So, what do you think is going to happen with Bally? As we reported last week, Bally didn't have a whole lot of good news when it held its conference call with analysts last week. Management at the public company, which has been staving off bankruptcy and searching for a buyer for about two years now, basically threw up their hands in the call and said they weren't sure what they had (as far as membership numbers go) or whether they would be able to continue without filing for reorganization. Of course, many in the industry suspected this early on, but then, people I spoke to were suggesting that with former CEO Paul Toback gone and new board members on board, the company might pull a turnaround without a bankruptcy filing. It still could happen, but for Bally interim Chairman Don Kornstein to admit that bankruptcy might be a possibility says to me that it's a probability.
The company hasn't turned a profit since 2001, and it missed the deadline to file its 2006 annual report with the Securities and Exchange Commission last week partially due to errors the company found in its membership numbers. Kornstein said he expects membership revenue would be down 3 percent (about $25 million less than 2005). Bally needs some understanding from its creditors, and I don't know that its creditors have any "understanding" left.
However, a reorganization might not be a bad thing for the company. If done properly, it could pull this once powerful player back into prime position once again.
To deal with current woes, Bally CEO Barry Elson said that the company would layoff some employees, renegotiate rents and close underperforming clubs.
Our managing editor, Stuart Goldman, is working on this story for the April issue--even fighting through the flu to continue reporting on this subject (sitting at his home computer with a hot cup of liquid by his side as he makes phone calls and e-mails contacts).
Feel free to comment on your thoughts about Bally and its possible bankruptcy by clicking on the comment button below. - Pam