocketing $11,000 simply for making the standards more restrictive.

Let’s also say that the economic impact scales linearly per runner. The 2014 New York Marathon had roughly 50,000 runners, producing an economic impact of $415 million, and also earned the local and state governments $22.2 million in taxes and occupancy fees [3]. The qualification races had a total of 75,000 runners, so the government would have earned more than $33 million in taxes. A 10% increase in registration would mean that the government would reap an additional $3.3 million from the combined economic impact.

I also have no doubt in my mind that the NYRR and the New York government worked together to ensure the qualification standards exist in their present form. The municipal and state governments are well aware of the economic impact that these races can provide, and are certainly looking for their cut of the revenues. By forcing athletes to run in their city, they extract more tourism dollars in the form of transactional taxes. While these numbers seem small, the New York Marathon organizers and the associated local and state governments are able to part more runners from their money without providing any additional benefit or innovation. The New York Marathon is the headphone jack removal of marathons, and the organizers are fully guilty of engaging in textbook rent-seeking behavior.

Rent-seeking is when an organization desires to gain additional wealth without any reciprocal contribution of productivity. Robert Shiller, an economics Nobel laureate, provides a classic example of rent-seeking behavior [5]:

A feudal lord installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is not adding value in any way, directly or indirectly, except for himself. All he is doing is finding a way to make money from something that used to be free.

The world of athletics is no stranger to rent-seekers. The World Triathlon Corporation (WTC), a privately held company and the organizer of the Ironman World Championships, had for years set up a chain over what was a free-flowing river. Until 2015, individuals looking to compete in the Ironman World Championships had to enter into a lottery for the chance to compete. Candidates were required to pay $50 to simply enter the lottery, and, if selected as one of the 100 competitors for the actual race, were also required to pay the race’s registration fee.

Fortunately, the US District Court found that the Florida based WTC had violated state law by setting up and charging for a lottery. Since they had charged a fee to enter the lottery instead of giving away the chance to compete in the race, they had broken the law. The FBI and the United States Attorney’s office, ironically represented by 8-time Ironman finisher James A. Muench, had the WTC forfeit more than $2.7 million, the amount the organizers had collected from the lottery since October 2012.

After the WTC agreed to cooperate with the FBI and the US government, people wondered whether this precedent would change the registration flows of other races. Rich Kenah, the race director of the 60,000 runner Peachtree 10K, claimed that he had heard of other races charging a lottery fee, but didn’t name any specific ones. The Justice Department and US Attorney Office also left things in flux, remarking that they couldn’t comment on other ongoing investigations [6]. 

In 1920, the State of New York adopted Emergency Rent Laws, instituting the first set of rent control legislation. A century later, we can only hope that the same government will enact new rent-seeking control laws. Even simply treating every USATF or AIMS qualifying time equally under the lottery entry process would eliminate these issues. However, by engaging in exclusive, rent-seeking, and crony capitalist behavior, the New York Marathon tarnishes the sanctity of competition, amateurism, and camaraderie that the athletics community has cultivated over centuries. The organizers of the world’s largest marathon have the starting pistol in their hands. I hope that they don’t choose to shoot themselves in the foot.

Sources

  1. https://www.baa.org/races/boston-marathon/enter/qualify
  2. https://help.tcsnycmarathon.org/customer/en/portal/articles/1826954-time-qualifiers
  3. https://juliabanksblog.files.wordpress.com/2016/08/economic-impact-final.pdf
  4. https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=13314
  5. https://www.project-syndicate.org/commentary/the-rent-seeking-problem-in-contemporary-finance-by-robert-j–shiller?barrier=accesspaylog
  6. https://www.outsideonline.com/1981506/ironman-lottery-dead-next-your-local-race
This entry was posted in Uncategorized. Bookmark the permalink.

One Response to Rent-Seeking and the New York Marathon

  1. Raghu Dwarakanath says:

    Thanks for the article Rohit. I finally got to it! Very informative. Your passion for the topic is evident. Cheers … Raghu

Leave a Reply

Your email address will not be published. Required fields are marked *