Map locations indicate firms’
corporate headquarters
LifeStart Wellness Network
24 Hour Fitness USA, Inc.
Anytime Fitness
Bally Total Fitness
Brick Bodies
Club One, Inc.
ClubCorp (part of KSL
Resorts)
Curves International, Inc.
elements fitness
Fitness Together Holdings
Gold’s Gym International, Inc.
Jazzercise, Inc.
L&T Health and Fitness
LA Fitness International, LLC
Lady of America Franchise
Corporation
Leisure Sports, Inc.
Life Time Fitness, Inc.
Lifestyle Family Fitness
Lucille Roberts Health Clubs
MediFit Corporate
Services, Inc.
GoodLife Fitness Clubs
Millennium Partners Sports
Club Management LLC
Planet Fitness
Renaissance, Inc.
The Rush Fitness Complex
Snap Fitness
Spectrum Athletic Clubs, Inc.
Stroller Strides, LLC
Town Sports International
Holdings, Inc.
Western Athletic Clubs (part
of KSL Resorts)
Organizacion Britania
25
The IHRSA
GLOBAL
36
Club Business International
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ELIXIA Nordic AS
Fitness World
HealthCity
Bannatyne Fitness, Ltd.
David Lloyd Leisure, Ltd.
Fitness First Group, Ltd.
LA Fitness, Plc.
Nuffield Health Fitness &
Wellbeing Centres
B-Fit
Club Med Gym
Virgin Active
Holmes Place
McFit GmbH
Kieser Training AG
power house sports international
Central Sports Co., Ltd.
Konami Sports & Life Co., Ltd.
PURE FITNESS
World Gym Taiwan
A! Bodytech Participações
BIO RITMO
Bodytech
Companhia Athletica
New Fitness Centers, SA
YWV$<daYÉh<nbEZgj
Sportlife
Fernwood Women’s
Health Clubs
THE ECONOMIC
RECOVERY IS UNEVEN,
BUT IT’S GATHERING MOMENTUM
By Patricia Amend
www.ihrsa.org
|
JULY 2011
|
Club Business International
37
I
The IHRSA Global 25
t’s now official.
The health club industry—comprised, in large part, of thousands of dedicated, hard-working, highly professional
IHRSA members—is truly recession-resilient. Figures for 2010 confirm that the U.S. industry has successfully navigated
one of the worst and most trying economic downturns of the last century. Many club operators in other parts of the
world have also stayed the course, but, admittedly, some continue to struggle in this most uneven of recoveries.
A year ago, CBI noted that the industry had breathed a collective sigh of relief, as there was a real sense that things
were finally beginning to improve, despite the fact that a full recovery remained elusive. That positive sentiment is
even stronger now.
“We can be proud that many people in this industry worked very hard to improve their clubs under difficult
circumstances,” observes Rick Caro, the president of Management Vision, Inc., a consulting firm based in New York
City. “In 2010, the number of net members increased, and attrition is under control again—closer to the 2008 numbers, following a difficult 2009. Nondues revenue came back; EBITDA margins are now closer to 2008 levels, though
not as high as in 2007; and we saw the first growth in members in several years.”
Results from IHRSA’s annual membership survey, conducted in January, indicate that U.S. club membership
reached 50.2 million in 2010, a healthy 10.8% increase over 45.3 million in 2009. That jump is even more impressive considering the fact that the number of Americans belonging to a club was flat—between 45 and 46 million—
from 2006 to 2009. In addition, the total number of health club consumers—i.e., members and nonmember users
and visitors—reached 58 million in 2010, up 10.4% from 52.6 million in 2009.
Finally, total U.S. industry revenues were $20.3 billion in 2010, up 4% over the previous year, and the number of
clubs totaled 29,890, a slight increase from 29,750 in 2009. Worldwide, the industry generated an estimated $70
billion in revenues, the result of the efforts of more than 128,000 clubs.
TURNING THE CORNER
“I’m definitely seeing more optimism on the part of club owners, compared to the ‘bunker mentality’ of the last two
years, and, I think, for good reason,” says Duane Stullich, managing director at FocalPoint Partners, an investment
banking firm based in Los Angeles. “Operators with balance-sheet issues who took the steps needed to fix them have
created opportunities for growth. Crunch Fitness is a good example of this.”
“Groups including LA Fitness, Urban Active, and XSport continue to build highly attractive, multisport boxes and
maintain large memberships at reasonable membership prices,” says Pete Moore, the managing partner at Integrity
Square, a boutique investment firm based in New York City that focuses on the active-lifestyle, health, and wellness
sector. “Equinox and Life Time Fitness, on the high end, are exceeding expectations. And Planet Fitness and WOW!
Work Out World are performing extremely well at lower-priced memberships.”
One of the principal factors contributing to the relatively stable number of clubs in
the U.S., and the increase in the number of club members, both in the U.S. and worldwide, is the ongoing success story of Anytime Fitness and Snap Fitness. By the end of
“We can be proud
2010, Anytime Fitness had a total of 1,496 facilities, a 20% increase over 2009, and
that many people
placed No. 2 on the Number of Franchises list; Snap Fitness had 1,122, a 17%
increase over ’09, and placed No. 3 on the list. Anytime Fitness’ five-year unit
in this industry
growth rate (2006-2010) was 397%, and Snap Fitness’ was 783%.
worked very hard
Together, the two companies now serve some 1.3 million members.
to improve their
Still, there were no big deals in the U.S. last year for three principal
clubs under difficult
reasons, Caro explains. “Strategic buyers haven’t been willing to pay
circumstances.”
the prices of three years ago, so potential sellers have been holding off.
Debt financing has been hard to obtain for cash-based borrowers who couldn’t
get the leverage that was available in 2008. It was also difficult for asset-basedborrowers because banks have tightened their requirements in general or because
they have problems with this industry. However, due to changes in some SBA loan requirements, things may pick
up by the end of this year.”
“Fitness facilities definitely require cash-flow loans, which was a class of lending that dried up in 2009, but
experienced some loosening in 2010,” notes Brent Knudsen, a managing partner at Partnership Capital Growth in
San Francisco. “It’s now available primarily to larger, stronger operators such as LA Fitness, which raised a
$300-million acquisition line earlier this year, and 24 Hour Fitness, which also restructured its debt recently. In
addition, more local and regional operators have accessed improved credit facilities with lenders willing to support
higher debt levels for growth and acquisitions.”
38
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VIEW FROM EUROPE
Results from a survey conducted by the Leisure Database Company show a slight increase in the number of U.K.
clubs, from 5,795 in 2009 to 5,885 in 2010, while membership rose from 7.3 million in 2009 to 7.4 million in 2010.
However, Continental Europe was still restrained by the recession in 2010, with the main exception being
Germany, points out David Giampaolo, the chief executive of Pi Capital, based in London. “Greece, Ireland, and
Portugal had to be bailed out by the European Central Bank and the International Monetary Fund. Unemployment
is high in most countries, and taxes are on the rise. I don’t think the industry has turned the corner yet,” he suggests.
“However, there are some very successful exceptions, including Fitness First, Virgin Active, and Health City.”
When it comes to debt financing, medium and large companies still enjoy access, Giampaolo says. “However, it’s
neither easy nor cheap,” he adds. “Generally speaking, debt financing, in my opinion, will be a lot harder to obtain
for years to come. Part of the reason for this is the fact that most banks need to shrink their balance sheets and
increase their capital reserves. And there are other industries with a better credit history than fitness.”
Still, the end of 2010 and the first half of 2011 were ripe with noteworthy deals. Health City acquired all 57 Fitness
First facilities in the Benelux region, which, when combined with their takeover of the budget chain Basic Fit, brings
Health City’s total count to 210 clubs.
Virgin Active agreed to acquire Esporta’s 35 health and fitness operations and 20 racquet-sport clubs in the U.K.,
which will give the company 124 sites in Britain, in addition to its locations in Italy, Spain, Portugal, and South Africa.
Club Med Gym’s majority shareholder, the private-equity group 21 Partners, acquired Group Helvetique Silhouette. Club Med Gym operates 22 clubs in Paris, and 32 corporate or hotel facilities; Silhouette has 22 sports clubs in
Geneva, Zurich, and Brussels. >
NUMBER OF FACILITIES OWNED—YEAR 2010
Rank & Company
1 Fitness First Group, Ltd.
' ')=djg;^icZhhJH6!>cX#
( A6;^icZhh>ciZgcVi^dcVa!AA8
) 7VaanIdiVa;^icZhh
5 GoodLife Fitness Clubs
6 Konami Sports & Life Co., Ltd.
7 HealthCity
- K^g\^c6Xi^kZ
. 7";^i
10 Town Sports International Holdings, Inc.
11 ClubCorp
12 Central Sports Co., Ltd.
13 SATS Sports Club Sweden AB
14 Renaissance, Inc.
&*V A^[ZI^bZ;^icZhh!>cX#
&*W 9Vk^YAadnYAZ^hjgZ!AiY#
&+ A6;^icZhh!EaX#
&, ;ZgclddYLdbZcÉh=ZVai]8ajWh
&- ;^icZhhLdgaY
19 Gold’s Gym International, Inc.
'% 7VccVincZ;^icZhh!AiY#
'& A^[ZhinaZ;Vb^an;^icZhh
22a Nuffield Health Fitness & Wellbeing Centres
22b Lucille Roberts Health Clubs
'( AI=ZVai]VcY;^icZhh
24 Organizacion Britania
'*V :A>M>6CdgY^X6H
'*W 7dYniZX]
Number Owned
474
)&.
(+%
(%% 216
210
203
&.)
&+)
158
139
115
113
98
-.
-.
-%
,)
+)
63
+% **
52
52
)-
46
)*
)*
www.ihrsa.org
Other Units
Total Units
Franchised: 18
492
C$6
)&.
C$6
(+%
C$6
(%%
Franchised: 48
264
Managed: 149
359
Franchised: 7
210
C$6
&.)
C$6
&+)
Managed: 4; Partly Owned: 2 164
Managed: 8
147
Managed: 40
155
Licensed: 30; Franchised: 3 146
Managed: 6
104
C$6
-.
C$6
-.
C$6
-%
C$6
,)
C$6
+)
Franchised: 637
700
C$6
+%
C$6
**
Managed: 148
200+
Franchised: 3
55
C$6
)Managed: 5
51
C$6
)*
C$6
)*
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JULY 2011
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Club Business International
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The IHRSA Global 25
The Altor Fund III signed an agreement to acquire ELIXIA Holding II AS, which operates 34 clubs in
Norway, 11 in Finland, and two in Sweden.
AUSTRALIA LEADS IN ASIA-PACIFIC
Once regarded as a relatively untapped market, this part of the world now claims a number of successful
club companies, including Konami and Central Sports in Japan; Ozone Fitness and Shenzhen Catic Wellness in China; and Fitness First, which is based in the U.K.
Now, in a major move, the Fitness First Group has applied for an initial public offering (IPO) on the
Singapore exchange during the third quarter of this year. The company, which is owned by BC Partners,
based in London, hopes to raise S$600 million ($481.4 million) to S$700 million ($561.6 million). Fitness
First now owns or franchises nearly 500 clubs across 18 countries in Europe and the Asia-Pacific region.
“At the same time, over the past two years, club growth was slow or flat in markets affected by the
downturn,” observes Melissa Rodriguez, IHRSA’s research manager. “Thailand, in particular, endured a
political crisis and violence that led to the loss of the True Fitness Zen Central club in Bangkok. Other
countries, such as Indonesia, were relatively unaffected by the recession, which put Celebrity Fitness
in a position to acquire California Fitness’ Malaysian operations. Just as they have in the U.S., some club
companies in Asia-Pacific are now consolidating and improving their internal processes.
“On the plus side,” continues Rodriguez, “more than 2.5 million people belonged to 2,800 clubs in the
Australian market, which generated $2 billion in 2010. Women-only clubs, such as Curves, Contours
Express, and Fernwood Women’s Health Clubs, a full-service chain, have also flourished. At the moment,
Fitness First Australia claims an estimated one-third of the full-service market.”
In Japan, the fitness market, with some 3,500 clubs, generated an estimated $5.1 billion in 2010. After
three years of slight declines or slow growth, the first quarter of 2010 was marked by an uptrend, according
to Club Business Japan. However, the devastating 8.9-magnitude earthquake that struck in March and the
23-foot tsunami that battered the coast have hurt the industry, Rodriguez says. “The FIA Japan has indicated that more than 100 clubs sustained damage, and 30 of them haven’t announced plans to reopen.”
W
hat’s ahead for the industry in the near future? What trends bode well for clubs?
Will deal-making resume in the U.S.?
“We can all agree that 2010 was a challenging year as businesses were still
recovering and valuations weren’t appealing with respect to exits,” says Knudsen.
“However, with hold periods approaching five years for private-equity-backed
fitness properties and business performance recovering, we believe that we’ll see a
fair amount of deal activity in 2011 and 2012.”
“I see a number of trends continuing to drive the industry,” concludes Stullich.
“From the consumer’s point of view, I see more choices emerging as operators become
more sophisticated about identifying and exploiting niches. With respect to consolidation, I do see significant investor interest and improving capital markets. There’s also
the ongoing entrepreneurial spirit, the passion for health and fitness, and the favorable
demographic trends—which is why I love this resilient industry.”
– Patricia Amend, PAmend@aol.com
Editor’s note: Data for this article was compiled, in part, from The 2011 IHRSA Global Report: The State
of the Health Club Industry, which contains profiles of more than 240 companies. This comprehensive
publication can now be purchased by logging on to www.ihrsa.org/store; the price is $29.95 for IHRSA
members, and $69.95 for nonmembers. >
40
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NUMBER OF FRANCHISES—YEAR 2010
Rank & Company
& 8jgkZh>ciZgcVi^dcVa!>cX#
2 Jazzercise, Inc.
3 Anytime Fitness
4 Snap Fitness
5 Gold’s Gym International, Inc.
+ ;^icZhhId\Zi]Zg=daY^c\h
7 Planet Fitness
8 Stroller Strides, LLC
9 Lady of America Franchise Corporation
10 GoodLife Fitness Clubs
NUMBER OF MEMBERS—YEAR 2010
Number of Units
-!%('
7,800
1,486
1,092
637
(.)
374
303
168
48
Rank & Company
Total
1 24 Hour Fitness USA, Inc.
3,800,000
2a Gold’s Gym International, Inc.
3,500,000
2b Bally Total Fitness
3,500,000
3 Planet Fitness
2,348,270
4 Curves International, Inc.
1,900,000
5 Fitness First Group, Ltd.
1,317,170
6a McFit GmbH
975,000
6b Virgin Active
975,000
7 Anytime Fitness
940,000
8 Konami Sports & Life Co., Ltd.
801,000
9 GoodLife Fitness Clubs
670,533
10 Life Time Fitness, Inc.
612,556
11 Town Sports International Holdings, Inc. 493,000
12 Snap Fitness
400,000
13 Renaissance, Inc.
355,000
14a Organizacion Britania
350,000
14b ClubCorp
350,000
15 SATS Sports Club Sweden AB
275,000
16 Fitness World
254,000
17 Lady of America Franchise Corporation 240,000
18 Lucille Roberts Health Clubs
233,300
19 Lifestyle Family Fitness
212,969
20 Nuffield Health Fitness &
Wellbeing Centres
170,000
21 ELIXIA Nordic AS
162,000
22 World Gym Taiwan
159,000
23 Club One, Inc.
151,250
24 Spectrum Athletic Clubs, Inc.
125,000
25 Jazzercise, Inc.
119,250
Other Units
C$6
Owned: 2
Owned: 10
Owned: 30
Owned: 63
C$6
Owned: 16
Owned: 1; Licensed: 110
Licensed: 30
Owned: 216
Total
-!%('
7,802
1,496
1,122
700
(.)
390
414
198
264
REVENUES—YEAR 2010
Rank & Company
Revenues $ Millions
1 Konami Sports & Life Co., Ltd.
1,052
2 24 Hour Fitness USA, Inc.
1,000 +
3 Fitness First Group, Ltd.
984
4 Life Time Fitness, Inc.
913
5 Virgin Active
709
6 Central Sports Co., Ltd.
565
7 Bally Total Fitness
480
8 Renaissance, Inc.
466
9 Town Sports International Holdings, Inc.
462
10 GoodLife Fitness Clubs
341
11 SATS Sports Club Sweden AB
247
12 McFit GmbH
212
13 Holmes Place
193
14 Kieser Training AG
191
15 ELIXIA Nordic AS
168
16 Planet Fitness
157
17 Western Athletic Clubs
111
18a Lifestyle Family Fitness
102
18b Fitness Together Holdings
102
19 Jazzercise, Inc.
96
20 Millennium Partners Sports Club
Management, LLC
92
21 Spectrum Athletic Clubs, Inc.
90
22a Fitness World
80
22b Club One, Inc.
80
23 A! Bodytech Participações
78
24 Curves International, Inc.
76
25 Leisure Sports, Inc.
73
www.ihrsa.org
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JULY 2011
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Club Business International
41
The IHRSA Global 25
REVENUE GROWTH
Rank & Company
1 Virgin Active
2 Life Time Fitness, Inc.
3 GoodLife Fitness Clubs
4 Fitness First Group, Ltd.
5 Fitness World
6 McFit GmbH
7 Planet Fitness
8 Holmes Place
9 Kieser Training AG
10 BIO RITMO
11 ELIXIA Nordic AS
12 Renaissance, Inc.
13 Organizacion Britania
14 elements fitness
15 A! Bodytech Participações
16 Bally Total Fitness
17 World Gym Taiwan
18 Leisure Sports, Inc.
19 Companhia Athletica
20 The Rush Fitness Complex
21 Western Athletic Clubs
22 Brick Bodies
23 Sportlife
24 MediFit Corporate Services, Inc.
25 SATS Sports Club Sweden AB
2010 Revenues
$ Millions
709
913
341
984
80
212
157
193
191
65
168
466
50
22
78
480
47
73
49
46
111
20
25
35
247
TOP TEN FIVE-YEAR REVENUE GROWTH
2010 Revenues
$ Millions
913
709
984
341
565
157
193
212
168
247
Rank & Company
1 Life Time Fitness, Inc.
2 Virgin Active
3 Fitness First Group, Ltd.
4 GoodLife Fitness Clubs
5 Central Sports Co., Ltd.
6 Planet Fitness
7 Holmes Place
8 McFit GmbH
9 ELIXIA Nordic AS
10 SATS Sports Club Sweden AB
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2009 Revenues
$ Millions
623
837
275
943
45
179
130
171
170
45
148
447
33
9
65
469
38
64
43
41
106
16
21
31
243
Change
$ Millions
86
76
66
41
35
33
27
22
21
20
20
19
17
13
13
11
9
9
6
5
5
4
4
4
4
% Change
14%
9%
24%
4%
78%
18%
21%
13%
12%
44%
14%
4%
52%
144%
20%
2%
24%
14%
14%
12%
5%
25%
19%
13%
2%
2006 Revenues
$ Millions
512
329
717
127
422
30
79
105
73
158
Increase
$ Millions
401
380
267
214
143
127
114
107
95
89
% Change
78%
115%
37%
169%
34%
423%
144%
102%
130%
56%
UNIT GROWTH
Rank & Company
2010 Units
1 Jazzercise, Inc.
7,802
2 Anytime Fitness
1,496
3 Snap Fitness
1,122
4 Stroller Strides, LLC
414
5 HealthCity
210
6 Planet Fitness
390
7 B-Fit
164
8 Nuffield Health Fitness & Wellbeing Centres 200+
9 LA Fitness International, LLC
360
10 Konami Sports & Life Co., Ltd.
359
11 Club Med Gym
53
12 elements fitness
39
13 Fitness World
64
14 MediFit Corporate Services, Inc.
224
15 PURE FITNESS
32
16 power house sports international
20
17 GoodLife Fitness Clubs
264
&- CZl;^icZhh8ZciZgh!H6YWV$<daYÉh<nbEZgj ''
19 LifeStart Wellness Network
30
20 BIO RITMO
34
21 Leisure Sports, Inc.
16
22 McFit GmbH
134
23 Bodytech
45
24 World Gym Taiwan
22
25 Virgin Active
194
2009 Units
7,472
1,250
956
305
114
300
80
157
324
327
22
12
39
203
16
6
250
&%
20
24
7
125
36
15
187
TOP TEN FIVE-YEAR UNIT GROWTH
Rank & Company
1 Jazzercise, Inc.
2 Anytime Fitness
3 Snap Fitness
4 Planet Fitness
5 Stroller Strides, LLC
6 LA Fitness International, LLC
7 B-Fit
8 GoodLife Fitness Clubs
9 Fitness Together Holdings
10 Konami Sports & Life Co., Ltd.
2010 Units
7,802
1,496
1,122
390
414
360
164
264
394
359
STIPULATIONS
IHRSA’s Global 25 listings are designed to provide basic
^c[dgbVi^dcVWdjihdbZd[i]ZldgaYÉhaVg\ZhiVcY$dg[VhiZhi"
growing club companies, but they are not definitive. Many of
the firms that should appear on these charts do not because
they were unwilling or unable to provide all of the informa-
2006 Units
6,285
301
127
106
151
175
10
121
300
276
Unit Increase
330
246
166
109
96
90
84
43
36
32
31
27
25
21
16
14
14
&'
10
10
9
9
9
7
7
% Change
4%
20%
17%
36%
84%
30%
105%
27%
11%
10%
141%
225%
64%
10%
100%
233%
6%
&'%
50%
42%
129%
7%
25%
47%
4%
Units
Increased
1,517
1,195
995
284
263
185
154
143
94
83
% Change
24%
397%
783%
268%
174%
106%
1540%
118%
31%
30%
tion requested by CBI’s deadline. The figures reported were
obtained from the companies themselves or from public,
published resources, and, in most cases involving major
firms, represent the one-year period ending on December
31, 2010. None of the figures, it should be noted, have been
independently corroborated. —|
www.ihrsa.org
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JULY 2011
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Club Business International
43