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Bloomberg Business of Sports
Churchill Downs CEO on Kentucky Derby Weekend, F1 Returns to Miami
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Narrator/Commercial Voice
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Michigan Business Representative
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Interviewer 1 (possibly Randall Williams)
Our aim is always to leverage the
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Bill Carstanjian, CEO of Churchill Downs
global appeal of football. Having representation in college sports is even more important than pro.
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Alberto Perlman, CEO of Zumba
10% of Americans now claim soccer to
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Ayo Komatsu, Haas F1 Team Principal
be their favorite sport.
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Alberto Perlman, CEO of Zumba
We estimate the youth sports audience has $3 trillion in spending power.
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Bill Carstanjian, CEO of Churchill Downs
The nature of baseball is it is worldwide and it is global.
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Host Michael Barr
I'm very happy for the WNBA and
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Alberto Perlman, CEO of Zumba
how the NBA sportsbooks are not going
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Bill Carstanjian, CEO of Churchill Downs
anywhere and sports betting is only growing.
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Interviewer 1 (possibly Randall Williams)
We have a super team running this league and this league is here and it's here to stay.
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Narrator/Commercial Voice
Bloomberg Business of Sports From Bloomberg Radio,
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Host Michael Barr
this is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr. Vanessa Perdomo and Randall Williams are out on assignment for them there in Miami for the Formula one race. We'll be talking about the Miami Grand Prix with Team Principal from Haas. And then later we'll speak with the CEO of Zumba. That's straight ahead on the Bloomberg Business of Sports. But first, let's go racing. Horse racing. That is ahead of the Kentucky Derby. Vanessa and I spoke with Bill Carstagen. He is the CEO of Churchill Downs Incorporated. He told us about how they have evolved the event beyond just the race and how he walked us through the renovation plans. Let's listen in on that conversation now with Bill Carstanjian, CEO of Churchill Downs. Bill, welcome to the Bloomberg Business of sports. Oh my. It's a busy week for you guys at Churchill Downs. Oh my goodness. They're running the Kentucky Derby. Bill, there's a lot that goes into it. Take us through that, please, please.
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Bill Carstanjian, CEO of Churchill Downs
Well, first, thanks for having me on the show. It's great to be here. It's always great to talk to you guys. So, yeah, this is always a, a busy time, but also it's an exciting time. Wherever you go in this community, not just the racetrack, everybody is fired up in Louisville, Kentucky. So whether you're in the airport or at the schools or in a restaurant, wherever you go, there's this, this sort of holiday energy to the place. Everybody, everybody's rhythm's tied into to this event. And when you're a part of it, like I'm fortunate enough to be, that keeps you fired up all week, Bill.
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Interviewer 1 (possibly Randall Williams)
You guys obviously have, you have more going on than just the Kentucky Derby. You have events going on every single day of the week leading up to the race on Friday. The Kentucky Oaks is going to be pushed into prime time. Right. For the first time in a long time. Tell us about that decision and about the decision just to have things leading up to the Derby every, every day.
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Bill Carstanjian, CEO of Churchill Downs
Yeah. So Friday, as you mentioned, it's, it's a very famous race called the Kentucky Oaks. And a lot of people don't realize this about this race. It's a three year old race for the Phillies. So the Derby is an open race, a three year old race for Phillies or colts. But predominantly it is male horses that enter that race. But the Phillies, the female horses have a race all for themselves. It's the day before on Friday and it's actually the fourth most bet race in the United States. It's the Kentucky Derby's number one by far. And then it's Preakness, Belmont Stakes and then the Kentucky Oaks race. So the Oaks is huge within this region of the country and it's huge amongst racing fans across the Country. But NBC saw some of the pageantry and some of the, some of the show that that has become the Oaks. We have well over 100,000 people that show up on the track for that day. Most are dressed in pink. Pink is the official color to support women's health related issues. So NBC has seen all that, seen how it's built, and they approached us about moving it to prime time. It had been run in the 6 o' clock hour, moving at the prime time on NBC because they thought it's a good enough spectacle and event where they wanted to take it across the country, much like we do the Derby. So, so really, for the first time ever, the race will be run in prime time post times 8, 40, just right in the middle of that primetime hour. And our media partner NBC feels very strongly we can build this like the Derby has become, where we sort of blow through all these barriers of regional interest, of industry interest and reach all of America to create potentially an event that can be as impactful, potentially as the Derby at some point in the near future.
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Interviewer 1 (possibly Randall Williams)
Michael, I love it. Not just women's sports are on the rise, but women's horses are on the rise also. I love that.
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Host Michael Barr
Yeah.
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Interviewer 1 (possibly Randall Williams)
In their time.
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Host Michael Barr
We're talking to Bill Carstagen. He is the CEO of Churchill Downs Incorporated, Twinspires, the app, if you're not at Churchill Downs, you can bet on the race. Is this a shameless plug? Yes, it is from me. Tell us more about this app because I have used it many times.
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Bill Carstanjian, CEO of Churchill Downs
Well, first of all, I appreciate that plug. I really do. So I'm going to back up for one second on that app to make a broader point, which is wagering on horse racing in the United States, whether you do it at the track or you do it online is subject to a congressional federal law different than any other sport. So sports wagering, on the other hand, if you're betting on the New York Giants or, or, or NBA or hockey or baseball, that's all a state by state legal paradigm. But horse racing has a federal law and that just has to do with the long history of betting on horse racing in the United States. So the relevance of that is that's why Twin Spires, an app devoted entirely to wagering online on horse racing, has been out there for a while longer than sports wagering. It just takes wagers on horse racing. And we've had a lot of time to build it, a lot of time to perfect it. And we have a lot of loyal customers that when they want to place a bet on a horse race. They like to do it on Twin Spires because we have lots of tools and lots of, you know, lots of functions and features that make it easier and more enriching and experience. So that's what the app's been. It's a very profitable app, and it's all homegrown. Here at Churchill Downs, we built it up from scratch, and it's been a wonderful journey for those of us who were a part of it, because now it's a very large, successful division of our company.
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Host Michael Barr
Yeah, you don't even see OTBS anymore, Vanessa. A lot of them are gone because of apps like this.
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Interviewer 2 (possibly Vanessa Perdomo)
Very efficient.
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Interviewer 1 (possibly Randall Williams)
Yeah, absolutely. And as we're on the subject of, you know, gaming and gambling for horse racing and things like that, I want to ask a little bit about historical racing machines and how much of that is part of the business is not necessarily, I guess, gambling in the same way, but tell me about that and how that, along with the app and all these other ways to get into horse racing, it's grown your business is.
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Bill Carstanjian, CEO of Churchill Downs
Sure. So historical horse racing machines are a gambling device that looks a lot like a slot machine and is very similar to a slot machine experience. And it goes back to this point I was making about sports wagering, that in this country, gambling is a state by state thing. So every state's different. Every state has different rules, allows different products, has a different history around gambling that changes how they deal with gambling in the present day. So there are a number of states, including Kentucky, where it didn't have traditional Las Vegas slot machines, but it allows a product called historical racing machines that look and feel pretty similar. And that is a business that in and of itself is a successful business, functioning a lot like a casino business. But also that's a paradigm under which purses for the horses are built. So when. When these folks race their horses, you know, they've raised these horses, they have a huge expense in delivering these horses to the racetrack to. To win races. So they want to win a lot of money when they take their horses to the track. And the question is, where do you get the money? Where do you get the purse money that the horses compete for and win? If you run in the Derby, you're running for a $5 million purse, where does the $5 million come from? Some of it comes from a piece of just the wagering on horse racing itself, and some of them depending on the state you're talking about. But let's take Kentucky. Some of it comes from a piece of the historical Racing machines that people play in several facilities across the state. So it's a two pronged business model. HRMs help Churchill Downs as a separate business unit in the sense that it functions similarly to a casino. But also HRM has helped the entire horse industry because a portion of the revenue from those flows into the purse account and that's the money the horses win when they win races at Churchill Downs racetrack.
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Host Michael Barr
Talking to Bill Karstangen, CEO of Churchill Downs, you guys, last year, you guys were working on a $900 million expansion, but it was stopped last year because of construction costs and tariffs. What is the status now on that?
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Bill Carstanjian, CEO of Churchill Downs
Yeah, we decided to rethink that, that project. We, we announced it last year right before the first rounds of tariffs were announced in our country. And we saw immediately that there was going to be a bunch of disruption potentially to the supply chain for construction. So we immediately said let's put the brakes on this and let's break that $900 million project into more bite sized projects where we had much more visibility and control over the immediate expenses to build out the project. So the most major project we're working on right now came out of that larger project. It's a $285 million project called Victory Run to convert an older area of the track that, that is around the beginning of the first turn of the track to convert it into a modern grandstand esque addition to our track with suites and boxes and dining areas. And I think we learned that that's the best way for us to announce and do projects. Do them in chunks where people will see the fruition of those projects in two to three years. Not discuss it as generational projects that will take five to ten years, but, but keep it to two to three year projects where people can digest the costs and appreciate the vision behind the project and know that it's a short period before they realize it. So we haven't really missed a beat. We just decided to reimagine and break it down into chunks.
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Interviewer 1 (possibly Randall Williams)
So is the overall goal still around a $900 million renovation or what else can be expected? Are you looking at the other, what will be the other chunks to add to the next expansion after Victory Run?
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Bill Carstanjian, CEO of Churchill Downs
So starting with Victory Run, it's already under construction and it'll be completed by 2028. We'll evaluate that and see what we learn and see if we spot any differences and changing tastes or preferences of our customers. And then we'll announce the next project from there. But certainly some of the elements of the $900 million project will be present in everything we do because you can see the places on the track that are outdated or undeveloped yet. And that's, that's where there's opportunity to improve and reimagine older spots of the track and build on and create new spaces where there currently isn't much development around the track. And even though we've been around for 152 years and we have this historic facility, there's still a lot of opportunity, both in terms of some open space and redoing existing older space to have impactful projects.
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Host Michael Barr
That was Bill Kostandjian, CEO of Churchill Downs Incorporated. Up next, Vanessa and Randall spoke with Ayo Komatsu, team principal for Haas Formula one team. That's straight ahead on Bloomberg Business OF Sports. I'm Michael Barr for Vanessa Perdomo and Randall Williams. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.
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Michigan Business Representative
This is Bloomberg Business of Sports From
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Host Michael Barr
Bloomberg Radio, this is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr. Vanessa Perdomo and Randall Williams are out in Miami this week covering the Formula One Miami Grand Prix. Lucky bunnies. But before they headed down south, they caught up with the Haas Team principal, Ayo Komatsu. Ahead of the Grand Prix, he gave them the lowdown on how they've been finding success with the new car and how they navigate being a small team amongst racing giants. Let's listen in to the conversation with IU Komatsu, Haas F1 team principal IO
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Interviewer 1 (possibly Randall Williams)
thanks for joining the Bloomberg Business of Sports. We're so excited to have you here. Especially made time for us right before the Miami Grand Prix. We super appreciate it. So we just want to dive right into it. Obviously the biggest topic of this season is all the new rule changes and everything new with the car. It seems to be working out pretty well for you guys. Can you tell me a little bit about how you guys have handled the new changes and why it's working for you guys?
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Ayo Komatsu, Haas F1 Team Principal
Well, that was really tough. It was the, it's the biggest regression change I've experienced in 23 years of my F1 career. You know, sometimes the changes happen. Big change happen on the chassis side or on the engine stroke PU side, but never together. So we knew this year was going to be a huge challenge. And then it's not like last year, we gave up on last year's development. So last year we had to do this parallel development and as you might know, we are the smallest team. So I just knew this year is going to be very, very tough challenge. But we really focused on the basics, you know, the milestones. We got to get the car build at certain point hit the ground running here. Just learning every time I said reliability and then the fact that we need to send the car out, maximize running time because every time we run the car, every lap we are running Something because it's so new. Everything is brand new, not just hardware in terms of software, how to get best out of hybrid engine, that was so new. So I think we've done those basics really well pre season. So we had three test, one in Barcelona, two in Bahrain. We got most out of it. We understood the car much better. So I think that's why we could get most out of what we got in the first three races. And of course we, we knew that since it's such a brand new car, reliability would be an issue. Like you saw in which race was China, boss McLaren had to be pushed off the grid. They couldn't even start the race and then two other cars couldn't start the race. So we got to be there to take those moment opportunities. You know, we shouldn't be the one retiring, right. So I think we've done those basics. That's why we are in a very good position at the moment. But the competition saw cuff, so from here it's going to be a very different challenge.
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Interviewer 2 (possibly Vanessa Perdomo)
I think it's interesting you, you mentioned all of the changes in terms of like the engine stuff and things like that. There are also some teams that have struggled with it as well.
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Ayo Komatsu, Haas F1 Team Principal
Yes.
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Interviewer 2 (possibly Vanessa Perdomo)
What do you think enabled you all to sort of roll with the punches and, and really take this in stride? Even though it's probably been very difficult behind the scenes now.
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Ayo Komatsu, Haas F1 Team Principal
Basics, focusing on basics. Because we just knew like, you know, normally the bigger the regulation changes are, right, More struggle small teams have because by definition we don't have as much resources as bigger teams like Ferrari, Mercedes or even Williams, they have more than 1000 people. Audi, they have more than 1000 people. Aston Martin, 1200. So they are much bigger than us. So for us, you know, we are 400 people, right? Less than, way less than half. So we got to really focus on the basics. So. And then also before you go to the circuit, other big teams have so many tools to be able to understand the car. Some of it we don't have. So it was really important that we maximize our pre season track time. Nine days of testing to understand the car, understand the regression. So really focusing on the basics I think gave us the good foundation.
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Interviewer 1 (possibly Randall Williams)
I mean, like you said, you learn a lot from every single time the car goes out, every single race. And you said going forward, you think it's, you know, it's even going to keep changing for you guys and get it, the competition just gonna get harder. Tell me how you're focusing on the rest of the year and what You've learned from the first couple of races.
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Ayo Komatsu, Haas F1 Team Principal
Yeah. Focusing on rest of the year. I mean, I don't know if you know, but there's a slight modification regulation ahead of this weekend's Miami Grand Prix. So heading on to Miami on the, it's a, it's called what we call the sprint weekend. So you have one practice sessions, then in the afternoon go straight into sprint racer qualifying. So you have hour and a half to really understand this tweaking, the regulation modification, the regulation to get best out of it. So that's a challenge. But also then now because everything is so brand new on the chassis side, if you remember last year, competitions were really, really close to each other because it was the last year of the stable regulation. So everybody developed the cars to the NS degree. So within 1/10 of a second there was like more than 10 cars. Right. But this year gaps are much bigger. But that will get reduced so quickly because people will learn from each other, understand the regulation better. So it's what we call a development war. So I'm sure in Miami you will see so many teams, vast majority of teams bringing a big change to the car. So that's going to be the challenge from now to the end of the year who can develop faster, who can make a big performance gains.
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Interviewer 2 (possibly Vanessa Perdomo)
It's also important to note that this season has been a little bit abnormal because of the war in Iran. Three races have been either postponed or canceled. We'll see if they get put back on the calendar. What have you done with this time off?
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Ayo Komatsu, Haas F1 Team Principal
Yeah, you call it time off, but it's not a time off. Yes, it's really sad that, you know, these conflicts are happening and then ended up in the tourist cancellation. But of course safety is the most important thing. And then as it happened, April, we didn't have any race to attend. And then you call it break, but it's a break in terms of not having a travel overseas, let's say long haul travel. But going back to our discussion about us being a small team and had the biggest challenge of the huge regulation change. Everybody's being flat out, more than flat out, really stretched. You know, if we talk about the size of the teams, you know, 400 people versus 1200 people, you know, simplistically speaking, in our team, one person needs to play three different roles, right. To be equal. So to sustain that from last half of last year, the first three races has been a stretch, really pushing everybody to limit. So April, not having a long haul races or long haul travel and also not Having two races to support. Right. Has been a big, let's say, stress reliever. But also what that meant was we can focus on some of the fundamentals that we always wanted to focus and improve, but never had time because you had to keep going racing. So that's what we focused on. So again, idea was to use this April month to basically build a better foundation so that we can hit the Miami ground running at the higher quality.
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Interviewer 1 (possibly Randall Williams)
Right. So actually almost kind of worked out better for you guys in a way.
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Ayo Komatsu, Haas F1 Team Principal
Well, I don't know. Only Miami and Montero race with her because there's always pros and cons. You know, some people would say, like, you know, we had a great start over the year, we got great momentum. We rather carry on with Bahrain, Saudi. But at the same time, you know, everybody was so stretched out on the edge. So you may not have done very well in Bahrain and Saudi vis outbreak, who knows? But the thing is, it is what it is. It's same for everyone. So you got to look at the opportunity in front of you. Okay, how can we turn this situation, which is same for everybody, to your advantage?
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Interviewer 1 (possibly Randall Williams)
How did you prepare your team for that time and how you were going to go through it, go through the break, what you're going to develop? Because, I mean, that obviously comes from what you want and what you need from the car. But as a leader, how did you go through that time to make sure everyone was, I mean, you know, ready?
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Ayo Komatsu, Haas F1 Team Principal
Yeah, but to be honest, like what we need from the car, what we need to do on the technical side, it actually doesn't come from me. We have a great technical team, and they all had a great list of things that they wanted to be getting on with, but they couldn't because those people had to support the races. So they had plenty of things to do. But then, of course, we just need to agree as a team, what are the priorities, what we need to get better in before Miami. And being a small team, that prioritization is a key. You know, if there's five things you want to do, maybe bigger teams can do all five of them, but we can't. So we really need to focus on what's the single biggest thing we need to do. And then looking at timescale, looking at where we are, which department is stretched more than the other. So you got to pick your battle. Right. But it's actually, you know, we have a culture of empowerment to each department. So it's wrong if I have to tell these department, you need to be focused on this focused on this. I basically have the, let's say, overview at the top level, but the execution level, those guys know what they need to prioritize.
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Interviewer 2 (possibly Vanessa Perdomo)
And so one of the things that captivated us audiences is the drama behind the scenes. You think about drive to survive, you think about the F1 movie as well. And so now I want to ask you, as being someone who's actually in it and also the first Japanese team principal leading a non Japanese F1 team, what does it take to lead an F1 team?
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Ayo Komatsu, Haas F1 Team Principal
I don't know if I've answered.
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Interviewer 2 (possibly Vanessa Perdomo)
You still have hair on your head for people who are listening out there.
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Public Investing Representative
So obviously you're not stressed.
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Alberto Perlman, CEO of Zumba
Little gray.
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Ayo Komatsu, Haas F1 Team Principal
No, no. I don't know if I have an answer to that already. You know, I'm learning every day. But it's. It helps the fact that I've been with the team since day one. So I knew the people I knew had good people. So it's like, you know, we had good ingredients, but it wasn't kind of put together. So then again, I just focused on listening to people because as a leader of organization, the leader is only as good as your people. Right. And then I have experts in every department, technical department, human resources, communication, marketing, etc. So I got to listen to those people and then they need to tell me what I can do, what I can facilitate, what kind of environment I need to provide for them to perform better. So that's the key thing for me really to be on the ground level, to be. Have an open door policy, accessible, approachable.
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Interviewer 1 (possibly Randall Williams)
Then really listen, I mean, Randall did say there too, like about the drama that People Love, the F1 movie that people love here. And we're talking about the Miami Grand Prix and we're talking with Haas, obviously the American, one of the American teams, one of the only ones before. You know, tell me about, you know, what the Miami race did for the US Audience and what you've seen over the last few years because of all of the different elements that have been.
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Ayo Komatsu, Haas F1 Team Principal
Nah, I think it's incredible. You know, I've been doing Formula One for 23 years and then we used to come racing here in Indianapolis. We've been trying to crack North America for a long, long time, but it never stuck, right? Never stayed. And then. But then back then I think our audience wasn't so diverse. It's only sort of like hardcore motor racing fans were interested in Formula One. Then you guys had a NASCAR. But with the Liberty Media taking over in 17 with on Netflix F1 film we managed to have like a much more diverse funds which is great. You know Then now what 42% of the audience is females and then such young generation. And then every race we go to, actually you can see both diverse audience within one race but also between races. It's very different audience as you like. Melbourne, Australia, our race opener, that's a traditional race. We've been racing there for many, many years. So the older spectators know Formula one very well. But you can see younger, more female fans are there as well. But if you go to China relatively new Grand Prix which wasn't popular years ago at all. I remember first time when to China stands were empty. But these days it's completely sold out. Even the Sprint on Saturday was totally sold out. But then if you look at the fans, if you speak to the fans, they there's so many young female fans there and then they see our iPhone drivers like a K pop star. Right? So that, that wasn't the thing before. So there's so many different ways to enjoy Formula one racing. You know, before I don't think, you know, the traditional audience used to sit on a Sunday, watch the race two hours in front of tv. Then these days so many people just take it on like on the social media, highlight or just follow drivers, drivers and girlfriend vlogs, etc, so very, very different ways to enjoy formula. It's much more entertainment. Whereas before we are purely focused on let's say sport stroke motor racing. So that's why I think it's really appealing to a diverse audience. And then we're talking about us. We have three races in us. Austin I would say is more traditional one, but Miami, with Miami being the location, amazing weather and the celebrity factor. And then again we added Las Vegas. I mean everybody in the world knows what Las Vegas is, what Las Vegas represents. I think it's amazing that we now have three races but with very different taste or characteristics that appeals to a different audience.
- [29:31]
Host Michael Barr
That was Ayu Komatsu. He is the Haas F1 team principal. Up next, we are speaking to the CEO of Zumba about the fitness brand's 25th anniversary. That is straight ahead on the Bloomberg business of sports. Michael Barr for Vanessa Perdomo and Randall Williams. You are listening to the Bloomberg business of sports from Bloomberg Radio. Around the world,
- [29:55]
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- [30:55]
IBM Representative
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- [31:55]
Narrator/Commercial Voice
This is Bloomberg Business of Sports from Bloomberg Radio.
- [32:01]
Host Michael Barr
Thanks for joining us on the Bloomberg Business of Sports, where we explore the big money issues in the world of sports. Michael Barr, Vanessa Perdomo and Randall Williams are out having fun in Miami for the Formula One race, and I guess they forgot to bring me. Sorry, sorry. Before she left, Vanessa sat down with the CEO of Zumba about the company's 25th anniversary. He spoke to her about how they've been able to beat fitness fads and grow to be available in 189 countries around the world. Let's listen to Vanessa's conversation with Zumba CEO Alberto Perlman.
- [32:37]
Interviewer 1 (possibly Randall Williams)
Alberto, thanks so much for joining the Bloomberg Business of Sports. We're so excited to have you on. So excited to talk to you. It's 25 years since you founded Zumba. How are you feeling? 25 years.
- [32:50]
Alberto Perlman, CEO of Zumba
It's half of my life, right? I've spent building Zumba and it's so rewarding and so amazing to do something that's good for the world. It's good for the instructors, it's good for the people taking the class. It's good for the gyms that have it because now the gyms have more members because they have Zumba. So it's good for everyone and so rewarding to be in a position where I'm like the steward of this beautiful thing.
- [33:14]
Interviewer 1 (possibly Randall Williams)
I want to go back to the start a little bit and just talk about over the 25 years you've talked about when you started, you got a lot of no's from investors. Do you think if you tried to start the business now under what the fitness industry looks like now, do you think you would still be getting no's or do you think it would be different?
- [33:32]
Alberto Perlman, CEO of Zumba
I think people just didn't understand
- [33:35]
Bill Carstanjian, CEO of Churchill Downs
what
- [33:36]
Alberto Perlman, CEO of Zumba
we were trying to build. I mean, think about it. I came from the dot com Internet. I was building all these Internet startups. It was super easy to raise money for those. But Zumba was like a dance fitness concept. Like how? Like. What do you mean? Like it was just hard to conceptualize. There was no business model like the one we were building. And so I don't know, I don't know if it would be different now. Now it's all about AI and all about other things. So I do think the fitness industry has exploded since we came on the scene. But there is also so much and so, so much activity going on. So I don't even think about like investors or anything. I just think about how do we serve the instructors better.
- [34:16]
Bill Carstanjian, CEO of Churchill Downs
Right.
- [34:16]
Interviewer 1 (possibly Randall Williams)
Really interesting. So how has the industry changed over the 25 years that you've been involved in it?
- [34:22]
Alberto Perlman, CEO of Zumba
Yeah, so so many new people have joined the industry, which is great. And there has been the explosion of the boutique gyms that started basically with SoulCycle here in New York. And then it was a huge explosion. Also the high value low price. So crunch used to be super high end at the beginning and now it's high value price and they deliver an amazing service to people for $10, $20 a month. So the explosion of the high value price and just the energy in the fitness industry, it used to be like a chore and now fitness is where it's at. So it's amazing to see that. And I feel that it's, it's great for everyone.
- [35:06]
Interviewer 1 (possibly Randall Williams)
It's really interesting that you brought that point up because it has gone into a different way. Like you said, people aren't meeting at bars anymore. And now there's running clubs and it's meet in Zumba class and things like that. You guys were one of the first people, if not the first really community based fitness activity. Tell me about building that and now seeing what it's become.
- [35:24]
Bill Carstanjian, CEO of Churchill Downs
Yeah.
- [35:24]
Alberto Perlman, CEO of Zumba
Well, when I found Beto, who's the original creator of the Zumba class, he had a community and it was very, very local, but it was insane. Like it was when I first saw the first Zumba class, there was a line out the door 30 minutes before the first Zuma class that I went to and people just trying to get into that class and. And there was a. The gym owner had to put a fence in the group X room because they were running into the yoga class before and trying to hold their spots. So they were interrupting the class. So it madness every day.
- [35:58]
Interviewer 1 (possibly Randall Williams)
Yeah.
- [35:59]
Alberto Perlman, CEO of Zumba
And when I saw the class for the first time, everybody was smiling, everybody was happy, and they were all like best friends and they all came together. And so community was part of it. Just, I think intrinsically when people dance together, there's something about that where they kind of come together and become friends and, oh, you're in my Zumba class. And then they, you know, start to become. Then they build their own WhatsApp group and they all get together. So we didn't design it to be community, actually. We started with VHS tapes and DVDs that we were selling on television. That was for people to do it at home by themselves. But the brand and the people told us they want a community and they're like, no, I want to get certified as an instructor or I want to go take a live class where I'm at. And so we started seeing that that's what people wanted and that's what people were needing. So.
- [36:47]
Interviewer 1 (possibly Randall Williams)
Yeah. Did you start seeing that early on or when did you start seeing that?
- [36:51]
Alberto Perlman, CEO of Zumba
Very early on. Very early on. So we, we found Beto's class and it's one of those things where you stumble upon something amazing and you're like, why aren't more people doing this? Why doesn't anybody, why doesn't everybody know about this thing? Right. It's like the cookie concept that exists only in one little city and then they expand it everywhere because it's the best cookie ever. It was something like. It was like, this was the best fitness class ever.
- [37:13]
Interviewer 1 (possibly Randall Williams)
Yeah.
- [37:14]
Alberto Perlman, CEO of Zumba
And we needed to find a way to take it around the world. So we said, well, first let's start with infomercials and sell VHS and DVDs on television so that people can do it at home. Immediately, we started getting calls from people saying, I want to teach that class. I saw it on the infomercial, I bought the tapes. I want to teach them. But can you certify me? Can you train me? And so in 2003, we started training, licensing Zumba instructors, and one thing led to the other, and we just went all over the world.
- [37:44]
Interviewer 1 (possibly Randall Williams)
Yeah, tell me about that. Because Zumba is available in 185 countries. How do you get to that many places in the world?
- [37:50]
Alberto Perlman, CEO of Zumba
It's actually 189. It's every country that we can actually operate in. There are six countries that we can't operate in because of North Korea, Cuba, like countries that we can't be in. But everywhere else, there's Zumba.
- [38:02]
Bill Carstanjian, CEO of Churchill Downs
And we.
- [38:03]
Alberto Perlman, CEO of Zumba
We've always felt that Zumba needed to be free and needed to move like water everywhere it needed to go. So we didn't, like, say, well, gyms have to pay a fee to have a Zumba class. It's free for gyms. Any gym can just bring in a Zumba class by hiring a Zumba structure. Because we wanted. Our main KPI was reach. Everybody should have access to Zumba class, just like everybody has access to a yoga class around the world. And we always thought about, like, yoga. We said, like, we want it everywhere. So we started training people in the U.S. and then we started training people in Mexico, then we started training people in Europe. And we would see that people would fly from one country to the other country to get trained and licensed as zoom instructors. And now we. If you go to the jungle of Chiang Mai, Thailand, you can find a Zumba class in the jungle. Like, people doing a Zumba class. If a friend of mine sent me a picture from Bhutan, and they said, in the Kingdom of Bhutan, there's no, like, brands. There's no any. Why is there a Zumba class here? And I'm like, I don't know. It's somehow some instructor went somewhere else, got trained and brought it back. And Zumba just flows everywhere, which it just.
- [39:03]
Interviewer 1 (possibly Randall Williams)
That's really amazing. That's such a cool story. So tell me about how on the business side you grow that, right? So if. If it's free for everyone and the KPI for you is reach, how did you grow the business part?
- [39:14]
Alberto Perlman, CEO of Zumba
Well, it's not free for instructors. It's free for the gyms.
- [39:16]
Interviewer 1 (possibly Randall Williams)
Free for the gyms.
- [39:17]
Alberto Perlman, CEO of Zumba
For anyone who wants to host a Zumba class for a gym, but they need to hire a licensed instructor. That instructor is licensed by us, they have to pay a fee to get licensed and they go through, through a training and then there's a membership that the instructors have that basically gives them all the tools they need to be successful and they pay for that membership. So they get music, they get choreography, and they get community. They get marketing materials. We have an AI app that makes beautiful marketing materials for them that they can then post on their social media to promote their classes. So that's basically how the instructor business works. And then we also have the at home business, which is now an app, the Zumba app. And we have events and we have clothing. We sell, believe it or not, we sell a lot of Zumba. But clothing. If you go to Zuma.com and you click on the cloth, there's hundreds and hundreds of.
- [40:09]
Interviewer 1 (possibly Randall Williams)
You know what? I read an article today and I was researching for the interview. One of the first things that came up was I can't believe how comfortable my zoom, my Zumba leggings are, my Zumba clothes are. You know, it's an interesting part of the business that maybe obviously goes hand in hand with fitness. Right. Which is one of the other parts I want to talk to you about is how fitness reaches other industries. Right. Where the business is sports. So how does fitness and sports work together? How have you integraled with the sports industry?
- [40:38]
Alberto Perlman, CEO of Zumba
Well, I think that first we are, we play in the intersection of fitness and entertainment. Right. But entertainment and sports have a big connection as well. So fitness and entertainment, because people come, people who go to Zumba class, they go for many reasons and to get entertained, to get fit. Mental health is huge. Brain health is huge. And we've even seen sports teams bring in Zumba as a training for their athletes because dance coordination, focus, cardio, zone 2 cardio. There's so many benefits to it. And we have sports teams like you would think, NFL teams and MLS teams that bring in Zumba as part of the training program. Because the brain needs to learn new things, to stay active and to like be focused.
- [41:29]
Interviewer 1 (possibly Randall Williams)
Yeah. Is that something that you work with sports teams on or they kind of bring in, they bring it in.
- [41:34]
Alberto Perlman, CEO of Zumba
Like I said, Zumba's like water. Like we have seen so many use cases of Zumba of it. Like summer camps, kids summer camps. We never designed like Zumba kids summer camp classes, but summer camp started hiring Zumba instructors and it just goes everywhere. Think about yoga and all the versions of yoga and all the reasons people use yoga. It's the same in the Zumba world. Like there's Zumba for everything. There's Aqua Zumba classes which are in pools. There's Zumba kids, there's Zumba Gold for seniors, There's Zoombini for Mommy and Me. So we have Zoombini classes for babies and their moms. And so it's.
- [42:10]
Interviewer 1 (possibly Randall Williams)
Yeah, it's one of the interesting things too, about the fitness industry and about Zumba is we see trends come and go a lot, but 25 years within the industry is a long amount of time. Today, stay very relevant to stay strong and have a lot of, you know, users. How did you guys. How do you feel like you've caught that niche that you. That you were able to say, so strong for so long?
- [42:31]
Alberto Perlman, CEO of Zumba
We've thought about this a lot and we're like, so why is it that in the business world people are like, well, Zoom is going to disappear because some new trend will come in, and then we're stronger the next year, and then we're bigger the next year, and then we're bigger the next year. And we're like, what is it about Zumba that is different? And then we looked at yoga again and we said, well, yoga's been around for hundreds, I don't know, thousands of years, for so long. Why is it that yoga stood the test of time? And it's one. It's. There's a physical benefit to it. So just like yoga has a physical benefit, Zumba has a physical benefit. It's a great cardio workout, but there's also an emotional benefit to it. In. In the yoga world, it's Zen. In the Zuma world, we call it veg freeing electrifying joy in. It's that moment, 20 minutes in, where the person that's in the class forgets everything, loses themselves in the music. That moment cannot be replicated in other fitness classes. It's a very Zumba moment. And then there's the community. The community is very strong and there's inner circles of the community. There's a Zumba convention which is like Mecca. It's like the place where everybody gathers, like the top Zumba structures in the world gather to learn new moves and they teach to other instructors. And it's like when the yogis go to India, the ones who are super deep in it and they learn and then they bring something back and so. And it's endless. That's the other thing. There's so many types of dances in the world. We don't only use Latin music, we use K Pop, we use African, we use. So the learning is endless of how much Zumba there could be. So I think those things together kind of create longevity.
- [44:03]
Host Michael Barr
That was Alberto Perlman. He is the CEO of Zumba. That's it for today. Randolph and Vanessa will be back next week. Nice and tan from a week in Miami. Thanks for joining us. Tune in again next week for the latest on the stories moving big money in the world of sports. And don't forget to catch our podcast on all your podcast platforms. And go to bloomberg.com to subscribe to the Bloomberg Business of Sports newsletter to stay up to date on all our juicy insights. You are listening to the Bloomberg Business of Sports, Bloomberg Radio around the world. Stay with us. Today's top stories and global business headlines are coming up right now.
- [44:44]
Narrator/Commercial Voice
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