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Aaron D
by on October 29, 2020
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Source — Kurt Nagl @ crainsdetroit.com

  • Venue fell short of financial expectations in its inaugural year
  • Operator hopes to double revenue, attendance in 2019
  • Big vision involves building pro league, exporting model to other cities

When the Lexus Velodrome in Detroit opened a year ago, it grabbed headlines for being only the second indoor cycle-racing track in the country. Now, it's forging a path forward with more than just bikes.

In its inaugural year, it has staged top-level races and attracted talent and attention from around the world. Dale Hughes — keeper of the huge white dome at the corner of I-75 and Mack Avenue — is bullish about establishing the venue as both the headquarters of world class cycle racing and the coolest community center in the area, just as he envisioned when he started building it.

Dale Hughes

The velodrome designer-turned businessman has learned the difference between chasing dreams and paying bills. Operating a $4.5 million, 64,000-square-foot venue solely with the support of niche bicycle racing fans just isn't viable.

"You have hopes and dreams, then you have what you consider the reality," said Hughes, 69, of Rochester Hills, who is executive director of the Detroit Fitness Foundation, the nonprofit operator of the velodrome. "We've done more than what we actually thought was gonna be our first year."

The reality is that from a financial standpoint, the velodrome fell short of expectations. The goal was $1 million in revenue. It achieved around $900,000, with operating costs totaling $950,000. So, it fell about $50,000 in the red — not ideal, but not unusual for a new business, especially as unique as a velodrome.

By other important measures — including attendance, community support and international interest — the enterprise has shown big potential.

An estimated 35,000 people went through the door last year. Athletes traveled from as far away as Germany and New Zealand to compete at the Detroit venue. Anywhere from 500-600 spectators showed up to monthly championship races at the 980-capacity venue, nearly a dozen races were aired on Detroit Public Television, and perhaps most impressively, each livestream of those races averaged 10,000-15,000 viewers from around the world.

"I think I can get a lot of worldwide exposure for Detroit," Hughes said, adding that 60 percent of those viewing races online are from outside the U.S.

Hughes has aggressive plans to double revenue and attendance in 2019, add sponsors, host larger events and ultimately make the velodrome sustainable. That means marketing it as a venue not just for cycling, but also for corporate events, private parties and practically any other sport or activity.

As a cycle-racing venue, the Detroit velodrome has little competition. The outdoor Velodrome at Bloomer Park, built in Rochester Hills in 2002, is the only other functioning velodrome in the state. As a place for unique experiences, the Lexus Velodrome could be considered one-of-a-kind, and it enters a market ripe with consumers who crave something different. It joins concept establishments such as the Fowling Warehouse in Hamtramck, TopGolf in Auburn Hills and ax-throwing joints, which give patrons an immersive experience not found at the run-of-the-mill bar or bowling alley.

Peddling new activities

The Detroit velodrome hosts a weekly disc golf session with portable baskets and mid- to short-range shot competitions. There's also roller derby, speedskating and bike polo. That's in addition to the standard fitness offerings of running, walking, yoga, pilates, dance fusion and cardio kickboxing.

"When I designed the interior of the space, I designed it with the ability to do different activities," Hughes said.

In October, operators opened a bar inside the velodrome to goose revenue and provide an amenity for patrons. Aptly named, the SpokeEasy Lounge is open 5-10 p.m. Tuesday-Saturday, serving $3-$6 beers, $7-$8 cocktails and $5 glasses of wine in the center of the velodrome. Food trucks are on hand during event days.

The bar is run by the nonprofit and has grossed around $50,000 since opening, with most sales made during race days. Hughes said the bar is a nice boon to business but is not the main focus of the community center. "We absolutely needed the lounge for a revenue generator," Hughes said. "We don't ever expect to be a HopCat."

About half of the velodrome's revenue comes from user fees, tickets, special events and the bar. Tickets for races start at $10, and there are 22 suites (10-person) available on a per-race basis for $200. Public cycling passes cost $79 for a month of unlimited access and $379 for a year. To use the facility for noncycling activities, there is a one-time $5 fee and then $20 for five visits or $30 for 10 visits.

Three big events last year — Detroit Homecoming, produced by Crain's Detroit Business, the Accelerate Michigan Innovation Competition and the Detroit Historical Society — also provided a significant portion of revenue. Hughes said the venue generally charges $10,000 for a full one-day rental, depending on the intended use of the facility.

Cycling in events and sponsors

When the Detroit Historical Society hosted its 20th annual black-tie event at the velodrome in December, it was the first time it was hosted in a building that was not historical, said Rebecca Witt, chief development and communications officer for the nonprofit.

The evening event took two days to set up and involved removing part of the cycle track to bring in a stage and seating, Witt said. There were concerns about acoustics and creating a formal atmosphere, but the party went on without a hitch, Witt said. The nonprofit contracted Clinton Township-based event planner Elysium Experience to handle sound and stage production.

As part of the rental package, riders put on a racing exhibition for the 400 guests at the center of the track.

"They got into it. We had all these folks in formal dress, standing up and cheering the cyclists," Witt said. "What you look for is, did your guests have fun, was it a memorable evening. I think in terms of the venue, it made for a memorable evening."

The Lexus Velodrome served as host venue for the annual Detroit Historical Society Ball last year. Corporate events are a key area of planned growth for operators.

Other proceeds came from sponsorships by the Detroit Medical Center, Diversified Members Credit Union and Lexus, which is the naming rights sponsor. The naming rights deal is $300,000 per year for four years. The other two deals are for $150,000 annually for three years.

Lexus is pleased with its sponsorship investment — its largest and most prominent in the market, said Curt McAllister, Midwest public relations manager for Lexus. Its return on investment has been two-fold, McAllister said. First, having its name painted to the side of the dome facing I-75 has increased exposure, which boosts brand recognition and has a residual impact on sales. Secondly, support for a community center builds its image as a good corporate citizen.

"What we're seeing first of all is visibility, and the crowds speak for themselves," McAllister said. "One of our mantras is being part of the community fabric. We are in fact doing that now."

Hughes' goal of adding three more sponsors and boosting the events business this year is critical if he wants to realize his broad vision for the business. He said he is in talks with potential sponsors and aims to host a dozen big events this year.

Focus on youth, community

Myrna Capela said the Lexus Velodrome has done more than benefit the community in a general sense; it's directly improved the lives of the kids that use it. Capela, a 45-year-old attendance agent at Mary McLeod Bethune Elementary-Middle School in Detroit, started bringing her 14- and 16-year-old boys to the track, along with 30 or so others she rounded up from Bethune.

"It makes me wanna cry when I think about the impact it's had," Capela said. "I started bringing my kids there and thought, this would be a great way to incentivize good behavior."

Many of the students with whom Capela works have troubled lives outside of school, she said, and the velodrome has offered a rare source of stability. For one student in particular, cycle racing led to a turnaround in his home and school life.

"He went from getting marked up and in trouble to almost a model student," she said. "Still, that's a struggle, but now he's closer to wanting to do well academically. He's more connected, and he's tuned in. It's made such a difference in his whole household."

Capela takes as many students as she can to the velodrome on Mondays, Wednesdays and Fridays from 3-5 p.m., when the track is reserved for open riding for those 17 and under. The nonprofit provides equipment, rental bikes and track time for no cost to the kids. Overall access to the velodrome, including races and noncycling activities, is free for youth as well. Hughes has even helped fund trips to out-of-state competitions, such as the National Junior Championship in Pennsylvania.

Hughes plans to grow the summer camp programs, which are available to kids age 3-17 and teach everything from how to ride a bike to how to race in a velodrome. Those interested can find more information on the venue's website.

Big vision

Track cycling has been around since the late 1800s, but despite the general popularity of cycling around the world, it remains a niche sport in the U.S. Hughes sees it a different way.

"Pro sports don't tend to get a lot of access out of the U.S.," he said. "Cycling is a worldwide sport."

The velodrome is the fourth largest sports venue in metro Detroit, Hughes said. He pointed out that it's the only one where a $10 ticket puts you literally in the center of action with reasonably priced drink and food options. In other words, he's making a play for weary Red Wings, Pistons, Tigers and Lions fans and why not, given the teams' chronic and worsening inability to captivate.

"I think we are getting more eyeballs watching our activity than maybe even some of the pro sports teams," he said.

Around 35-40 riders regularly compete at the velodrome, which hosts several races each month. Participants are comprised of amateur local riders as well as some of the best in the country. National champions such as Justin Butsavage of Pennsylvania and Zachary Kovalcik of Portland frequent the velodrome.

Popular types of races include sprints, which usually are 8-10 laps on the one-10th mile track, and more lap-heavy endurance races. With cyclists hitting speeds up to 40 mph, events are high-energy and high-stakes, with broken collarbones and wrists as common as wrecks on a race car track. Championship race winners take home $5,000 in prize money.

"There's an aspect of NASCAR here," Hughes said. "Here on our track, we don't mind having some close calls 'cuz it gets the 'oohs and ahs.' It's when they actually fall that we worry."

The Lexus Velodrome in Detroit features several races each month where cyclists compete on a track one-tenth of a mile long.

Track cycling is part of the summer Olympics, and there are multiple world championship events each year. Despite ongoing efforts by various organizations to start a full-fledged professional league, track cycling just hasn't had the traction to support a model like other popular sports. At the Lexus Velodrome, Hughes is convinced he's onto something that could change this.

"We think this model can be duplicated," he said. "We want five other locations — Boston, Denver, New York — that we're going after now."

The vision is to build a professional league in Detroit by bringing on more riders with the support of new sponsors, and then exporting the model, community center and all, across the country. The first expansion could happen as soon as 2021, Hughes said.

"Our outreach is going to be interesting," he added.


See the original article @ crainsdetroit.com

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