Gold's Gym Acquires Four Clubs

These deals mark the beginning of a larger growth strategy.

WASHINGTON, D.C. - In a move that could very well be an omen of bigger things to come, Gold's Gym International (GGI) has acquired four clubs: a Gold's Gym franchise in Fairfax, Va., a World's Gym in Pasadena, Calif., and two facilities north of Baltimore (Fitness Zone and Olympus Fitness).

Why these four clubs? Location. The Virginia and Maryland clubs strengthen GGI's market along the Washington, D.C.-Baltimore corridor, and the Pasadena club operates in a strong demographic area.

There are other geographic benefits. After last year's buyout by the G Group, GGI transformed into a bicoastal company. Headquartered in the greater Washington, D.C. area, the G Group became the corporate center for finances and the back office, while Gold's historic Venice Beach facility took responsibility for operational duties, according to Gene LaMott, GGI's COO. The acquired clubs in Virginia and Maryland are near GGI's East Coast headquarters, and the Pasadena club is a short drive from Venice Beach. Therefore, the four clubs help reinforce clusters in areas where corporate support is plentiful.

Since the acquired facilities exist in clusters of corporately owned clubs, GGI was able to integrate management from the four clubs into other Gold's locations (where appropriate). For example, GGI moved the owner of the Pasadena club into a regional franchise position and replaced him with a new general manager. LaMott explained that this type of integration allows new employees to learn all of GGI's systems and procedures, while GGI benefits from fresh talent.

"We have been able to look at people's skill sets and reposition them within the company," LaMott said.

The fact that the acquired clubs are close to strategic corporate locations makes this type of repositioning easier, but don't assume that GGI's long-term growth strategy will concentrate solely on the Washington, D.C., and Venice Beach areas. This chain intends to spread beyond its coastal homes.

Growth will come in a variety of ways, according to Peter Brockway, managing partner of Brockway Moran & Partners, the Boca Raton, Fla.-based equity firm behind GGI. He pointed to franchising and conversations as examples, noting that Royce Pulliam's Global Fitness Holdings recently received exclusive development rights in Kentucky, Tennessee and Greater Cincinnati. He also stressed that GGI will expand its number of corporately owned clubs, acquiring facilities that live up to company standards.

"You won't see us buying clubs that aren't consistent with the Gold's model," Brockway said.

One thing you will see is more acquisitions. These four clubs won't be the last. Brockway noted that with the hiring of new management - such as CFO Paul Andrews (who came to GGI from Marriott) and LaMott - GGI has reached a level where growth will be easier.

"We've added some pretty significant people to the team, worked on the infrastructure, and we are now stepping up in the acquisition area," Brockway said. "This is just the start for us."

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