DavidBartonGym, New York, closed its eight health clubs in New York, Boston, Chicago, Miami and Bellevue, Washington, on Wednesday due to "severe competitive pressures," according to an announcement on the company's website. The company's two clubs in Los Angeles, one club in Las Vegas and one club in Honolulu will remain open.
The closed clubs, which include its Limelight location in a former church, were owned by Club Ventures Investments LLC. The company leased all the buildings the clubs were located in. The clubs that remain open are owned by a separate legal entity, Meridian Sports Club LLC, according to the announcement.
Steve Lubarsky has been named the new president of Meridian Clubs LLC, a company spokesperson told Club Industry. He previously served as chief operating officer of Meridian Sports Clubs California.
All staff members at the closed clubs will be paid up to the last day worked, which was Dec. 20, the company spokesperson said. However, Club Industry spoke with a DavidBartonGym general manager who had concerns about getting paid thousands of dollars in commission owed. Likewise, the same manager—who wished to remain anonymous—said dozens of clients have contacted the gym's training staff inquiring about lost dues.
“Nobody has any answers,” the manager told Club Industry. “ ‘What about my money?’ they ask. Well, what about my money? We were supposed to be paid Dec. 30, and I have children and am working 70 hours a week running a whole entire gym with my team, and just like that it’s all gone.”
In regard to the closings, the website announcement said: "The company deeply regrets this final action, but due to severe competitive pressures, particularly in New York, it has become impossible for these locations to continue. DavidBartonGym greatly appreciates the past patronage of its clients and support of its staff and training professionals."
Members of the closed clubs were notified through an email sent around 1 a.m. on Wednesday and a message on the door of each of the closed clubs.
The email said: "The difficult decision to close was necessitated by changing forces in the fitness industry, including the rise of boutique studios and tremendous competitive pricing pressures in these markets. The company could no longer sustain its operations given the current competitive environment.
"We deeply regret any hardship or inconvenience this situation may cause you. There was simply no other answer but to close these facilities. You will have an opportunity at a future date and time to retrieve any personal items that may remain in your gym locker."
The unnamed manager first suspected there was trouble last Thursday, when an internal company email requested that lockers be emptied. And on Tuesday of this week, after the manager had left the club for the day, locksmiths arrived unannounced and began changing the building's locks.
As of Wednesday afternoon, this manager is stilled locked out of the facility. There has been no indication of when staff or clients will be allowed back inside to retrieve personal items, the manager said.
"I think this was very sudden and outside the realm of anyone's control," the manager said. "Something must have happened [within the company] in just the last few weeks. I'm not angry with anyone I worked with, but it's an awful situation, and I feel for everyone affected.
"We had built an amazing community and were just crushing it," the manager said. "From my perspective, it felt like things were really taking off."
David Barton opened DavidBartonGym in 1992 with one location that offered a night club vibe, something he continued to offer with each additional club. In 2004, Barton and John Howard formed Club Ventures Investments LLC, a holding company to establish, operate and manage the DavidBartonGym clubs, according to a lawsuit filed in 2013 by Barton against Club Ventures. Praesidian Capital Investors LP invested in Club Ventures in 2004.
In 2011, Club Ventures filed for Chapter 11 bankruptcy to restructure the debt and leases of DavidBartonGyms. At that time, Crain's New York Business listed revenue for DavidBartonGym at $28.3 million and its debt at $65.5 million. As part of the restructuring, Club Ventures entered into a strategic alliance with Meridian Sports Club California, which also goes by Bodies in Motion. Praesidian Capital had ownership in Meridian at that time, having invested $10 million of senior secured debt in Meridian in 2009. Barton became president of the company, and Chuck Grieve became CEO.
In November 2012, Meridian Sports Clubs California LLC filed for Chapter 11 bankruptcy. At that time, three of the company's 10 clubs were DavidBartonGym clubs. According to the bankruptcy filings at that time, Meridian had revenue of $21.5 million in 2011. In June 2013, Meridian completed its reorganization and exited its bankruptcy.
In January 2013, Howard Brodsky, who had been CEO of New York Health & Racquet Club, New York, was named CEO of DavidBartonGym. Barton left the company in September 2013.
In a 2004 interview with Club Industry, Barton talked about the cult following that he cultivated for his clubs.
He said: "What I set out to do initially in 1992 when there were a lot of chains and one-off bodybuilding chains was to update the business a little. We were still stuck in the 1980s and needed to move forward. I also wanted to start an alternative to the big chains. It has become sort of a counter-culture. We have become sort of an underground thing with a little bit of a subversive aspect to it right down to how I marketed it and whom I hired. There is a little bit of a cult following."
(Editors' Note: Club Industry will be updating this story throughout the day. Please check back later for more information.)