Equinox, New York, has acquired the Sports Club/LA clubs operated by Millennium Partners, the New York-based parent company of Millennium Partners Sports Club Management, Boston.
Millennium Partners Sports Club Management had operated seven Sports Club/LA clubs: two in the Boston area, two in New York City and one each in San Francisco, Miami and Washington, DC. Equinox says it is acquiring six of the clubs owned by Millennium Partners—including the Reebok Sports Club/NY club—in the deal, which the New York Times reported is for $110 million. Equinox is selling the remaining Sports Club/LA club to The Healthworks Group, Boston.
"This acquisition is a testament to the continued expansion of the Equinox brand as a global leader in luxury health and fitness and the growing demand for our unique offering," Harvey Spevak, CEO of Equinox, said in a statement. "The acquisition of Sports Club/LA and the Reebok Sports Club/NY locations not only expands our geographical footprint, but also adds six desirable clubs to an existing collection of trophy properties. We look forward to integrating these clubs into our portfolio in order to best serve our current and future members."
Millennium Partners informed employees of the acquisition Sunday night in letters obtained by Club Industry.
"This transaction will bring together two industry-leading companies in a way that will strengthen the value proposition to our members," Mario Palumbo, a partner with Millennium Partners, New York, wrote in one of the letters. "Unfortunately, though, this transaction ends the independence of a proud tradition and history that we are honored to have been part of—Sports Club/LA and Reebok Sports Club/NY."
Palumbo later acknowledged in the letter that some employees had heard rumors of the deal for the past several weeks.
"We are sorry that we have not been able to openly discuss the transaction with you," Palumbo wrote. "Millennium and Equinox started discussing the transaction, promising confidentiality to each other until the end. As a result, we had to ask the management team not to discuss the transaction with you, which was very difficult for them."
Smaiyra Million, CEO of Millennium Partners Sports Club Management, wrote the other letter obtained by Club Industry.
"After almost 17 years of personally being involved in building our wonderful brand, the time has come for us to part ways," Million wrote. "Sometimes things don't end up the way one would imagine, but we have so much to be proud of, and we can celebrate that legacy for years to come."
'Major Play' in the Industry
Equinox now operates 73 clubs in New York, Chicago, Los Angeles, San Francisco, Miami, Boston, Dallas and Washington, DC, as well as London and Toronto. Equinox says it will take immediate operational control of the six clubs and will rebrand them as Equinox.
"Equinox is committed to an unparalleled member experience," Spevak said. "We are thrilled to welcome all of the existing Sports Club/LA and Reebok Sports Club/NY members to Equinox. We think they will welcome the changes in their clubs and look forward to continuing to serve them with a luxurious lifestyle fitness experience."
In 2011, Equinox acquired four Sports Club/LA clubs that were owned by The Sports Club Co., Los Angeles, for a reported $130 million. Three of those clubs are in Southern California—Los Angeles, Beverly Hills and Irvine. The fourth club is in New York City's Rockefeller Center.
"I think it's a major play in the industry," a source tells Club Industry, referring to the latest Equinox-Sports Club/LA deal. "There are very few high-end urban players. When I think about the industry, I can't really think of another multi-club, high-end chain."
Moody's Investor Service estimates revenue for Equinox, which also operates the Pure Yoga, SoulCycle and Blink brands, at $740 million as of March 31, 2014. Millennium Partners Sports Club Management reported $99.8 million in revenue in 2013 to Club Industry. Both companies are on Club Industry's Top 100 Clubs list, which was released this week.