Gold's Gym, Dallas, has made its second acquisition of 2014 and fourth regional club chain acquisition in the past three years by agreeing to acquire all 23 clubs operated by The Rush Fitness Complex, Knoxville, TN. The deal was signed last Friday and will close next month.
The acquisition, terms of which have not been disclosed, is an opportunity for Gold's Gym to grow in new markets. Specifically, the locations involved in the deal include Knoxville; Chattanooga, TN; Dalton, GA; Greenville, SC; Asheville, NC; and the Triad, which is the north-central region of North Carolina. A Gold's Gym in Winston-Salem, NC, is currently operated by a Gold's Gym franchisee.
All 23 of the former Rush Fitness Complex clubs in Tennessee, Georgia, North Carolina and South Carolina will be corporately owned and will remain open during the rebranding, which is expected to be completed by the end of this year.
The acquisition now gives Gold's Gym 146 corporate-owned clubs, a 40 percent increase from the company's 104 corporate-owned gym count from July 2013 and an 80 percent increase from its July 2012 count of 81 corporate-owned gyms.
"Following steady growth this last quarter, which included the acquisition of Aspen Athletic Clubs, we are excited to kick off the second half of the year with this announcement," Gold's Gym President Aaron Watkins said in a statement. "There were obvious synergies between The Rush Fitness Complex offerings and Gold's Gym offerings, which is why this deal was attractive to us. We look forward to providing award-winning service and helping these new members of the Gold's Gym family reach their individual fitness goals."
The Rush Fitness Complex reported $44.8 million in 2013 revenue to Club Industry, an 8 percent decrease from the $48.5 million in revenue The Rush reported for 2012. The Rush was founded in 2000 by club industry veteran Larry Gurney. Both The Rush and Gold's Gym are on Club Industry's Top 100 Clubs list, which was released this week.
"This is an exciting development for our Rush employees and members," David Carney, president and CEO of The Rush, said in a statement. "We share a similar operating philosophy with Gold's Gym along with a passion for customer service. Our members and employees will now be part of one of the strongest brands in the industry."
Earlier this year, Gold's Gym acquired eight of the nine Aspen Athletic Clubs in the Midwest. Last year, the company acquired 17 of the 18 Fitness First clubs in the Maryland, Virginia and Washington, DC, areas. In 2012, Gold's Gym acquired the 11 Spectrum Athletic Clubs in the San Antonio area.
"This is another example of these larger-scale regional players—they can't survive," a source tells Club Industry. "It's very hard to make money with those business models unless you have scale. You can allocate overhead more expensively. You have infrastructure. When you start operating hundreds of clubs, you can spread costs, you can expand control if you have scale. If you're a small operation trying to do that, it's a lot more expensive on a unit-level basis. It puts a lot of pressure [on the company]."
This is the second major acquisition in the industry today. Equinox announced this morning it had acquired the Sports Club/LA clubs from Millennium Partners.