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Fitness Industry Activity Abounds in November

The past 10 days have been a bit of a whirlwind that has kept us hopping trying to cover it all. The event that likely will have the most significant effect on the industry is LA Fitness' acquisition of 171 Bally Total Fitness clubs. Once this deal is finalized, it puts LA Fitness ahead of 24 Hour Fitness in number of clubs—and likely in revenue.

Not only that, but Bally sold those clubs for less than $1 million each. Is this a sign that more club companies are ready to be had at rock bottom prices, or was this simply a matter of Bally clubs being available at such a low price?

Life Time Fitness, Chanhassen, MN, did not disclose how much it paid for its recent purchase of four Lifestyle Family Fitness clubs in Ohio and Indiana (with another five Lifestyle clubs in North Carolina as possible purchases by Life Time). However, the purchases do help expand Life Time's presence in these markets and its goal of locating smaller clubs around its larger facilities, much like Town Sports International has done.

On the manufacturer side, Cybex International, Medway, MA, received mixed news. NASDAQ granted it an extension to meet two requirements to continue to be listed on the stock exchange, but Cybex's appeal in the Barnhard v. Cybex International case was not granted. The panel did reduce the award amount from $66 million to about $44 million, of which Cybex says it will likely be responsible for about $33 million. However, Cybex has not given up the fight, and the company plans to file an appeal with the New York State Supreme Court. Cybex is looking at options beyond another appeal, but Art Hicks, COO, indicated in a call on Tuesday that the appeal is the next move.

If this judgment is not reversed, what do you think the effect will be on Cybex and on other fitness equipment manufacturers as it relates to future product liability lawsuits?

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