LA Fitness increased its portfolio to more than 500 clubs following last month’s acquisition of 171 Bally Total Fitness clubs. Photo by Cheri Jones.

Of the many reactions to last month’s industry-shaking announcement that LA Fitness would acquire 171 Bally Total Fitness clubs for the price of $153 million, perhaps the most unexpected response came from one of its competitors: 24 Hour Fitness.

When asked for a comment about the deal, which was scheduled to be completed on Nov. 30, Wendy Yellin, spokesperson for 24 Hour, indicated that it was an encouraging sign for the industry.

“24 Hour Fitness believes the news of this acquisition validates the importance of making fitness more available to more Americans, especially as our country faces an increasing number of health-related concerns,” Yellin said. “We look forward to achieving this mission alongside our industry peers.”

24 Hour Fitness, San Ramon, CA, and LA Fitness, Irvine, CA, have been neck-and-neck in terms of revenue generated over the past two years. 24 Hour has been No. 1 and LA Fitness No. 2 each of the last two years on Club Industry’s Top 100 Clubs list, with each company generating estimated annual revenues of $1.352 billion and $1 billion, respectively.

The recent LA Fitness-Bally deal likely will cause a shift in next year’s rankings. LA Fitness will have more than 500 clubs in operation by the end of this year. 24 Hour reported 420 clubs at the end of 2010.

“It’s an interesting play and obviously one that LA Fitness feels will really catapult them into the leadership position in the industry, as far as number of clubs [of their type] go,” says Michael Scott Scudder, managing partner of The Fitness Industry Group, Taos, NM.

The LA Fitness acquisition involves Bally clubs in 16 states plus the District of Columbia. At the time of the announcement, Bally had 271 clubs in operation. After completion of the transaction, Bally will continue to operate its remaining 100 clubs.

A spokesperson for Chicago-based Bally said at the time of the announcement that Bally was going to focus on clubs in its key markets, which include New York, San Francisco, Denver and Houston. The spokesperson also confirmed that Bally’s first BFit club, a lower-price, smaller-box model that the company introduced in October in Illinois, is included in the LA Fitness acquisition. It remains to be seen what the future holds for the BFit model.

The states in which the Bally clubs have been acquired are Arizona, California (Southern California), Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Minnesota, Oregon, Pennsylvania, Washington, the District of Columbia and certain locations in Massachusetts, New Jersey, New York and Virginia.

“It looks like they ‘cherry-picked’ in this deal,” Scudder says.

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