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Last year when Club Industry released its annual Top 100 Clubs list, merger and acquisition talks in the industry were just starting to brim, although no deals had been consummated at the time. Since the release of that list, a number of deals have come to fruition, the largest of which was the LA Fitness acquisition of 171 clubs from Bally Total Fitness. That deal coincided with a smaller acquisition by Life Time Fitness, which purchased nine clubs from Lifestyle Family Fitness.
So far in 2012, these four club companies have been principal players in other deals. The most recent acquisition news announced last month was that LA Fitness entered into an agreement to purchase the remaining Lifestyle Family Fitness clubs in Florida. That deal had not been completed as of press time. In May, Bally sold 39 of its clubs to Blast Fitness, and in February, Life Time Fitness acquired Atlanta’s Racquet Club of the South.
The plethora of deals so far this year will definitely affect the Top 100 Clubs list in 2013. However, even with some of the deals made late last year, this year’s Top 100 Clubs list once again resembles its predecessor as the top six club companies remain unchanged. The Top 100 Clubs list ranks club companies by revenue in the previous year and is not intended to rank clubs based on quality or service.
The encouraging news for the industry is that more companies reported double-digit growth percentages this year than last, and six of those increases were for more than 20 percent.
The 2011 revenues for the two largest club companies—24 Hour Fitness and LA Fitness—are based on estimates from sources both inside and outside the club companies. 24 Hour Fitness, San Ramon, CA, reported that it had more than $1 billion and operated more than 400 clubs in 2011, but due to other sources, Club Industry estimates the company’s revenue at $1.5 billion in 2011, an increase from $1.352 billion estimated last year, keeping 24 Hour at No. 1 for the ninth consecutive year.
The future of 24 Hour’s ownership remains uncertain as the company’s private-equity owner, Forstmann Little, faced a June 30 deadline regarding its sale. As The New York Times reported last year, Forstmann Little was contractually required to sell its three remaining assets—including 24 Hour Fitness—and return proceeds to its limited partners by the June 30 deadline. A possible extension of the deadline was not known as of press time.
No. 2 LA Fitness, Irvine, CA, had an estimated $1.2 billion in 2011, up from an estimated $1 billion in 2010. The company reported it had 505 clubs in operation at the end of 2011. Given the announced acquisitions and the number of new club openings by LA Fitness this year, LA Fitness likely will become the market leader in revenue and number of clubs by the end of 2012.
Life Time Fitness, Chanhassen, MN, is No. 3 on this year’s Top 100 Clubs list with a reported $1.014 billion in 2011 revenue, the first time the company has surpassed the $1 billion mark. Life Time, a public company that reported $912.8 million at the end of 2010, remains active in terms of growth. This year, Life Time opened a club in the Toronto suburb of Mississauga, Ontario, the company’s first club in Canada. It also opened a new club in Tulsa, OK, and held its 100th grand opening for a new club in the Atlanta suburb of Sandy Springs, GA.
Club Corp., Dallas, is No. 4 on this year’s list. In June 2011, Club Corp., the owner of upscale sports clubs, golf clubs and country clubs, traded some of its debt for publicly traded debt, which means the company now must file financial statements with the Securities and Exchange Commission. Club Corp. reported $725.7 million in 2011 revenue compared to $693.7 million in 2010 and $706.2 million in 2009. The company sold its full-service resorts in November 2010.
Bally Total Fitness, Chicago, remains at No. 5 with $468 million in 2011 revenue, a 15 percent decrease from $550 million in 2010. The sale of the 171 clubs to LA Fitness last year led to a significant decrease in the company’s club number from 278 at the end of 2010 to 102 at the end of 2011. That number will fall further next year because of the Blast Fitness acquisition of 39 Bally clubs.
Town Sports International (TSI), New York, is No. 6 with $466.9 million in 2011 revenue, a slight increase from the public company’s $462.4 million revenue in 2010. TSI, which operates New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs and Washington Sports Clubs, plans on one new club opening in 2012.
Rounding out the top 10 are Capital Fitness Inc., Big Rock, IL, which operates XSport Fitness clubs ($151 million); Western Athletic Clubs, San Francisco ($131 million); Urban Active, Lexington, KY ($107.5 million); and Sport & Health, McLean, VA ($97 million). Sport & Health adjusted its reported revenue from $100 million after press time, however the adjustment did not change the order of the Top 100. Some non-revenue information on other club companies also was updated on the Top 100 Clubs list after press time.
Planet Fitness, Newington, NH, which for the past three years had been in the Top 10 of the Top 100 Clubs list, chose not to be on the list this year. Club Industry could not determine an accurate estimate for the company based on last year’s figures, which were reported incorrectly due to a miscommunication regarding the type of revenue allowable for reporting.
This year likely will be the final year on the Top 100 Clubs list for St. Petersburg, FL-based Lifestyle Family Fitness, which is in the process of selling its remaining clubs to LA Fitness. Before the announcement of the deal, Lifestyle reported $96.3 million for 2011 revenue, putting it at No. 11 on this year’s list. The company reported $102.4 million in 2010 revenue, which was prior to its sale of those nine clubs to Life Time last year.
Crunch Fitness, New York, is one of the companies reporting a double-digit increase in revenue percentage. Crunch, No. 12 on this year’s list, reported $96 million in 2011 revenue, a 23 percent increase from the $78 million it reported for 2010. The increase in revenue is attributed to additional clubs (including the sale of franchised clubs), an increase in membership and personal training growth, according to the company.
Midtown Athletic Clubs, Chicago, which rebranded its Proactive Partners division to Midtown Health earlier this year, is No. 13 with $95 million, a 3 percent increase from the previous year.
Following Midtown at No. 14 is Millennium Partners Sports Club Management, Boston. The company chose not to report its 2011 financials this year. Because it provided its revenue last year, Club Industry estimated its 2011 revenue this year at $94.8 million. For any companies that reported revenue last year but not this year, Club Industry estimated a 3 percent increase.
Two California-based club companies return to the Top 100 Clubs list this year after a brief absence. Spectrum Athletic Clubs, El Segundo, CA, and In-Shape Health Clubs, Stockton, CA, are tied at No. 15 with $90 million in 2011 revenue. Spectrum Athletic Clubs reported its revenue; In-Shape’s revenue was based from an estimate derived from outside sources.
Spectrum reported 23 clubs at the end of 2011, but that number is now lower after Spectrum sold its 11 San Antonio clubs to Gold’s Gym International, Irving, TX, this February for an undisclosed sum. Gold’s Gym did not provide revenue figures to Club Industry and therefore is not on the Top 100 Clubs list. However, Gold’s did report 75 company-owned clubs and 625 franchised clubs at the end of 2011.
Another club company that is not on this year’s list is Equinox, New York, which completed the industry’s first major acquisition of 2011 last August when it acquired the remaining four The Sports Club/LA clubs from The Sports Club Co., Los Angeles. After appearing at No. 22 on last year’s Top 100 Clubs list, The Sports Club Co., which no longer operates clubs, also is not on this year’s list.
One other club company missing from the list is Curves, Waco, TX, which has never reported its revenue for the Top 100 Clubs list. Last year, however, The Wall Street Journal reported Curves company revenue for 2009 ($84.1 million) and 2010 ($75.6 million). Without further details about the specifics of these numbers,Club Industry did not have enough information to estimate corporate revenue for Curves, even though it likely could have placed in the top 25.
Like Crunch Fitness, several other clubs showed a double-digit improvement from the previous year. Anytime Fitness, Hastings, MN, is No. 31 on this year’s list with $39.1 million in 2011 revenue, a 16 percent increase from the previous year. This is the third consecutive year that Anytime Fitness, a franchisor of all-access clubs (formerly called key-card clubs), has enjoyed an increase of 12 percent or higher.
“We’re very pleased—but not surprised—by the 16 percent increase in revenue from 2010 compared to 2011,” says Mark Daly, national media director for Anytime Fitness. “We’ve opened 250 or more clubs each of the last six years, and we anticipate maintaining that growth rate for the foreseeable future.”
Powerhouse Gyms International, Birmingham, MI, tied for No. 35 on this year’s list with $34 million, a 10 percent increase from the previous year. Powerhouse President and CEO Henry Dabish attributes part of the increase to the opening of two large gyms, including the company’s 60,000-square-foot club in Novi, MI.
Best Fitness, Nashua, NH, reported a 35 percent increase in 2011 revenue and is No. 47 on this year’s list. Best Fitness, which had $18 million in 2011 (it did not report its 2010 revenue last year), opened a new club and acquired another club in 2011, giving the company 10 clubs total.
“We also invested in building a strong management team,” says Rick Hatch, vice president of operations for Best Fitness. “This has resulted in much better success in our PT (personal training) and membership departments. I am really excited to see what our team can accomplish this year.”
Other clubs had decreases in their revenue from the previous year, and some provided details as to why. Greenwood Athletic and Tennis Club, Greenwood Village, CO, saw its revenue drop from $11.5 million in 2010 to $11 million in 2011 and is tied for No. 64 on this year’s list. Dan Gray, CFO of Greenwood Athletic and Tennis Club, says the decrease was due to a Life Time Fitness that opened three miles away, which reduced Greenwood’s memberships by about 200 in a little more than two months.
However, Gray adds, about 22 percent of those memberships have returned, and the company is experiencing a resurgence so far this year. Through May, the company’s revenues are up more than 8 percent year over year, according to Gray.
Competition in the area also was a factor in a decrease in revenue for HealthQuest Fitness, Flemington, NJ, says general manager Deirdre Whalen. HealthQuest dipped from $7.5 million in 2010 to $6.9 million in 2011, but it only fell one spot on the list to No. 83. However, Whalen says the club is making some changes to the facility to help bring back members who had left.
Advocate Condell Centre Club, Libertyville, IL, had a 16 percent decrease in revenue, from $11.3 million in 2010 to $9.5 million in 2011, and is tied for No. 72 on this year’s list. Manager Richard Schoeneman said a good portion of the decrease was due to the relocation of the club’s cardiac rehabilitation center to another site. A physical therapy unit also was relocated, Schoeneman adds.
Four new companies are on this year’s list: Wisconsin Athletic Clubs, Milwaukee, which tied at No. 52 with $15 million in 2011 revenue; FIT Brands Max Fitness, Columbus, GA, which is No. 59 with $13 million; Blue Sky Holdings Inc., Manchester, MA, which tied at No. 90 with $6.3 million; and City Club at River Ranch, Lafayette, LA, which is No. 97 with $4.8 million.
Several club companies indicated on their Top 100 entry form that they plan to grow this year, which could enhance their ranking on the list next year.
“Perhaps one of the hidden trends arising from this year’s Top 100 Clubs list is the planned growth by regional and middle-sized club companies that are adding one to two new facilities in the next year,” says Rick Caro, president of Management Vision, New York, who reviewed the information on the Top 100 Clubs list. “This is often at a faster pace than historically has been the case. There is also intended growth by acquisition. Obviously, the franchisors are planning to benefit from substantial new franchise sales.”
The following companies are large enough to be included on the Top 100 Clubs list, but their owners either did not complete a Top 100 Clubs form or turned in an incomplete form, and we were unable to estimate their revenue.
Thank you to Rick Caro, president of Management Vision, New York, for reviewing the information provided by the club companies and helping with the analysis.