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It Looks Like Bally Is Going…Going…Gone?

It Looks Like Bally Is Going…Going…Gone?

Three years ago, an acquisition of Bally Total Fitness clubs by a major player in the industry caused ripple effects across the country.

Three years later, after another announced sale of Bally clubs, the sense I'm getting is…meh.

Last week, 24 Hour Fitness announced it is acquiring 32 Bally clubs located in the New York City, Denver and San Francisco markets. The completion of the sale is expected next week.

A quick search around the country, and particularly in those three markets, tells me the rest of the media hasn't exactly advanced this story.

That wasn't the case in 2011, when LA Fitness acquired 171 Bally clubs across the United States. After Bally went through two bankruptcies and closed close to 50 clubs, the LA Fitness deal was really the first indicator that Bally may not be around much longer. And after the 24 Hour deal is complete, Bally will appear to have only six clubs left. (It had 347 clubs in 26 states after its second bankruptcy filing in 2008.)

Needless to say, this is a significant chapter in the history of this industry.

Ding, dong, the witch is dead? That's the sentiment of one of my sources, who asked not to be identified.

"Thankfully, the Bally brand will be soon laid to rest," the source told me in an email. "This is a very positive development for the industry as Bally has been a poster child for the wrongdoings in our industry for the past 25 years. A public burning of all Bally logo apparel and signage in a celebratory (and apologetic) gathering would be an appropriate event to hold on this historical occasion!"

That last part sounds excessive, but I imagine this isn't the only person out there who has similar sentiments. I recall the story of how so many IHRSA member clubs years ago objected to allowing Bally in as a member. I've worked with some good people at Bally, so it's hard for me to feel a lot of schadenfreude.

Michael Scott Scudder, who has been monitoring the demise of Bally over the past seven years, has a more analytical approach to the 24 Hour-Bally sale. Scudder says when Bally sold those 171 clubs to LA Fitness, he "saw the writing on the wall."

"It was a matter of time until they negotiated the sale of more of their clubs (even the underperforming facilities)," Scudder says. "I was not surprised that 24 Hour picked up most of the remaining clubs."

On a grander scale, Scudder says hedge funds, baby boomer trusts and investment firms with a lot of money are becoming more interested in buying up blocks of clubs to enhance either regional or national presence. 24 Hour, which already has a presence coast to coast, was sold this year to a group headed by AEA Investors and the Ontario Teachers' Pension Plan.

"I think we'll see a lot more buying in 2015," Scudder says. "which means more industry consolidation and fewer and fewer club organizations controlling more and more memberships."

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