The Bay Club Co is known as a California luxury brand with a focus on fitness sports hospitality and family After a recent purchase of Spectrum Athletic Clubs in Los Angeles its CEO says the company will expand outside California starting with Denver Photo courtesy of The Bay Club Co

The Bay Club Co. is known as a California luxury brand with a focus on fitness, sports, hospitality and family. After a recent purchase of Spectrum Athletic Clubs in Los Angeles, its CEO says the company will expand outside California, starting with Denver. Photo courtesy of The Bay Club Co.

The Bay Club Company Has Aggressive Growth Plans Outside California

The Bay Club Co. plans to expand its luxury brand beyond California's borders to other metropolitan markets that have a focus on fitness, sports, family and hospitality. 

For some health and wellness business operators, the purchase and renovation of 11 new facilities in one year might be enough to keep management busy, not to mention exhaust the wallets of investors for quite some time. But after The Bay Club Co. CEO Matthew Stevens led his team through the long-sought purchase of the 11 Spectrum Athletic Clubs in Los Angeles earlier this month, he noted that his company is planning "extremely aggressive" growth in markets outside California this year and for at least the next three to five years.

"We are extremely well capitalized so we don't have any barriers to growth," Stevens told Club Industry. "It is just a matter of making sure we identify the right assets within our playbook and then making the acquisition."

It's a bold move and a bold statement from a CEO who says his company tries to fly under the radar. If the aggressive growth plan proves out, The Bay Club Co. may no longer be able to stay in the background.  The company, which now has 23 locations across 10 campuses in California, has backing from York Capital Management as well as Continental Development Corp.

The first target market for growth is Denver.

"Our hope is to be in Denver by the end of 2015," Stevens says, adding that Denver has a similar lifestyle to the northern California market that The Bay Club Co. already inhabits with its luxury resort-style campuses. "San Francisco has a lot of similarities to Denver culture and the active outdoor lifestyle. We think that is the first natural market to go to outside of the California area."

Attractive acquisition properties are those with amenities and services that The Bay Club Co.'s target membership of families would want, and a strong or weak product that would have a balance of fitness, family, sports and hospitality, which the company calls its four quadrants.

These four quadrants apply in most metropolitan markets in the country, Stevens says.

"We plan to continue to prove out the science behind our four quadrant playbook and be able to grow consistently over the next three to five years," Stevens says.

Could The Bay Club Co. grow to 114 clubs like Life Time Fitness, another family-oriented brand with many amenities? Only a limited number of markets can support more than a few facilities like The Bay Club Co. has, says Art Curtis, president of Curtis Club Advisors and former chairman and CEO of former luxury brand Millennium Sports Club Partners. He is also a friend of Stevens, whom he met when both worked for Club Sports International (now Wellbridge).

A mid-priced club company such as LA Fitness could potentially go into a market such as Denver with 10 or 12 clubs, but Life Time Fitness has only three clubs in Denver right now because that may be all Denver can support, Curtis says.

"It is just kind of relative," he says. "The higher end of the market that you are in, you are defining a narrower and narrower market that you are going to serve."

That doesn't mean Curtis doesn't think The Bay Club Co. could substantially increase its club numbers. For example, ClubCorp, a luxury brand in the country club and golf club market that also includes fitness centers, has 200 locations.

"Given enough time, there is no doubt in my mind that you could put together another company that could have a pretty sizeable number of clubs geographically spread out over the U.S. that could approach the size of a Life Time Fitness," Curtis says.

Investor Interest

The Bay Club Co.'s focus on its four quadrants could help its growth because it diversifies the company, Stevens says, which makes the brand attractive to investors.

Investors are also interested in The Bay Club Co. because it is different from other companies in the industry, Curtis says. Curtis helped put together the deal last summer in which York Capital Management purchased The Bay Club Co.

"They are not a fitness business," Curtis says. "They are a true active lifestyle company, and they understand what that means. There are any number of companies that talk about doing that, but The Bay Club Co. actually delivers on all these different legs that are really important to be that kind of business."

Not only does the company have strong fitness programs, but it also has organized sports leagues and lessons for tennis, swimming and other sports along with social programming around those sports activities.

At the same time, the company is in many affluent, family-focused markets, Curtis says.

"They provide really high-quality, extensive programming so that a family could go there and spend hours at a time with kids doing things in organized programs or doing things with their parents at the club," Curtis says. "They really understand how to serve that family market."

The Spectrum purchase only added more of those markets to The Bay Club Co.'s portfolio, Stevens says.

"We are providing the diversified, well-balanced, modernized country club structure to them, and there is a huge demand in that category for this type of service," Stevens says.

Key to attracting this market is the modern mom between 35 and 55 years old, which Stevens says is The Bay Club Co.'s core customer.

"We try to understand what the modern mom is looking for and what fits her family," Stevens says, adding that the company is aided by its strategic move to include a large number of modern moms in its management team.

In fact, 70 percent of the management team is composed of modern moms, he says.

"If you look at the companies that are in the country club space, they are very male-centric, and we are the modernized country club driven by the modern mom, run by the modern mom," Stevens says.

That focus on the team extends to ownership of the company.

"If there is a secret sauce behind our business, it is that we have decided as a management team to engage in ownership a significant number of our managers and department heads," Stevens says.

By the end of this month, more than 175 of The Bay Club Co. employees will have significant ownership in the company, he says.

"So we have chosen to pass out the ownership deeper into the field than most companies, and we believe that gives us the recruiting edge against others to bring the best of the best to work for The Bay Club Co.," he says. 

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