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Parker Willis
12-28-2009, 11:45 PM
I posted this on Robb's blog, I'm not sure how many people saw it.

From “The Best Way to Rob a Bank is to Own One” by William K. Black
(page 1) “A control fraud is a company run by a criminal who uses it as a weapon and shield to defraud others and makes it difficult to detect and punish the fraud (Wheeler and Rothman 1982). Fraud is theft by deception: one creates and expoits trust to cheat others… Successful control frauds have primarily one skill: identifying and exploiting human weakness. Audacity is the trait that sets control frauds apart…Well-run companies have substantial internal and external controls designed to stop thieves. The chief executive officer (CEO), however, can defeat all of those controls because he is in charge of them… Control frauds create a “fraud friendly” corporate culture by hiring yes-men. They combine excessive pay, ego strokes (e.g. calling employees “geniuses”), and terror to get employees who will not cross the CEO. Control frauds are control freaks (Black 2000)… The CEO causes the firm to engage in transactions that are ideal for fraud. Control frauds are accounting frauds. Investments that have no readily ascertainable value are superior vehicles for accounting fraud… Control frauds grow rapidly (Black 1993d). The worst control frauds are Ponzi schemes, named after Carlo Ponzi, an early American fruad. A Ponzi must bring in new money continuously to pay off old investors, and the fraudster pockets a percentage of the take. The record “income” that the accounting fraud produces makes it possible for the Ponzi scheme to grow. .. Control frauds are predators. They spot and attack human and regulatory weakness.

The author William K. Black is legit. PhD in Criminology, JD, professor at UT, regulator during S&L crisis.

With that in mind, I'd like to start a running list of verifiable facts and figures on CF finances. I'd appreciate any help in answering the following questions: Where does the money come from? How is money spent? How much are people paid? What are the expenses? What are the liabilities? Plus any other pertinent questions I forgot to ask.

Parker Willis
12-29-2009, 12:01 AM
Here is what I have so far:

CF is a private publishing company based in Arizona which employs 10 people, but how might one go about getting a peak at their tax returns, or any other finance statement? Also, if anyone knows any statistics related to CF & $ (that can be verified), I'd say it'd be a good idea to start compiling a list.

As it stands now, there are 50 Level 1 certs. I counted the total number of people from the 5 Cert pictures from 12/21/2009 and they were, if I'm not mistaken, 51, 62, 59, 52, and 38, which averages out to 52.4. So I'll use 53 as my number (which, compared to my Level 1, is a conservative number, but may reflect the slowing demand.)
53 people times 50 certs times $1,000 = $2,650,000. Since those Certs run until April, (which is the fourth month) multiplying 2,650,000 by 3 will give an approximate pre-tax year total income before expenses. 2,650,000 x 3 = 7,950,000. For simplicity's sake, I'll round that up to $8 million. So we can expect Cf to make 8 million this year on Level 1 certs, before costs. I've heard that Level 1 trainers make $400/day, so $400 x 2 days x 6 trainers = $4,800. Multiplied by 50 certs, that's $240,000. 240,000 x 3 = $720,000, so CF will spend $720,000 this year on trainers, if those figures are accurate, which is about 9% of the income. I believe they do not pay to use the CF gym which holds the cert, because it is deemed an honor. For every dollar CF makes, they have to pay out 9 cents to trainers. Thinking about it another way, the Return on Capital is %1,111. So for every 9 cents they spend, they make 1 dollar. And that's for Level 1 only.

I need some help filling in the blanks on these:

There is one Level 2 cert in January, so I will assume 1 per month on those. It may turn out that there is 1 every 4 months, or 3 a year. But it's somewhere between 3-12. Does anyone know the number of trainees and trainers at a Level 2? Or the prescribed ratio?

CrossFit Kids is $595 for two days + $50 for a background check. There are 5 certs right now, so that's 15 a year. If they get 30 people a class, that would net them $267,750, pre-tax and expenses. Does anyone know the cost of a background check? Is it $50, or is someone making money on that too?

Endurance
7 certs until March (03/3009) x 4 = 28 certs a year. $595 for a two day cert. Anyone know how many trainers and trainees?

CF Football
$795 for a 2 day cert. 5 certs through May.

Gymnastics
$595 for a 2 day cert. 10 certs through March, so that would make 40 certs a year.

Kettlebell
$595 for a 2 day cert. 6 certs through April so that would make 18 certs a year.

Mobility and Recovery
$225 for a 1 day cert. 5 certs through April so 15 a year.

Nutrition
$249 for a 1 day cert. 5 certs through April, so 15 certs a year.

OLY Lift
$595 for a 2 day cert. 12 certs through April, so 36 certs a year.

Powerlifting
$595 for a 2 day cert. 3 certs through March, so 12 certs a year.

Rowing
$395 for a 1 day cert. 5 certs through April, so 15 certs a year.

Running
$595 for a 2 day cert. 2 certs through February, so 12 a year.

Crossfit Coach's Prep Course
Price unlisted, requires a $250 deposit.

CrossFit Vacation
$1490 for a single, $1365 for a single. 5 days, 2 certs (Gymnastics and Nutrition). 1 in January.

CrossFit Journal
$25 per year, or free with cert.

CF Games and Regionals
Costs?

Affiliation Dues
$500 or $1,000 or $2,000 depending on when you got in.
There are 1330 paying affiliates, as I counted them. At the very least, that's $665,000 per year. Does anyone know when the price hikes started, and the affiliation counts too? I bet that number is at least 1 million a year.

Jamila Bey
12-29-2009, 07:16 AM
I quote from the November 2008 Outside Magazine article about Mark Twight:

(Crossfit) It's on track to earn more than $13 million this year. Twight, whose operations remain private, earns roughly $200,000 a year with Gym Jones.

So... a free little website spins gold.

Parker Willis
12-29-2009, 09:38 AM
I forgot Merchandise. But I have no idea how much they make on that. $60 for a Zip-up hoodie, $14 for a 50% off tshirt, $46 for a normal shirt, $11 for socks, $26 for baby one-piece, $58 for shorts, $140 for Jacket, $32-34 for tank top. Does anyone work in the garment/textile industry, and be willing to help discover the mark-up?
So $13 million is the number. What year was that, do you know? Here is what Hoover's has to say:
http://www.hoovers.com/company/Crossfit_Inc/yjfhrjkh-1.html
Estimated annual sales: 5.5 million.
Based in Prescott, AZ
That's quite a discrepancy.

I don't think anyone can argue against the fact that CF has honed the skill of identifying and exploiting human weakness, which is primarily what jumped out at me. This works on many levels. First, physical weakness. It is a fitness program. Second, psychological weakness. Body insecurities, etc., make ripe targets. Also, GG has stated on video that Cf has tremendous psychological benefits, and even went as far as to say he thought CF would be used to treat mental illness in some capacity.
The yes man culture is at CF too.
What about regulation and the RRG/insurance/safety issues?
The CEO has shown that he is willing to override some internal and external controls, evidenced by his unwillingness to have a third party investigate the black box seminar fiasco and Castro's workplace violence.
The question is, is it a Ponzi, or can it become one if things turn down? The Cultfit article mentioned it was similar to a Multi-level marketing scheme. It's worth it to look at.

travis earp
12-29-2009, 10:49 AM
Well I hear Couch gets his car detailed 365 days a year. This is obviously subtracted from the gin fund.

Jamila Bey
12-29-2009, 11:15 AM
The figure I quoted was in the November 2008 issue of Outside Magazine.

Garrett Smith
12-29-2009, 11:22 AM
The figure I quoted was in the November 2008 issue of Outside Magazine.
Parker, you might try contacting the author of the article for a reference on that number.

Basically, with the small amount of work you've done, it has become quite obvious that there's a whole bankload of money going into the CF coffers (who knows how fast it is being spent, not my business).

There's many more expenses than what you've come up with, though. For example, the CFHQ trainers are likely getting at least their travel expenses paid for (because $800 a cert would cover the flight/hotel/meals and maybe not much more). I could be wrong.

Anyway, as Jamila noted, it's just hilarious that sheeple still push the "free website" thing on anyone who protests the costs of seminars etc. "Free" my arse.

Dominic Sirianni
12-29-2009, 11:50 AM
It seems like they are entitled to the money.

Parker Willis
12-29-2009, 11:53 AM
The author's name is Nick Heil. I've tried to contact him, we'll see if he responds. He has a facebook account, someone else give it shot. Garrett, you live in Arizona where CF is incorporated. Perhaps you might be able to go to your local courthouse and dig up some tax returns, or any other information? Check that link I posted from Hoover's, it has the address in case you need it. Most state court systems have tax leins and other public documents online, so you can check the entire state for free if you go in person. just a thought.
Is anyone a CPA? I'd be willing to do the research if you could point me in the right direction and the right resources.
As far as this being anyone's business, I'd say looking into everything is a necessary service to affiliate owners (and former affiliate owners), and anyone else who has invested in CF, including certs.

Garrett Smith
12-29-2009, 11:56 AM
It seems like they are entitled to the money.
People are definitely paying it, alright.

Dominic, I think some people get upset when the "free" notion is constantly jammed in their face. Most websites are "free" to look at.

You used the word "entitled". I would equate that as close to "deserved". A wise old barber told me once, "be careful of saying you deserve something, you might actually get what you really deserve instead of what you think you deserve." I think the backlash may fit right into that idea about now.

Geoffrey Thompson
12-29-2009, 12:05 PM
The author's name is Nick Heil. I've tried to contact him, we'll see if he responds. He has a facebook account, someone else give it shot. Garrett, you live in Arizona where CF is incorporated. Perhaps you might be able to go to your local courthouse and dig up some tax returns, or any other information? Check that link I posted from Hoover's, it has the address in case you need it. Most state court systems have tax leins and other public documents online, so you can check the entire state for free if you go in person. just a thought.
Is anyone a CPA? I'd be willing to do the research if you could point me in the right direction and the right resources.
As far as this being anyone's business, I'd say looking into everything is a necessary service to affiliate owners (and former affiliate owners), and anyone else who has invested in CF, including certs.

Eh, CF is quite up-front about the fact that they are "hugely profitable", see this recent article from the CF Journal: http://journal.crossfit.com/2009/10/the-business-of-crossfit.tpl Free Download!

Dominic Sirianni
12-29-2009, 12:18 PM
I really don't have much vested interest in either side of it; I just meant that CF sells a service, people pay for it, etc.

I get a lot out of the CF site, as well as this site, Robb's site, Ross Training, DD, etc. For me CF has opened a lot of doors into a world I was largely ignorant of. I found Ross and CF at around the same time and they have both been awesome tools for me.

Steve Romer
12-29-2009, 01:37 PM
The firings of Greg and Robb is all about the money. CFHQ is very upset about the BBS because it was an event outside the control CFHQ and did not direct any profits to CFHQ. This scared the sh*t out of CFHQ so CFHQ excommunicated Greg and Robb to scare others away from doing similar seminars.

I believe CFHQ is not about what works best for their clients but rather a cult whose mission is to funnel as much money back to CFHQ as possible at the expense of the affiliates and the affiliates' clients.

Geoffrey Thompson
12-29-2009, 01:48 PM
The firings of Greg and Robb is all about the money. CFHQ is very upset about the BBS because it was an event outside the control CFHQ and did not direct any profits to CFHQ. This scared the sh*t out of CFHQ so CFHQ excommunicated Greg and Robb to scare others away from doing similar seminars.

I believe CFHQ is not about what works best for their clients but rather a cult whose mission is to funnel as much money back to CFHQ as possible at the expense of the affiliates and the affiliates' clients.

The only thing Crossfit has to sell is its brand name. Certification is selling the brand name to trainers. Affiliation is selling the brand name to gyms. The BBS and subsequent actions of Greg and Robb were damaging to the brand name, which is a threat to their only product (the brand name). Discussion on the message board is locked down because it is damaging to the brand name. CF, in fact, will pretty much openly admit this.

Parker Willis
12-29-2009, 02:27 PM
According to the "Business of CF" article, affiliation fees are as follows:
350 gyms pay $500 a year (350 x $500 = $175,000)
650 gyms pay $1,000 a year (650 x $1,000 = $650,000)
That leaves 330 gyms paying $2,000 a year. (330 x $2,000 = $660,000)
Total: $1,485,000 a year

GG on Affiliates
"...if I try to get everyone moving in lockstep, I get everyone moving towards mediocrity. Because we have a Darwinian/free-market approach to the affiliates, best practices arise at a breathtaking rate."

According to that article, 60 students attend an average seminar, so my numbers from the level 1 which used 53 are conservative.

The article says $6.48 million in yearly revenue from certs. Revenue is the entire income before deductions are made, so that number seems low. His calculations assumed there were 98 Level 1 certs per year with 60 people attending, whereas mine used the mainpage's 50 L1 in 4 months to get 150 L1 certs per year with 53 attending.

CFHQ takes a 20-30% cut of SME's revenue.
If 45 people go to a $595 cert, that's $6693.75 in CFHQ's pocket.

Any way to figure out how many Journal subscribers there are?

Garrett Smith
12-29-2009, 03:01 PM
Parker,
Nothing against your personal mission here, but I don't have the time or inclination to go to the courthouse to find anything.

CF won't have much to stand on if they try to "protect" the word CrossFit, based on this landmark case in NY on the word "Pilates":
Court overturns Pilates Trademarks (http://www.pilates.com/BBAPP/V/about/pilates-trademark-lawsuit.html)By Lawrence Stanley, Esq.

What’s in a name? Plenty, especially if the name is “Pilates,” one of the hottest fitness trends in America. An October 2000 decision in Manhattan’s federal court declared that Pilates, like yoga and karate, is an exercise method and not a trademark. The decision affected thousands of Pilates instructors who had been prevented from saying that they taught Pilates. “Imagine if you were a yoga teacher, and couldn‘t say ‘yoga’ – you were forced to describe it in some other way,” said Marie José Blom-Lawrence, a Pilates instructor since 1980. “Pilates instructors were in the same boat.”

The four-year case pitted Sean Gallagher, owner of the Manhattan-based Pilates Studio, against Ken Endelman and Balanced Body Inc., the world‘s largest manufacturer of Pilates equipment. On October 19, 2000, U.S. District Court Judge Miriam Cedarbaum ruled that the Pilates trademarks were invalid. She directed the United States Patent and Trademark Office to cancel the marks immediately.

Pilates ruled “generic”
The Court‘s 93-page opinion, which invalidated Gallagher’s trademarks for Pilates exercise services and Pilates equipment, found that Pilates is a generic term. Since “consumers identify the world ‘Pilates’ as a particular method of exercise,” the Court found, “plaintiff cannot monopolize [it].” Gallagher was also found to have “deliberately attempted to mislead” the United States Patent and Trademark office by falsely claiming in sworn documents that he had manufactured Pilates equipment.
Basically, by CF trying to be "everything" in exercise (note all the different "certs") and "nothing" at the same time (note how CF.com's exercise programming methods have never been disclosed, CrossFit is NOT considered the mainpage WOD because that would lead to franchising issues, and doing a bunch of different exercises in random fashion can't really be trademarked because...it's random!) they will, IMO, never be able to even begin to protect the brand in court.

Could you just see it?

Defendant's attorney: "Please, define CrossFit for us."

Plaintiff: "Well...it's a mixture of weightlifting, powerlifting, gymnastics, rowing, running, kettlebells, yadda yadda yadda..."

Def. Att.: "So is there anything original about it?"

Plaintiff: "The way we combine it."

Def. Att.: "So your tools are nothing new. How is it that you combine them that makes this all so original it can be protected?"

Plaintiff: "Well, there was one CFJ article written about our programming, but we've never really followed that, some people have said our program is random based on the "hopper" model of fitness, but really it is an ever-evolving paradigm that is constantly changing in an effort to increase work capacity across broad time and modal domains."

Def. Att.: "So, let me get this straight for the judge. You don't follow your own programming guidelines. For all anyone knows, your programming may be completely random. Your "type" of fitness has no real-world definition and your annual competitions are never the same...hmmm.

You do exercises that other people do.
You do rep ranges that other people do.
There appears to be no deeper knowledge to your programming.
You don't teach your affiliates how to "program" CrossFit workouts.

Basically, either everyone exercising in the world could be said to be "doing CrossFit" according to you, or CrossFit really stands for nothing at all. Really, what do you think you can protect?!?!"

CASE CLOSED.

Steve Romer
12-29-2009, 03:29 PM
The only thing Crossfit has to sell is its brand name. Certification is selling the brand name to trainers. Affiliation is selling the brand name to gyms. The BBS and subsequent actions of Greg and Robb were damaging to the brand name, which is a threat to their only product (the brand name). Discussion on the message board is locked down because it is damaging to the brand name. CF, in fact, will pretty much openly admit this.

I am sorry but the BBS did not hurt CF's Brand Name. However the actions of Dave at the BBS harmed CF Brand's Name and the actions of CFHQ since the BBS are hurting the CF Brand Name. All self inflected wounds by the way.

Jonathan Silverman
12-29-2009, 04:23 PM
Sometimes I geek out and play with numbers and equations, and i made a post about a secret math formula in CF workouts... but actually there was no formula in actuality. I got a lotta replies though. It did get an innocuous post from Cf's Attorney Dale Saran saying like you can't blame me for trying.

I actually don't have a head for numbers. So it is difficult for me to follow this thread. Can someone explain to me why CF could have a Ponzi structure? Are you saying you have fraud going on? What kinda fraud?

Neill Smith
12-29-2009, 04:42 PM
I actually don't have a head for numbers. So it is difficult for me to follow this thread. Can someone explain to me why CF could have a Ponzi structure? Are you saying you have fraud going on? What kinda fraud?

CF could not be a Ponzi scheme. Ponzi schemes, by definition, take investment and pay returns on that investment. It's a scheme because money from today's investors is used to pay off yesterday's investors. If there are no investors tomorrow, it collapses. CF isn't an investment vehicle.

Parker Willis
12-29-2009, 06:00 PM
I think the Ponzi scheme comparison is there because the achilles heel of any Ponzi scheme is the lack of sustainable (albeit explosive) growth from which to draw. Right now, people are lining up to go to a cert, but how many people can you certify? Will it continue, or will it dry up? If CF's main source of revenue is the level 1 cert, and from my perspective it is, then what happens if fewer people sign up? If I get a level 1 cert, I am banking on brand recognition to sell my product (if i train people) which is where the multi-level marketing comparisons creep in. That's comparison, not accusation. Its fishy enough to look into, which is what I'm doing. anyways, if CF has taken on any debt and uses cert money to pay off that debt, it could end badly, especially for affiliates. I have to wonder why affiliates don't demand more accountability from HQ. But you're right, CF is not a Ponzi scheme.

The reason I posted the quote was the "exploiting weakness in others" part. I believe that CF does that very well. But that is my opinion.

I'll just keep posting information as I can get it, so people can make up their own mind. I'll do my best to stick to the facts.
btw Garrett thanks for the cfj link--it was helpful.

Steve Romer
12-29-2009, 06:00 PM
CF could not be a Ponzi scheme. Ponzi schemes, by definition, take investment and pay returns on that investment. It's a scheme because money from today's investors is used to pay off yesterday's investors. If there are no investors tomorrow, it collapses. CF isn't an investment vehicle.

I agree that CF isn't a Ponzi Scheme; it runs more like a cult. All profits are funneled to a few at the top and everyone else get very little in return except for joy of being in the CF Cult.

Ganine Vanalst
12-29-2009, 06:25 PM
everyone else get very little in return except for joy of being in the CF Cult.

I don't think we're happy enough. I'll teach ya to be happy:

Happy Happy Joy Joy (http://www.youtube.com/watch?v=LsJfBsNpTJM&feature=related)

(Oh, not w/f/s)

Ban them!!! hahahaha!!!!!!!!!!!!!!!!

Justin Herring
12-29-2009, 06:46 PM
Parker,
Nothing against your personal mission here, but I don't have the time or inclination to go to the courthouse to find anything.

CF won't have much to stand on if they try to "protect" the word CrossFit, based on this landmark case in NY on the word "Pilates":
Court overturns Pilates Trademarks (http://www.pilates.com/BBAPP/V/about/pilates-trademark-lawsuit.html)
***
CASE CLOSED.
Just to be clear, originality or value have nothing to do with trademarks (they are required for patents though). Trademarks are about brands. You can trademark a freaking bottle of water that is identical to tap water.

If Crossfit ends up like Pilates, it will be because the term has become a generic descriptor for a certain type of exercise, not because they are not original (or not effective, or not disclosed, or lacking in specificity, etc.).

This is explained here: http://en.wikipedia.org/wiki/Genericized_trademark

This is why Coke sometimes pays people to go around and make sure that other company's soda is not referred to as Coke. This is why I couldn't trademark "weightlifting!" as the exclusive brand of my new company.

Justin Herring
12-29-2009, 06:47 PM
I think the Ponzi scheme comparison is there because the achilles heel of any Ponzi scheme is the lack of sustainable (albeit explosive) growth from which to draw. Right now, people are lining up to go to a cert, but how many people can you certify? Will it continue, or will it dry up?
***

I agree that CF isn't a Ponzi Scheme; it runs more like a cult. All profits are funneled to a few at the top and everyone else get very little in return except for joy of being in the CF Cult.
This is what happens 90% of the time when a privately owned company experiences major success. The owners make bank. The customers get to be customers.

The fact that crossfit is a big financial success is not surprising, it isn't a secret, and it isn't nefarious. People get rich every day in this country selling everything under the sun.

Nor is a business that grows explosively for a while and then flat-lines or crashes because its popularity diminishes "like a ponzi scheme" or "like a fraud." It happens to lots of businesses. Sometimes they go up, sometimes they go down.

Look, I'm all about Robb Wolf etc, but sometimes this crossfit hate gets out of hand.

Brandon Oto
12-29-2009, 07:06 PM
Really interesting and tasteful work, Parker.

Garrett Smith
12-29-2009, 08:04 PM
Just to be clear, originality or value have nothing to do with trademarks (they are required for patents though). Trademarks are about brands. You can trademark a freaking bottle of water that is identical to tap water.

If Crossfit ends up like Pilates, it will be because the term has become a generic descriptor for a certain type of exercise, not because they are not original (or not effective, or not disclosed, or lacking in specificity, etc.).

This is explained here: http://en.wikipedia.org/wiki/Genericized_trademark

This is why Coke sometimes pays people to go around and make sure that other company's soda is not referred to as Coke. This is why I couldn't trademark "weightlifting!" as the exclusive brand of my new company.
Justin,
CF Inc., according to someone who was within, has very little to no history of defending their mark and IP. I think you hit the nail on the head...genericide is likely to occur with the CF name.

George Mounce
12-29-2009, 08:14 PM
This is what happens 90% of the time when a privately owned company experiences major success. The owners make bank. The customers get to be customers.

The fact that crossfit is a big financial success is not surprising, it isn't a secret, and it isn't nefarious. People get rich every day in this country selling everything under the sun.

Nor is a business that grows explosively for a while and then flat-lines or crashes because its popularity diminishes "like a ponzi scheme" or "like a fraud." It happens to lots of businesses. Sometimes they go up, sometimes they go down.

Look, I'm all about Robb Wolf etc, but sometimes this crossfit hate gets out of hand.

CrossFit hate never gets out of hand. If you don't care and don't want to be part of the process of looking into how they run their finances, then it seems you don't want to help Parker. That is fine, and your choice. But don't sit here and troll the thread to try and turn it away from what he is trying to do. That is the mod's decision on whether they want it on their forum.

This isn't even close to the hate, go to IGX, and you'll see there is a heck of a lot more to this over the years.

Clay Jones
12-29-2009, 08:27 PM
The fact that crossfit is a big financial success is not surprising, it isn't a secret, and it isn't nefarious. People get rich every day in this country selling everything under the sun.
I have to agree here. No one is forcing anyone to take a cert. However, I do sometimes wonder as to their effectiveness and whether they represent a good investment.



Ban them!!! hahahaha!!!!!!!!!!!!!!!!
Gee, thanks . . . now I have that song stuck in my head. :p

Steve Romer
12-29-2009, 08:38 PM
CrossFit hate never gets out of hand. If you don't care and don't want to be part of the process of looking into how they run their finances, then it seems you don't want to help Parker. That is fine, and your choice. But don't sit here and troll the thread to try and turn it away from what he is trying to do. That is the mod's decision on whether they want it on their forum.

This isn't even close to the hate, go to IGX, and you'll see there is a heck of a lot more to this over the years.

Well said George.

Justin I do not hate CF, but as a businessman I can tell you CFHQ runs their business as a cult. The level 1 and 2 cert money is not shared with the hosting affiliate. Every cent of the cert''s money are funneled back to CFHQ and the affiliates are left with nothing except for the good feelings of hosting the Cert for CFHQ. That is just one example of cult behavior of the CF cult. Their treatment of Robb and Greg is another and their banning of those people who question the excommunications of Robb and Greg is a third. I could go on but I think I made my point.

Brad Miles
12-29-2009, 08:45 PM
Glassman says in the video in the beginning here are some numbers 500,000 journal subscriptions. 500,000x $25= $12,500,000

http://www.youtube.com/watch?v=sUj5YAnA0bQ sfw the evolution

Steve Romer
12-29-2009, 08:47 PM
I don't think we're happy enough. I'll teach ya to be happy:

Happy Happy Joy Joy (http://www.youtube.com/watch?v=LsJfBsNpTJM&feature=related)

(Oh, not w/f/s)

Ban them!!! hahahaha!!!!!!!!!!!!!!!!

Funny and annoying all at the same time.

Justin Herring
12-29-2009, 08:55 PM
CrossFit hate never gets out of hand. If you don't care and don't want to be part of the process of looking into how they run their finances, then it seems you don't want to help Parker. That is fine, and your choice. But don't sit here and troll the thread to try and turn it away from what he is trying to do. That is the mod's decision on whether they want it on their forum.

This isn't even close to the hate, go to IGX, and you'll see there is a heck of a lot more to this over the years.
Hey, I think how Crossfit Inc is run is an interesting topic. Once upon a time I was a management consultant, and I think how companies and markets operate is an intrinsically interesting subject.

It looks like Parkers original estimate needs to be modified to include: 1) more costs to operate a cert (airfare, hotel), 2) not all non-Level I certs sell out, 3) HQ overhead costs (facilities, however modest, accounting, legal, etc). HQ may have only 8 employees, but when you add it up, including travel, benefits, salary, it could easily be $1 million. Plus they may have more than 8 by now. Also, the CF Games have to be a source of profit this year, but probably drive up the payroll too.

That said, per the first post in this thread, this is apparently an exercise to uncover a "control fraud." That is silly. Greg Glassman doesn't need to rig the company rules or embezzle. He owns the company.

Patrick Donnelly
12-29-2009, 09:06 PM
It looks like Parkers original estimate needs to be modified to include: 1) more costs to operate a cert (airfare, hotel), 2) not all non-Level I certs sell out, 3) HQ overhead costs (facilities, however modest, accounting, legal, etc). HQ may have only 8 employees, but when you add it up, including travel, benefits, salary, it could easily be $1 million. Plus they may have more than 8 by now. Also, the CF Games have to be a source of profit this year, but probably drive up the payroll too.

Just throwing this out there, but I heard that the Games last year lost $300k. I'd like to see the math on how that happened, haha.

Ganine Vanalst
12-29-2009, 09:12 PM
Trademarks are about brands.

Not that it would change your points at all, but it seems like CrossFit would be more of a "service mark" and not a "trademark." From the United States Patent and Trademark office:

What is a trademark?

A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.


What is a service mark?

A service mark is any word, name, symbol, device, or any combination, used, or intended to be used, in commerce, to identify and distinguish the services of one provider from services provided by others, and to indicate the source of the services.


The fact that crossfit is a big financial success is not surprising, it isn't a secret, and it isn't nefarious. People get rich every day in this country selling everything under the sun.

I agree that making money in and of itself is not bad. More power to anyone who comes up with a great idea and gets rich as hell off of it. It does seem like it's human nature to want to tear down people who have done well out of jealousy, envy, etc.

In my opinion, CF making money, even a lot of money, isn't the problem, it's the deception, hyperbole, hypocrisy, intimidation, character assassination, deflection from the truth, double standards, misrepresentation, and lack of true concern for its customers (both the end user's of the "program" and the affiliates) that is the problem.

Really interesting and tasteful work, Parker.

I agree with Brandon, Parker, that it is interesting information you've gathered, although I personally don't think it is applicable to CF's business model.

I think a lot of the recent events have been good to help expose and bring to light more of the cult-like dynamics of the organization. The organization is showing its true colors more clearly as time goes on and people will either open their eyes to the truth or continue to deny/ignore it, but you can't make people see what they don't want to see or admit what they don't want to admit. And many do see but don't care because they feel it is worth it to them from a business perspective.

Other than my attempt above at comic relief from the absurdity that is CF that is all I've got to contribute. Be thankful you weren't delusional enough to take the bait and affiliate like some of us stupnagles (is that how you spell stupnagle???). :)

Parker Willis
12-29-2009, 09:20 PM
Just to clarify, none of my posts were accusing anyone of fraud. I simply felt that the passage from the book had an eerily similar overtone to CF practices, and posted it for anyone to read. I have stated that I don't think CF is a Ponzi scheme. Something, somewhere seems suspicious (in my opinion) and I would like to check it out, to satisfy my own curiosity. I think those invested in CF (affiliates, certified trainers) would be wise to do the same. I'll be doing my best to collect the facts first and then come to any conclusions. In short, I'd like to know how CF runs itself, and how money flows around the enterprise.
Justin, I agree with you. Do you have any clue as to how I would modify those numbers, or could you get some numbers somehow, which could be verified? Does HQ pay hotel and plane tix? I'm not looking to argue with anyone, but I got that "53 average cert participants" number by averaging the count of the 5 most recent certs as posted on crossfit.com. The numbers ranged from 62 down to 38. Do you have a more appropriate number I might use?

Emily Mattes
12-29-2009, 10:52 PM
A question for the lawyers:

If Crossfit were to go to court to defend the brand name, would that make them open to being considered a franchise or something by the IRS? Or are those totally different issues?

Jonathan Yoon
12-30-2009, 06:16 AM
A question for the lawyers:

If Crossfit were to go to court to defend the brand name, would that make them open to being considered a franchise or something by the IRS? Or are those totally different issues?

Not a lawyer, but I've talked about this before with a few lawyers about this.

Answer: Yes, if the opposing party makes the franchise/affiliate thing apart of their argument.

Justin Herring
12-30-2009, 01:28 PM
Do you have any clue as to how I would modify those numbers, or could you get some numbers somehow, which could be verified? Does HQ pay hotel and plane tix? I'm not looking to argue with anyone, but I got that "53 average cert participants" number by averaging the count of the 5 most recent certs as posted on crossfit.com. The numbers ranged from 62 down to 38. Do you have a more appropriate number I might use?

53 sounds like a good estimate for Level I certs. Let me take a 1-minute stab:

1. My Lev I had 7-8 trainers that I remember (Budding, Sherwood, Wolf, Gilson, Jeff & Maggie from CF Fairfax, another guy maybe from HQ, and I think I'm missing a trainer). Airfare/hotel for the group (2 were local from Fairfax) probably comes in at a couple of thousand.

As an aside, the Crossfit Greyskull guys were at my cert. I remember the owner and his girlfriend/assistant-coach because they were very friendly and wearing/selling some cool "Greyskull' shirts I almost bought. The woman was a firebreather, and she absolutely destroyed the workouts. They were talking about how they had just gotten started training suburban housewives (and that watching their kids while they trained was an important part of the business model) and now clients were starting to bring their husbands. They were serious crossfit koolaid drinkers even by the standards of a cert. How things change...

For non-level one certs, just assume 40 attendees on average? Also, for certs with SME experts, they probably get more than the trainers. I'm sure Martone/Rip/Wolf/etc got more than $400 for running their own certs.

For the games: you can go to the website and see how many people are competing at regionals. Assume 1 spectator for every attendee. Assume 5 times as many people at the Sectionals and 1 spectator for every 2 attendees (too many for the Sectionals?). I don't know what the costs are--do they have paid staff? Need equipment? Pay the host site? Food?

The Games themselves are tough. Revenue is from sponsors and spectators. I have no idea of the cost structure for an event like that.

I would assume CFHQ has about $1.5 million in fixed overhead, including salaries and stuff.

That is all off the top of my head. Feel free to pick it apart.

Justin Herring
12-30-2009, 01:37 PM
A question for the lawyers:

If Crossfit were to go to court to defend the brand name, would that make them open to being considered a franchise or something by the IRS? Or are those totally different issues?

I know zilch about franchise law, but I just read the wikipedia entry. (http://en.wikipedia.org/wiki/Franchising) (love that wiki). That doesn't count as legal research, but it doesn't look to me like affiliates are anything like franchises.

Correct me if I'm wrong, but thought you get three things for being an affiliate:

1. Right to use the crossfit brand.
2. Read/post on affiliate board and invitation to affiliate gathering.
3. Opportunity to use their group insurance thing, whatever that is worth.

Am I missing anything? #1 seems like the only thing that matters. A license to use a brand is a pretty far cry from a franchise, as far as I know.

Why does it matter? Why would the IRS want to tax HQ for the revenue of an affiliate that doesn't go to HQ?
Not a lawyer, but I've talked about this before with a few lawyers about this.

Answer: Yes, if the opposing party makes the franchise/affiliate thing apart of their argument.
There is a legal principle that if you successfully assert something in your defense or for your own benefit in a legal proceeding, you can't latter deny that same thing when it becomes advantageous to do so. In other words, you can't tell Court #1 X on Monday, win because of that, and go tell Court #2 not-X on Tuesday. (If you lose in Court #1 then usually you can go assert not-X latter down the road.) As with all legal principles, there are exceptions.

I'm still not clear on why HQ would want to claim affiliates are franchises.

Tom Fetter
01-06-2010, 07:29 AM
The games may easily lose money as an event, but they're a primary source of Journal content. And also, frankly, a primary source of Crossfit's product - which I do not think is a brand name, but a dream, an aspirational community.

The dream is that with enough focus on intense and varied training, enough grit, enough time spent on skill development, that anyone can be a firebreather. Mind trumps genetics. The Games represent a pinnacle, but an achievable pinnacle ... not one that depends on the eye-hand coordination to play major league baseball, the size and athleticism to play NFL or NBA. Crossfit's much-ballyhooed appeal to military and LEOs ties in as well; we all know that Games competitors may not be pro-athlete material, but we convince ourselves that as GPP specialists, they'd be modern Spartans.

And it's hard to dispute that Games competitors aren't so far removed from the fitness of the general population, even of the general population of mildly athletic folks, that the dream's got no connection to reality.

But the conceit is that everyone can become a firebreather. Oh, everyone can become a firebreather in comparison with their own untrained potential, to be sure, but we are not all latent Spartans.

But that's what CF sells; the dream of being a Spartan, and a methodology which manifestly seems to get people there. A methodology which works well enough with untrained populations to produce striking changes in short order - changes that are striking enough to convince CFers that if they themselves did have enough focus, grit, time, dedication etc., that they would be Spartans. And that not being that is a choice, more than a fact of genetics.

Darryl Shaw
01-08-2010, 04:50 AM
But that's what CF sells; the dream of being a Spartan, and a methodology which manifestly seems to get people there. A methodology which works well enough with untrained populations to produce striking changes in short order - changes that are striking enough to convince CFers that if they themselves did have enough focus, grit, time, dedication etc., that they would be Spartans. And that not being that is a choice, more than a fact of genetics.

What did crossfitters want to be before 300 came out?

Sara Fleming
01-08-2010, 07:06 AM
Trojans.

http://en.wikipedia.org/wiki/Troy_%28film%29 (wfs)

Tom Fetter
01-08-2010, 11:24 AM
Greg Amundson.

Tom Rawls
01-08-2010, 04:00 PM
Do the guys like Amundson get that way doing X-fit? My impression is that the icons of X-fit all did and still do considerably more than the WOD or its equivalent.

Pat McElhone
01-08-2010, 09:38 PM
I am not aware of any of well known CrossFit athletes (Speal, Everret, Amundson) who were not very conditioned athletes before doing CrossFit (I believe everyone of them participated in NCAA athletics, except Kalipa) Kalipa is the only one I know. OPT played national level soccer up north (or so I heard on CF Radio.)

But, said another way, no one currently at the top of the CF totem poll was a regular guy, before finding CF.

Tom Rawls
01-09-2010, 05:43 AM
My question goes beyond what their backgrounds were when the showed up as X-fitters. It is, what do they now do to maintain strength and conditioning? My impression is that they rely on more that X-fits WODs, but I don't know. It seems that you don't get to be an elite X-fitter by simply doing X-fit.

Pat McElhone
01-09-2010, 08:00 AM
You could search the internet for the training program on each athlete, I would bet less then 25% are following the dot com WOD. Most, I bet, are doing a mix of periodization of strength training, general metabolic conditioning and specific skill work in the "known CF moves, like muscle-up, wall balls, double unders, etc."

Greg Amundson has stated he does the dot com WOD for his training and continues to set PR's in the "benchmarks" after 8 years. This is based on info from the CF Journal. But, interpret this how you will, for me, this means that after 8 years of doing Fran....well you are better at Fran.

Patrick Donnelly
05-13-2010, 06:03 AM
Got certs? The June 2009 - June 2010 Lv1 CrossFit Certification calendar:
http://img27.imageshack.us/img27/9030/certs.png


I probably missed a few somewhere along the line, and there were a few that I never saw listed as sold out (though they might have done it by the time the date arrived), but the above list is pretty complete.