Bally's Membership Report

Bally's new members grew by 8 percent during the first five months of 2005 compared to the same period the year before, but the total number of members increased by only 1 percent. Paul Toback, Bally CEO, said because the company has about 4 million members, it's hard for sales from every month or quarter to affect the overall membership numbers, and a 1 percent increase is a positive change from the flat or down sales in past years.

“We had strong sales numbers and a record number of new members in 2004,” he said. “In 2005, the combination of acquisition and retention has given us a net increase. The price per member went down because we allowed people to add a friend or family member, and we look at those incremental adds as a benefit to the company.”

But Consultant Rick Caro, president of Management Vision, said Bally management's explanation of the membership figures during a July 13 conference call with investors was confusing because it was unclear whether the company was counting temporary memberships. (After a later interview with Toback, Bally clarified that it does not count temporary memberships in its numbers).

In an online survey on Fitness Business Pro's Web site, a large Bally shareholder and a small bondholder, who wanted to remain nameless, shared their concerns about what they said was an increase in member churn during the past 12 months.“They are replacing higher revenue customers with lower paying ones, and so the fact that they are signing a lot of new members is neutral unless they stem churn, and could actually result in revenue declines.” they said.