Is the Second Time the Charm?
Bally Total Fitness, Chicago — led by Michael Sheehan, a former 24 Hour Fitness executive — plans to emerge from its second bankruptcy soon. Will Sheehan and his new executives give birth to a better company than former executives did during Bally's first emergence from bankruptcy in 2007? I hope so. It would make a great story for the company and the industry if they turn into one of the best club companies around for their price point. Unfortunately, Bally never had the reputation that many in the industry had hoped for in a national brand. Now is the perfect time for Bally to change that by reinventing itself.
Bally has plenty of challenges ahead, most notably, executing its plan as the industry watches. What will a redefined Bally look like? Will Bally remain at its current price point? Will it focus on group exercise? Will it focus on families or singles, urban or suburban markets? We'll have to wait for those answers from Sheehan and his team. But to execute the brand properly, Bally executives will need to have a clear idea of the brand and how it's different from its competitors' brands. And they must be able to communicate that difference to staff, members and potential members.
According to industry people with whom I spoke, Bally executives will need to create a great management team and supporting staff at each club. That means keeping successful staff members who can adapt to Bally's plan. It means retraining some and letting go those who can't change. It also means empowering general managers to be fully charged with bottom line responsibility and compensating them based on net profits (with expense accountability).
Bally is already re-doing or letting go leases in some areas. The plan appears to be to operate only in areas where they have clusters of clubs that are doing well. And my hope is that Bally will add state-of-the-art clubs and re-invest in physical plant and equipment to bring its existing clubs up to the standards of its competitors. Bally must also invest in its staff, making sure its personal trainers and group exercise instructors have quality certifications, particularly if the new Bally wants to be a strong provider of group exercise programming.
And the investment must extend to the information technology side of the business by creating customer relationship management systems, daily dashboards for on-site general managers, e-marketing, interactive Web sites and other technology options that could move Bally to the front of the pack.
And finally, Bally must become a brand that inspires pride in its staff and members. Bally must have a culture focused on integrity and service that will help build the industry for the long term. That means having in place member integration programs with tracking systems. It also means eliminating its infamous three-year membership contracts with legacy rights and instead selling one-year committed dues memberships and month-to-month memberships.
For better or for worse, Bally is one of the most recognizable names in our industry, and it would be best for the industry if Bally emerged to become a strong company with a strong brand and a solid reputation. If Sheehan et al. can turn around this ship, then they'll have pulled off quite a feat in our industry. I'm rooting for them.