A few weeks after the sale of the company was announced, 24 Hour Fitness, San Ramon, CA, is selling its four clubs in the New York City area, sources tell Club Industry.
The New York City clubs 24 Hour currently operates are its Soho Ultra Sport, Madison Square Park Ultra Sport and Midtown Ultra Sport clubs, in addition to its Bronx Fordham Road Sport club. 24 Hour also operates three other clubs in the state of New York.
One source says a book on the New York City clubs already is out to prospective buyers. Another source says the clubs' rents present a challenge for 24 Hour to sell.
"The leases are extremely high rents so it will be difficult for 24 Hour to get their guarantee off the leases and for a new buyer to assume those obligations in full," a source tells Club Industry.
A spokesperson for 24 Hour Fitness tells Club Industry the company does not comment on speculation about its business and that "we continue to stay focused on delivering the best experience for our members and guests."
On May 30, Forstmann Little and Co. completed the sale of 24 Hour Fitness to an investment group led by New York-based private equity firm AEA Investors, the Ontario Teachers' Pension Plan and Fitness Capital Partners, a fund organized by Dean Bradley Osborne and Global Leisure Partners. The sale price was $1.85 billion, sources told Club Industry. Mark Smith is expected to join the company as CEO on July 1, with Frank Napolitano serving as president.
Three of the New York City clubs (not including the one in the Bronx) that opened in 2008 had included a partnership with New York Yankees shortstop Derek Jeter, but that partnership no longer exists, a source says. 24 Hour Fitness has had a long history with aligning itself with sports starts, including Magic Johnson, Andre Agassi and Lance Armstrong. The only 24 Hour signature clubs tied to an athlete that remain are Shaquille O'Neal clubs. There are nine "Shaq" clubs in Florida and one in Texas.
A source told Club Industry the difference between the O'Neal partnership with 24 Hour Fitness and other athletes is that O'Neal is an equity partner in 24 Hour Fitness whereas the rest were royalty partners.
A spokesperson for BILT by Agassi and Reyes, the Las Vegas-based equipment manufacturer Agassi co-owns, said Monday that Agassi no longer has a relationship with 24 Hour Fitness and that the partnership ended last August.
In October 2012, 24 Hour announced it would no longer carry the Armstrong name on six of its clubs across the country in the wake of a report by the United States Anti-Doping Agency, which detailed widespread doping through banned drugs and blood transfusions by Armstrong and his cycling teams.