On July 8, Chris Clawson walked back through the doors of Life Fitness, Rosemont, Illinois, after a 2 1/2 year absence and received a big hug from the security guard. She welcomed him back to the company he left as president and returned to as CEO.
It wasn’t the last hug he received that day. He made his way into an executive team meeting as an email went out to employees that Clawson was back at the helm. His phone started “blowing up” he said with congratulatory texts, emails and phone calls.
Later that morning, he spoke at a town hall meeting that was broadcast to everyone in the company. He received additional hugs and handshakes at that meeting, too.
“I never felt like I wanted to be away from Life Fitness,” Clawson told Club Industry the day after he started back at the company. “I love the company. I love the employees. Obviously, I love the industry. I’ve been around the fitness industry for 35 years. And my favorite place to be is with Life Fitness.”
That’s the reason Clawson, who had worked at Life Fitness for 17 years, 10 of those as president, jumped at the chance to work with six private equity firms who all bid on Life Fitness and who all asked him to be the CEO at Life Fitness if their bid was successful.
In early 2018, publicly traded Brunswick Corp., which also owns a marine business, announced it planned to spin off its fitness segment, which included Life Fitness, Cybex, Hammer Strength, Indoor Cycling Group, SCIFIT and Brunswick Billiards, into a separate company as an initial public offering.
By fall of 2018, it seemed the IPO wasn’t going to happen, Clawson said, as the fitness segment’s revenue held but its earnings “had been a challenge.”
A private equity firm that included Life Fitness co-founder Augie Nieto, who Clawson knows well, called him as Clawson sat at his son’s volleyball game indicating that they were interested in buying Life Fitness—even though it wasn’t for sale at the time. They asked, if they were successful in their pursuit, would he run the business for them? He answered yes. But this firm wasn’t the only one interested in buying Life Fitness. At least six others were interested—and five of those six others also asked Chris if he would be involved. He said yes to all of them—sharing with each that he was non-exclusive.
Instead, he told each group: “I said that I want you to think of me as a jockey, and I’ll train your horses and I’ll ride your horses in practice. When I go in the stands, I’ll cheer as hard as I can, and when your horse crosses the finish line, I’ll put on your colors and I’ll ride the horse into the winner’s circle and I’ll be your guy.”
However, none of the six firms he worked with won the bid. Instead, KPS Capital Partners, New York, did. It purchased the company in May for $490 million.
Still, Clawson wasn’t done being a jockey. A person at one of the private equity firms he was working with used to work for KPS and put him in touch with Jay Bernstein, a partner at KPS. Before long, Clawson was on board as KPS’s CEO pick—and the firm also agreed to add Nieto to the board of directors.
“Augie created this whole conversation around buying the business although he was rebuffed early on, and it was a natural for him to be a part of this going forward. And KPS totally supported it,” Clawson said.
Nieto shared in an email with Club Industry that he is excited to be back at Life Fitness and working with Clawson again. The two had worked together at the company before Nieto sold it, and they kept in touch due to Clawson's support of Augie's Quest, a group that raises funds to find a cure for amyotrophic lateral sclerosis (ALS), a condition that Nieto was diagnosed with in 2005.
Clawson said that Nieto’s passion for Life Fitness transcends everything he has been doing since leaving the company in 1997.
“Wherever he’s been, he’s always had this extreme love for the company,” Clawson said. “…So it’s very natural for him to be here, and I think the industry recognizes that.”
For many, it also likely seems natural that Clawson is back, too. He started with the company in 1994, leaving in 2004, working for Omni Fitness, then Stamina Products before being named as president of Matrix Fitness Systems and then president and CEO of JohnsonHealth Tech North America (which owns Matrix). He returned to Life Fitness in 2010 as president, but he left in January 2017 after management changed at Brunswick and his boss retired and his boss’s replacement brought in his own team.
He said that his wife, who he met when she also worked at Life Fitness, may have captured the spirit of why he wanted to return to Life Fitness.
“She said, ‘For all six of these private equity groups who are involved, this is a bid process to buy a business. And for you, it’s your legacy,’” Clawson said. “And it is because I spent 17 years of my life at Life Fitness and transcended ownership groups from Mancuso to Brunswick, and I wanted to be back at the helm, and I didn’t want something to jeopardize that.”
Plans Ahead
So now that Clawson is back at the brand, he is working with the new CFO Steve Klyn to do one thing first: listen. A lot has changed—new people have been hired and people familiar to him have changed jobs—while he has been away, he said.
“So it’s really important for us to not necessarily come in with a pre-disposition one way or another and to listen to what people are doing, why they are doing it, what their priorities are, why they are their priorities, what things they are not doing and why they aren’t doing them,” he said.
Only then can he work with the executive team to formulate an amended strategy, he said.
A top priority is restoring morale at Life Fitness, which he said had dropped while he was gone as Brunswick's interest in the fitness business faded.
During one of the town halls Clawson held with employees on his first day back, he was asked how he was going to improve morale.
“I said that I have a two-legged approach to that,” he said. “I pointed to my left leg and my right leg. I said, ‘I’m going to get out, and I’m going to explain to you that I’m back and what it means for you that I’m back. Then as I explain to you, I’m going to ask that you do the same to each other. And through the process of us all coming back together and reinvigorating this Life Fitness culture, we’re going to change the dynamic. And it’s going to happen very quickly.’”
But he said that the strength of the company is in the employees, who are “dyed in the wool Life Fitness people who love the company.”
“That’s the spirit we have to re-awaken in everyone,” Clawson said. “For those who have never seen it, we need to install it, foster it and watch it grow.”
KPS will be an ally in that because they are an “incredibly interested owner,” Clawson said, and KPS has asked him to reinvigorate the business.
“That sincere interest in the business and the willingness to invest in the business from KPS is going to be a huge part of what makes the company successful going forward,” he said.
Expectations for Customers
In his early days at Life Fitness, Clawson worked in product development, and he plans to invest in research and development moving forward to help return Life Fitness to what he said was its innovation leadership role.
“Innovation was our cornerstone around the value provided for our customers,” Clawson said.
But innovation isn’t always about technology, he cautioned, noting the innovation of the company’s Synrgy product, an “adult jungle gym” used for group training and personal training that the company introduced in 2012. That product was not a technology tool, but it was introduced because of a need the company saw for a tool for clubs to use in group training and personal training.
And Synrgy wasn’t a traditional cardio or strength product, but Clawson has never considered Life Fitness to be a strength and cardio equipment company, he said.
“Our job is to create tools for all of our customers to use to have a compelling story and offering for their customer,” Clawson said.
For health club operators, the need may be to drive membership while for university rec centers, it often is to attract and recruit students. And Life Fitness exists to create the tools they need to be more successful financially, he said.
“You have thousands of Life Fitness employees who not only care greatly about the company but also care greatly about the industry in which we operate.” Clawson said. “All I’m here to do, as I said to them, is make this a better place every day. And if I can make Life Fitness a better place every day and make them happier and more successful, I do believe that our company and the things that we are doing in the fitness industry are going to add tremendous value to our customers and help them to drive better value to their respective stakeholders. That’s what our job is.”