Swift Action by Active Sports Clubs led to Club One Acquisition

Club One was on the verge of shutting down before Bill McBride, Jill Kinney and Active Sports Clubs came to the rescue.

Bill McBride and Active Sports Clubs hosted a reception at the IHRSA show last month, the same reception Club One had hosted in years past.

It was a nice breather for McBride that March 12 night atop the roof of the Hard Rock Hotel in San Diego. He and Active Sports Clubs co-owners Jill Kinney and Carey White—along with other investors—had just purchased a majority of the assets of San Francisco-based Club One. The acquisition came suddenly and not without some bumps in the road.

As the San Francisco Business Times first reported in March, Club One had been struggling financially. What wasn't reported was that Club One was going to shut down completely on Feb. 28.

"I think a lot of people were caught completely off-guard, as was I," McBride told me in a recent interview. "We didn't know for sure that the 28th deadline wouldn't be extended by Club One. The bulk of all this happened within a matter of two to three weeks. We literally put together the new entity in approximately three weeks."

Active Sports Clubs took over on March 1. The transition wasn't entirely seamless: The health insurance policy for the more than 2,000 Club One employees was terminated by Club One on Feb. 28.

"Because of the way that plan was structured, there was no COBRA for those people," said McBride, who left Club One last July. "Active was a brand new entity that was just formed. We didn't have health insurance in place, as of yet. So we basically instructed the staff to buy insurance on the market, and we set up a reimbursement program."

McBride added employees purchased short-term insurance for March and are now insured retroactive to April 1.

Another hurdle came a few days after the acquisition. One of the clubs acquired in the deal, a club in Oakland whose members include California Gov. Jerry Brown, was closed from 5 a.m. until 5 p.m. on March 4 as Active Sports Clubs continues to negotiate the assignment for the lease agreement with the landlord of the building, McBride said.

"This is a longtime landlord that Club One has had in that space," McBride said. "We were trying to work with him, but we also didn't want to occupy the club without express legal permission to be there. We just wanted to play by the rules."

The Oakland Tribune reported that Brown himself made a call inquiring about the closure.

"The governor and his wife are members of the club and have been members of the club for a long time," McBride said. "I don't know that the governor did or didn't do anything. If he did call on our behalf, it surely didn't hurt.

Active Sports Clubs now operates 65 sites, including commercial clubs, Jewish Community Centers, a hospital fitness center and corporate sites. After the acquisition, Club One still owned one club in downtown San Francisco, which Active Sports Clubs managed, and had a corporate office. On April 1, Club One sold that downtown club to Crunch Fitness, according to a source, meaning Club One no longer owns or manages health clubs in the industry.

Club One CEO Robin Klaus did not respond to a Club Industry email asking for his comments, but he did tell the San Francisco Business Times that the rental market has been challenging for the company.

"There were portions of our business that were very healthy and portions that were struggling," Klaus told the Business Times. "The club market is very difficult here, and a rapidly changing rental market made some leases difficult. I think the business is in very good hands now."

Active Sports Clubs has already completed the rebranding of one club—the Petaluma club it acquired back in January. The rest of the clubs will be rebranded in phases, McBride said.

For now, it's business as usual for Active Sports Clubs.

"The energy and the excitement from the workforce has been fantastic," McBride said. "Everybody still has jobs, at least. We saved the business from closure. It's been a very positive reaction."

Please or Register to post comments.

What's Behind the Scenes?

Behind-the-Scenes - Get a look behind the magazine--the people the editors talk to, the clubs they visit and the stories they are working on.

Blog Archive