CHICAGO—It almost happened once before—in 1987. That’s when IHRSA first asked Bally Total Fitness to join its ranks. An outcry from IHRSA members put a stop to that.
John McCarthy, IHRSA’s executive director, was diplomatic when he described what happened 14 years ago. “In 1987, it was unclear to the IHRSA membership as to whether [Bally was] committed to high ethical standards and high image leadership within the industry,” he said. Now, apparently, the clarity is no longer in question. In March of last year, IHRSA once again decided to invite Bally to join the association. Bally accepted in January.
So why was the country’s largest club chain finally welcomed into the IHRSA fold—without member protest? Well, for one thing, Bally and IHRSA had already been working together for years.
“Bally has been a strong partner with IHRSA both on the fair competition front, and on the legal and legislation front,” McCarthy explained.
Furthermore, Bally’s community involvement has assuaged any previous misgivings about the chain’s “image,” according to McCarthy. “Bally has a particularly impressive record in terms of working with inner-city high schools, and Boys and Girls Clubs of America,” he said. “In terms of community service, Bally has a very strong and positive record.
“Bally is taking tremendous industry leadership with respect to working in minority communities,” McCarthy continued. “They are one of the first club management companies in the country to proactively search out minority community opportunities, and we applaud them for that.”
If Bally’s performance is worthy of applause, then Lee Hillman (Bally’s chairman, president and CEO) deserves the final curtain call. Since taking charge of the chain five years ago, Hillman is often credited for changing the business practices that had given Bally its notoriety.
“Lee became president in late 1996,” said Dave Southern, Bally’s vice president of public and investor relation, “and it’s really since then that the company has made its concerted effort to completely revitalize itself.”
Unfortunately, some recent media coverage doesn’t portray Bally as a revitalized company. In January, publications such as the New York Post and Smart Money printed pieces criticizing Bally’s sales and collection practices. The timing couldn’t have been worse, as the articles appeared shortly after Bally joined IHRSA.
McCarthy sees these articles as an anomaly in Bally’s recent track record. “[W]e’ve worked closely with Bally for at least the past two years, and though they had a rash of disappointing media stories in January, their record [of unfortunate press coverage] for the past two years was almost totally clean,” he said.
For his part, Southern dismissed the recent media coverage as unfair, biased reporting based on old news that doesn’t represent the Hillman era at Bally.
In arguing that the articles distort facts, Southern referred to the Smart Money feature. It begins by describing the plight of six San Antonio women who claimed they were misrepresented, then harassed when they tried to cancel their Bally contracts. Southern said that the article leaves out an important fact which shows that the women weren’t duped.
“They actually signed not one, but two contracts each,” he explained. “In other words, they entered a contract, signed it, and then a couple of weeks later decided they wanted to upgrade their membership to a more expensive membership, and then signed a contract a second time. That’s a very clear and obvious fact not included in the article.”
While the factual accuracy of the coverage is debatable, Rick Caro, of Management Vision and Spectrum Clubs, believes that the media attention reminds Bally that, as a large public company with hundreds of clubs and millions of members, it will always be measured by its weakest link, regardless of the improvements Hillman has made.
It is Caro’s hope that Bally will use the negative publicity as an opportunity to re-examine its systems. And, according to Caro, Hillman has already taken the right steps to address the problems raised in the recent articles.
“The good news, in my view, is that they have made all the right statements as to how they are going to improve consumer practices and conformity to the selling of [contracts],” Caro said. “And in some ways, they are now not only accountable to themselves, but they will now be scrutinized by IHRSA and IHRSA membership, and that will give them an additional reminder to attend to this right away and not let this kind of behavior continue.
“Although no one ever wants to start off a relationship with a bunch of negative publicity, if this doesn’t continue, I’d say this is a mere hiccup and an unfortunate situation. If it turns out to be endemic to the system, then there are ways to review Bally and make sure that if it doesn’t belong in IHRSA, then there are ways to deal with it.”
Put another way, IHRSA clubs could ask Bally to leave if they felt the chain didn’t meet the association’s ethical standards. However, if the articles raised red flags with IHRSA members, they have been decidedly tight-lipped. At press time, no staunch opponent has come forward to protest Bally’s IHRSA membership, according to McCarthy. “I have received about three phone calls and five e-mails and two or three letters,” he claimed. “But, thus far...I haven’t received a single letter, e-mail or phone call that said, ‘Don’t do this under any circumstance.’ They just wanted to hear our reason as to why [we invited Bally to join]. And they did have reservations and concerns.” McCarthy’s response to the few people who have contacted him? “I’ve said to them that we are all going to be better off working together rather than working separately,” he offered.
Southern shared a similar sentiment when describing why Bally decided to join IHRSA. “It’s important to be a member in order to be in a good position from which to work with everybody in the industry,” he said. “We all have common goals and aspirations in the industry, and we felt that it was time that we participate from the inside.”