Last fall, Mark Mastrov, chairman and co-founder of New Evolution Ventures (NeV), Lafayette, CA, suggested that many companies involved in acquisition negotiations might want to get a deal done before the end of 2012 to avoid looming tax implications related to capital gains rates. What Mastrov did not say was that NeV may have been one of those companies.
Last month, NeV’s UFC Gym announced the acquisition of LA Boxing, Santa Ana, CA, which had 81 franchises around the country. The two sides began serious negotiations last September before closing the deal on Dec. 31, right before the tax deadline. Terms of the deal were not disclosed.
The tax deadline was a consideration but not the determining factor in the acquisition, says Anthony Geisler, former president of LA Boxing and now president of UFC Gym Franchise. Jim Rowley, CEO and co-founder of NeV, says it was more beneficial for the seller than the buyer to get the deal done before the tax deadline.
Regardless, overall interest in UFC Gym has been growing since the concept was announced in 2009. Count Geisler among the interested parties. He met Mastrov around the time of UFC Gym’s opening and stayed in contact since. Rowley says the timing of a deal was not right three years ago, but it was now.
“We’re very excited about this,” Rowley says, “mostly for the current 80 franchisees but also for the unbelievably enormous amount of inbound inquiries that we’ve had over the last three years for people who want to be part of the UFC Gym brand.”
UFC Gym, which combines mixed martial arts (MMA) with traditional fitness, is a 50-50 joint venture between Ultimate Fighting Championship and NeV. Rowley says UFC President Dana White, Zuffa CEO Lorenzo Fertitta and the UFC board were instrumental in the acquisition decision-making. (Zuffa LLC is the parent company of UFC.)
Geisler and his team at LA Boxing were two of the main reasons UFC Gym made the deal, according to Rowley.
“Mark and I have had the opportunity to work with a lot of people in the industry,” Rowley says. “At this stage in our careers, it’s more about the people that you’re surrounding yourself with than it is the idea. Anthony has proven to be a strong entrepreneur. He built that business from basically scratch. He surrounded himself with a strong team. He’s got a good infrastructure. It was a sweet spot for us.”
Geisler says LA Boxing was the small-box format of what UFC Gym does. In addition to boxing and kickboxing, LA Boxing clubs also incorporated MMA training. While the UFC Gym corporate clubs are around 35,000 square feet, each of the former LA Boxing clubs is around 5,000 square feet.
“We started comparing our members and our philosophies overall, and we noticed there were a lot of synergies between the two companies,” Geisler says.
The new UFC Gyms may not have all the services of a corporate-owned UFC Gym, such as Zumba dance and hula-hooping, but they will have the same amenities as a larger UFC Gym, Geisler says. Each of the new gyms will have about 30 150-pound heavy bags, plus cardio and strength equipment, free weights and dumbbells.
“We won’t have the ability to have 25 treadmills lined up, but then again, we also won’t have 6,000 members in those locations,” Geisler says. “When you look at the amount of equipment per member, that pretty much stays the same, if not gets better. You don’t have as many members inside the box utilizing the equipment. It was definitely our goal to take the best of what UFC Gym has accomplished as a look and feel and vibe and environment and programming and put that to work in a 5,000-square-foot box.”
Franchisees of LA Boxing love the move to UFC Gym, Geisler says. Existing agreements will stay the same, plus franchisees will now have the ability to tap into the NeV and UFC networks. Converting LA Boxing clubs into UFC Gyms was simply the next evolution of the company, Geisler says.
“As much as I love the LA Boxing brand, I don’t think I could argue that LA Boxing has a national and international presence larger than UFC does, or that we’ve done more in the fitness industry than Mark Mastrov has done and the NeV group has done,” Geisler says. “We built an amazing brand. We did stuff in the industry that no one else did. It was an awesome run.”