Town Sports International (TSI), New York, announced that it has entered into an agreement to acquire Fitcorp, Boston. Both parties expect to complete the transaction within the next couple of months.
Fitcorp owns five clubs and manages four others in the Boston area.
When the acquisition is completed, Fitcorp President and CEO Gary Klencheski, along with partners Mike Parent and Bob Schwartz, will be employees of TSI, and Klencheski will lead TSI's new Fitcorp Corporate Fitness Division, he tells Club Industry. Klencheski declined to comment on the purchase price of the agreement.
"We are very excited to be part of the TSI family, and I am looking forward to growing their managed center business for corporations within their network," Klencheski says.
Fitcorp, founded in 1979, was No. 77 on Club Industry's Top 100 Clubs list last year with a reported $9.2 million in 2011 revenue. On the 2011 Top 100 Clubs list, Fitcorp was tied for No. 55 with a reported $14 million in 2010 revenue. Klencheski says the reduction in revenue from 2010 to 2011 was a reflection of the company closing a number of underperforming clubs. (Fitcorp closed four clubs in 2011.)
TSI, No. 6 on Club Industry's Top 100 Clubs list with a reported $466.9 million in 2011 revenue, will release its 2012 earnings on Tuesday prior to a conference call with analysts. TSI did not open a new club in 2012, but during its last earnings call, the company said it expected to add three to six new clubs in 2013 and six to 12 new clubs in 2014. TSI also said it is focusing its expansion efforts in the New York and Boston urban areas.
The Fitcorp acquisition fits in with that strategy.
"We are excited to add the Fitcorp clubs and the Fitcorp management team to our business," TSI CEO Bob Giardina said in a statement. "These clubs add a terrific presence to our already solid footprint in Boston and should also provide us with a platform to expand our corporate member base as well as expand our managed facility business."
Giardina added that the acquisition includes the 25,000-square-foot-club at the Prudential Center in downtown Boston as well as the Boston Racquet Club.
"We have the capital to reinvest in these clubs as appropriate and are confident that our members and the Fitcorp members will benefit a great deal by the expansion of our network," Giardina said.
According to a report in The Boston Globe, Fitcorp had managed clubs for such Boston companies as Raytheon Co., Fidelity Investments, Gillette and Boston Scientific Corp. In 2006, Fitcorp sold off that business in a transaction that included a five-year non-compete clause, the newspaper reported. Fitcorp re-entered that business after the expiration of that clause.
“What differentiates us from competitors is that employees in our private business centers will also have access to all of TSI's 160 clubs,” Klencheski told the Globe.
Fitcorp reported to Club Industry that it had 80 employees at the end of 2011. Klencheski told the Globe that the company had 65 full-time employees and between 150 and 200 part-time employees.