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One Bay Area Club Founder Bought Back the Company; Could It Happen to 24 Hour Fitness?

One Bay Area Club Founder Bought Back the Company; Could It Happen to 24 Hour Fitness?

On Tuesday, Jill Kinney and the Active Sports Clubs company she formed with Bill McBride bought a majority of Club One, the San Francisco-based company that she co-founded.

The news out of the Bay Area sent a seismic shift throughout the health club industry. But if rumors of another possible Bay Area club deal keep persisting, the industry may just fall into the Pacific Ocean.

The company in question is 24 Hour Fitness, which has been on and off the market for the last two years. Since Elizabeth Blair was promoted to CEO last September, 24 Hour Fitness has gone about its business quietly.

But two well-connected sources have told me that they've heard that Mark Mastrov, the founder of 24 Hour Fitness who sold the San Ramon, CA-based company to private equity owner Forstmann Little in 2005, may want to own 24 Hour again.

I recently asked Mastrov about this rumor, and he told me on the record, "I am not in any conversations with 24 about the purchase of the company at this time." A spokesperson for 24 Hour, when asked about the Mastrov rumor, declined to comment on the speculation.

It is not clearly known if 24 Hour is back on the market. The fact remains, though, that Forstmann Little has held onto 24 Hour for almost nine years now, a longer term than private equity firms typically spend with their investments.

There's a lot to consider, the two industry sources told me, when addressing the 24 Hour-to-Mastrov rumors. No. 1, according to the first source, Mastrov and his New Evolution Ventures (NeV) company (based in Lafayette, CA) would probably need more capital from outside investors to secure a deal. Forstmann Little's asking price—if 24 Hour is back on the market—could be about the same or lower than the $1.6 billion it paid for 24 Hour.

The second source wonders if Mastrov, who left 24 Hour as chairman in 2008, would be interested in taking on 24 Hour again, citing contractual obligations as part-owner of the NBA's Sacramento Kings. Plus, Mastrov has built several diverse brands in NeV: Crunch Fitness, Crunch Franchise, UFC Gym, Madonna's Hard Candy Fitness, Energy Fitness (Mexico) and Steve Nash Fitness World and Sports Club (Canada).

While those brands are unique, none is a mega brand like 24 Hour Fitness, the No. 2 club company on our Top 100 Clubs list last year with an estimated $1.5 billion in 2012 revenue and more than 400 clubs nationwide.

A health club company founder buying back the company? As Kinney told the San Francisco Business Times, "It's a little odd." But nonetheless, she proved it can be done.

Adding 24 Hour to the NeV mix would be a huge undertaking. It also would make Mastrov and NeV the biggest fish in the health club sea.

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