CHICAGO — Despite a delay in the closing of the Crunch sale, Marc Tascher and private equity group Angelo, Gordon & Co. are forging ahead with plans for the properties. The group will invest $11 million in capital improvements in the Crunch clubs when they close the transaction with Bally Total Fitness. Tascher expected to finalize the deal by the end of 2005, but due to landlord lease obligations, the deadline was postponed until Jan. 17.
All of the Crunch clubs are in leased buildings, and the main holdup to the sale has been negotiating new club leases with 25 landlords and their attorneys, said Tascher. One of the key closing conditions is to remove Bally from the leases, said Paul Toback, Bally's chairman and CEO.
“That process is still going slower than we would have liked,” Toback said. “We still hope to get the transaction through because it's good for the shareholders, and it's good for Bally.”
Bally purchased Crunch in 2001 in a cash/stock transaction worth $90 million and is selling the chain for $45 million.
Tascher plans to rebrand the two Gorilla and two Pinnacle Sports facilities included in the transaction as Crunch clubs. The eight other clubs that Tascher owns will also be rebranded with the Crunch name.
“We've gone after the same market, so I won't have to make radical changes,” he said. “I'll just need to change the signs and incorporate Crunch programming.”
Tascher worked with designer Cuoco Black on a 21,000-square-foot Crunch flagship club in Manhattan, and the project went into full construction in late December. Tascher said he plans to continue with the project even if the Crunch deal falls through.
The battle over Bally's board has been a distraction but hasn't affected the sale as of yet, he said.
“Bally has been working hard to get this deal done,” said Tascher. “There has been no change in attitude because of external issues. We're all aware of them, and it creates another unknown. In business you want to control all of the things that affect your business, but in this case, I'm trying not to worry about something that I can't do anything about.”