In the past five years, Rodney Steven, owner of Genesis Health Clubs, Wichita, Kansas, has made multiple purchases that now place his health club company, which he purchased as one club in 1994, as one of the largest in the Midwest with 44 locations.
Steven's most recent purchases came in a whirlwind day on Tuesday when he bought 19 24 Hour Fitness clubs, then sold six of those clubs to Gold's Gym International, Dallas, while purchasing six other clubs from Gold's Gym. Steven declined to share the purchase or sale price for any of the deals.
The 24 Hour deal involved purchasing the following 24 Hour clubs: two in Oklahoma City; five in Omaha, Nebraska; eight in Kansas City, Missouri; and four in St. Louis, Missouri. He then sold the four 24 Hour clubs in St. Louis and the two in Oklahoma City to Gold's Gym International. (With the deal, Gold's Gym now has 11 clubs in St. Louis and 10 in Oklahoma City, according to a media release from Gold's.) The six Gold's Gym clubs that Genesis purchased were: two in Tulsa, Oklahoma; two in Lincoln, Nebraska; and two in Omaha.
"It's a tough transaction to pull off at one time," Steven told Club Industry while on his way from Omaha to St. Louis to hand off the four St. Louis facilities to Gold's Gym.
Steven sold the St. Louis and Oklahoma City clubs to ensure his markets were consolidated, he said. Prior to Tuesday's deals, Genesis already had clubs in the Kansas City metro (five); Wichita, Kansas (five); Topeka, Kansas (three); Lawrence, Kansas (two); Manhattan, Kansas (two); and Springfield, Missouri (two). Genesis also had one club each in the following Kansas cities: Emporia, Hutchinson, Salina, McPherson and Leavenworth, plus it had one location in St. Joseph, Missouri.
Steven called the Kansas City market an exciting market for him because of the growth occurring in the area.
"The Kansas City, Omaha and Tulsa markets are so incredible right now," he said. "I wanted to focus on those markets. It's something I've been working on for a long time. It all came together."
The expansion into Kansas City, Omaha and Tulsa also puts Genesis in some larger markets than it had been operating, he said.
"It'll be nice to be in a main market," he said. "We've had incredible success [in Kansas City] with the one year we've been there with the Midtown acquisition. We are riding off that success."
With the purchases on Tuesday, Genesis now has seven clubs in Omaha (five from 24 Hour and two from Gold's Gym) and 13 in Kansas City (four from a Gold's Gym club purchase in May, one from a Midtown Athletic Club purchase in 2015 and eight from the 24 Hour Fitness purchase on Tuesday).
The two Gold's Gym facilities purchased in Tulsa are his first two clubs in Oklahoma, and Steven said they would be good fits with the Tulsa Oilers, an ECHL hockey team that he co-owns with his brothers, Johnny and Brandon.
Steven said he plans to remodel several of the locations, although he said the 24 Hour clubs were in good shape. The company had just replaced most of the cardio equipment at most of the clubs.
"I think once we come in and put our locker rooms into their clubs, we can convert them to our clubs nicely," he said, noting that Genesis is well-known for having nice locker rooms. The locker rooms also will now offer towels and complimentary shampoo, soap and conditioner.
The former Midtown Athletic club in Overland Park that Genesis purchased in 2015 will undergo the largest transformation. (See exterior rendering below.) In a $7 million renovation that will begin in October and take a year to complete, he will add 20,000 square feet to the club, a new cardio deck, pool facilities, a basketball court, a group exercise studio and a cafe.
"Our Overland Park club is getting ready to go through the largest construction project of my career right now," Steven said. "It will be the jewel of Kansas City. We're really going to do a lot to it."
Steven said that Genesis will hire as many of the existing employees from the Gold's Gym and 24 Hour Fitness locations as it can. The company does not have contractors, so all staff will be full-time employees with health insurance, dental insurance, 401k and vacation, he said.
Steven and his executive team flew to each market and met with all the clubs on Tuesday to share the news and answer questions.
Steven said: "I work a lot. I have six kids. Every hour I'm not home with my kids, then I'm at work. Every hour I’m at work, it's an hour I'm not with my kids. I take work very seriously. I work out every day at the clubs, so I spend a lot of the day in the clubs. Your staff ends up being your family. You spend a lot of time with them. Today, I welcomed almost 1,000 people to join our family."