A Year to Remember: A Look Back at 2013

Never before have there been so many fitness options from which to choose.

Led by the growth of CrossFit and other high-intensity microgyms and small group training studios, plus the continued rise of Pilates and yoga studios as well as cycle studios, the United States now has more than 100,000 fitness studios, according to one estimate. Some small club operators, with an emphasis on personal and group training, enjoyed more financial success than ever before.

Add to that the growing technological advances in the industry that are making fitness increasingly more mobile, such as cloud-based connections and mobile applications, and you had an unprecedented fitness industry landscape in 2013.

Traditional fitness club operators did their best to keep up with the changes. In one survey conducted by the Fitness Industry Technology Council, about 60 percent of health clubs have configured their website to a mobile device. Less than 30 percent of those clubs had a mobile app or interactive smartphone capabilities, according to the survey.

The rise of studios and changes in technology played a huge role in 2013, but the year was still dominated by large clubs and major chains, particularly the moves that occurred at the top of those companies.

The corporate changes began in January when Planet Fitness formally announced its partnership with private equity firm TSG Consumer Partners. With the announcement, co-founder Mike Grondahl left as CEO, replaced by one of his partners, Chris Rondeau. The Newington, NH-based company continued its growth as it opened its 600th club and later its 700th club during 2013.

The biggest story in the industry, according to readership on Club Industry’s website, centered on the changes at 24 Hour Fitness, San Ramon, CA.

In March, CEO Carl Liebert announced the layoffs of a dozen executives within the corporate office. Two months later, Liebert resigned and became president of USAA Capital Corp.

The search for a new CEO ended in September, when 24 Hour named Elizabeth Blair as its new president and CEO. Blair was relatively new to the company, having served as its executive vice president, chief strategy officer and general counsel since February.

Gold’s Gym International, Dallas, made waves in July when it let go President and CEO Jim Snow and COO Todd Scartozzi. The removal came just days after the company held its annual franchisee convention in Las Vegas. Gold’s search for a new CEO included candidates from inside and outside the company. In November, the company promoted seven-year Gold’s veteran Aaron Watkins, who had been its CFO and interim president.

Bally Total Fitness, Chicago, had been quietly transforming itself into a smaller company with more than 40 locations nationwide when CEO Marc Tascher stepped down in April. Bally quickly named his replacement in June, promoting CFO Steve Tucker to president. The promotions of Rondeau, Blair, Watkins and Tucker all showed the willingness of club companies to look within for their next leaders.

Former Gold’s Gym CEO Jim Snow (tablet), 24 Hour Fitness (laptop) and the growth of small club operators, including West U Fitness co-owner Brent Gallagher (smartphone), made headlines in 2013. (Photo illustration by Cheri Jones.)

Other Top Companies

After making big splashes with acquisitions in 2011 and 2012, LA Fitness, Irvine, CA, had a relatively quiet year, although the company continued to grow steadily with club openings throughout the country. In July, LA Fitness unseated 24 Hour Fitness as the No. 1 club company on Club Industry’s Top 100 Clubs list with an estimated 2012 revenue of $1.7 billion.

Life Time Fitness, Chanhassen, MN, which was No. 3 on the Top 100 Clubs list with a reported $1.127 billion in 2012 revenue, showed no signs of slowing down in 2013 and was well on its way to a third straight year of earning more than $1 billion in revenue. Life Time opened three multipurpose clubs in 2013 and announced plans to open six new clubs in 2014.

Although not on the Top 100 Clubs list, Equinox, New York, continued to make its mark as one of the giants in the industry, adding members to its executive team from the hospitality market. Perhaps the biggest news story related to Equinox in 2013 came in July when the company took down a controversial billboard in Maryland and said it would launch a new ad campaign next year.

Curves International, Waco, TX, continued to make changes and additions after it was purchased by private equity firm North Castle Partners last year. Curves named a new CEO, Monty Sharma, and in November, the company acquired weight-loss management company Jenny Craig and formed a partnership with trainer Jillian Michaels.

Two all-access chains, Anytime Fitness, Hastings, MN, and Snap Fitness, Chanhassen, MN, continued their reach throughout the country. Both franchise companies also continued to be recognized for their success both locally and nationally. In October, Chuck Runyon, co-founder and CEO of Anytime Fitness, received the inaugural Mid-Market CEO Award for leadership from Chief Executive magazine. And in December, Anytime Fitness was named the No. 1 franchise on Entrepreneur magazine's Franchise 500 list.

In another CEO move this year, The Cooper Institute, Dallas, named Blaine Nelson its new president and CEO in September. Nelson replaced Fred Meyer, who retired in 2012.

President and COO Changes

In addition to changes at the CEO level, several changes occurred at the president and COO level in the industry. Club One, San Francisco, announced in May that President and COO Bill McBride would be leaving the company in July. Earlier this month, Town Sports International (TSI), New York, announced that COO Terry Kew had left the company. Steve Saxton left as president of The Rush Fitness Complex, Knoxville, TN, in February. And David Barton left as president of David Barton Gym, New York, in September. Barton was replaced by Kevin Kavanaugh, a 14-year veteran of the company. Howard Brodsky, the former CEO of New York Health and Racquet Club who took over as CEO of David Barton Gym in January, made the announcement.

Promotions occurred at the COO level, too, as Life Time Fitness appointed Jeffrey Zwiefel to the position in October. Zwiefel has been with the company since 1998. Life Time also announced in August the planned retirement of CFO Michael Robinson. In May, Midtown Athletic Clubs, Chicago, named Jonathan Brady as its new COO, and in June, The Wellbridge Co., Denver, named Michael Meehan as its new COO.

Mergers and acquisitions of club companies continued in the industry in 2013, although they were not as prevalent as they were the year before. Gold’s Gym acquired all but one of the Fitness First clubs in the Washington, DC, area in June. In February, TSI entered into an agreement to acquire Fitcorp, Boston, and finalized the deal in May. TSI then created a Fitcorp Private Fitness Division.

New Evolution Ventures (NeV), Lafayette, CA, had a busy year. Not only did it promote Crunch Fitness President Keith Worts to CEO in January, but that same month, it announced that UFC Gym had acquired LA Boxing, Santa Ana, CA, and its more than 80 studios. Also this year, Mark Mastrov, chairman and co-founder of NeV, became a part-owner of the NBA’s Sacramento Kings.

More Sales and Acquisitons

In smaller regional sales/acquisitions this year, Fitness Connection, McLean, VA, announced in October that it had received funding from private equity firm LNK Partners to purchase WestView Capital Partners’ share of the company. In-Shape Health Clubs, Stockton, CA, announced in January a partnership with Fremont Private Holdings and Pulse Equity Partners to further its expansion.

In April, the Little Rock (AR) Athletic Clubs were sold to a local group, and in August, Big Vanilla Athletic Club, Pasadena, MD, sold one of its clubs to a local YMCA. In September, Snap Fitness announced it had acquired Minnesota-based personal training company Steele Fitness. In November, Genesis Health Clubs, Wichita, KS, acquired one club in Missouri, and MVP Sports Clubs, Orlando, FL, announced it was acquiring two clubs in Michigan.

Acquisitions occurred north of the border as well. In April, GoodLife Fitness, London, Ontario, Canada, announced the acquisition of 13 Extreme Fitness clubs in the Toronto area, bringing the total number of GoodLife Fitness clubs in Canada to more than 300. GoodLife had acquired seven Gold’s Gyms in 2012.

The manufacturer side of the industry saw its share of deals, too. In March, Jonas Software, Toronto, acquired Club Solutions from Fiserv, Brookfield, WI, and created Jonas Fitness. The previous month, Mad Dogg Athletics, Venice, CA, announced a strategic alliance with KettleBell Concepts, New York. In January, Core Health and Fitness LLC, Vancouver, WA, the parent company of Star Trac and StairMaster, announced it had closed on a $43 million debt facility with PNC Bank and UPS Capital Corp.

ClubCorp Holdings Inc., Dallas, announced in September the closing of its previously announced public offering of 18 million shares of common stock.

ClubCorp joins Life Time Fitness and TSI as the only publicly traded U.S. health club companies in the industry.

Sidebar: YMCAs Struggle to Keep Members Safe, Expand with Former For-Profit Clubs

This year, YMCAs across the country made headlines for issues that jeopardized the health and safety of their members.

Several cases involved members being recorded while they were in lockers rooms. At the Andover (MN) Y, two men were arrested for using recording devices, including a watch with a hidden camera, to capture footage and images of young boys changing. In another incident at the Upper Palmetto Y, Rock Hill, SC, an employee was arrested and charged with voyeurism after he allegedly hid a video camera in the women’s locker room.

Employee behavior also was called into question at the York (PA) Y and the West Chatham Y, Pooler, GA. Both facilities lost their state-issued child care licenses following confirmed allegations of child abuse.

But while some Ys struggled, others flourished and expanded their operations to include former commercial clubs. In August, one of the two Big Vanilla Athletic Clubs in Maryland was sold to the Y of Central Maryland. In Davenport, IA, a Gold’s Gym closed on Oct. 31 and reopened a week later as the newest branch of the Scott County (IA) Family Y. -Kelsey Cipolla, Associate Editor

Sidebar: Universities Continue to Expand Rec Center Facilities, Services

NIRSA data released this year showed an increase in the number of member schools that reported plans for recreation construction or renovation projects between 2013 and 2018, including 157 construction projects currently in progress that represent $1.7 billion.

As an increasing number of schools turned to their students for funding, new facilities were incorporating unique elements. Auburn University’s new student-funded Recreation and Wellness Center features a 45-person tiger paw-shaped hot tub, an outdoor courtyard located inside the building and a five-story fitness tower. The University of Minnesota’s new University Recreation and Wellness Center building includes lobby areas with fireplaces where students can do homework.

Although having a state-of-the-art facility can help colleges recruit new students, more schools also were designing buildings and programs that aim to keep current students happy, healthy and engaged.

Data from Purdue University’s Division of Recreational Sports showed that students who work out at the rec center get better grades. Since the school opened its renovated France A. Córdova Recreational Sports Center in the fall of 2012, the $98 million facility has been attracting 7,000 student users per day who take advantage of an indoor hockey and soccer court and a host of wellness services. -Kelsey Cipolla, Associate Editor

Sidebar: U.S. Military Faces Challenges Trying to Keep Soldiers Fit

As military personnel continued to struggle with fitness standards, branches introduced new readiness standards to better prepare soldiers while addressing issues with current tests.

In April, the U.S. Army began taking steps to reintroduce the Master Fitness Trainer Course (MFTC) to help soldiers meet new physical readiness training guidelines, which emphasize strength, endurance and mobility as well as other health factors, such as sleep and nutrition. The new training is being evaluated as a replacement for the Army’s current physical fitness test.

The U.S. Air Force’s fitness programs also underwent changes in 2013. Officials announced that airmen who fail the waistline portion of the test but pass the other components and meet body mass index standards issued by the Department of Defense will pass the test. The Air Force also announced plans to make fitness centers on bases accessible 24 hours a day, seven days a week in an effort to accommodate people who work unconventional hours.

Some military base employees, including those at some fitness centers, were affected by the government shutdown in October. But despite the government shutdown and extensive budget cuts, military fitness officials said their facilities were largely unaffected. -Kelsey Cipolla, Associate Editor

Sidebar: Most-Viewed News Stories on ClubIndustry.com in 2013

1. 24 Hour Fitness Lays Off Several in Corporate Shakeup

2. 24 Hour Fitness President and CEO Carl Liebert Resigns

3. CEO Jim Snow, COO Out at Gold’s Gym

4. Gold’s Gym Acquires Fitness First Clubs in DC Area

5. Florida CrossFit Gym Owner Shot and Killed While Leading Class

6. Students Who Work Out At Campus Recs Get Better Grades, Research Says

7. Grondahl Steps Down as Planet Fitness Announces TSG Partnership

8. 24 Hour Offers Settlement in Overtime Case, Appeals NLRB Ruling

9. Planet Fitness Sued after Woman’s Collapse and Death; Family Claims Staff Ignored Her

10. Bikram Yoga Founder Accused of Rape in Two Lawsuits

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