Club Industry’s Top 100 Health Clubs of 2015

The biggest news about this year’s Club Industry Top 100 Health Clubs list may be how far one former No. 1 club company has fallen. Bally Total Fitness, Chicago, had ranked first on the list for a number of years before beginning a gradual drop after the company’s financial troubles and stint as a public company in the early 2000s. This year, Bally is absent from the list after declining to submit its form. Its website lists three clubs, all of which are in New York City, so whether Bally would have made the list this year had it submitted is in question.

Despite this shift, the top 10 companies on our annual list, which ranks companies by gross revenue, remained fairly consistent with last year’s list.

LA Fitness (Fitness International LLC), Irvine, California, ranks No. 1 again this year with $1.85 billion in 2014 revenue, a number gathered through a variety of sources. Last year, Club Industry estimated that LA Fitness had $1.7 billion in 2013 revenue.
Despite its reputation for being private, LA Fitness drew some attention to itself in 2014 with the opening of 43 clubs for the year, according to its Facebook page. The company also acquired 10 Vision Quest Sport and Fitness clubs in Seattle last year, but it closed four of those later in the year. It also closed three former Urban Active Clubs in Nashville that it had purchased in 2012, and two Rochester Athletic Clubs and two Buffalo Athletic Clubs that it had purchased in 2013. The memberships at these clubs were transferred to existing LA Fitness clubs that were nearby, the company said. As planned, it also closed some former Bally clubs that it had purchased.

Following LA Fitness is 24 Hour Fitness, No. 2 on the list with $1.33 billion in revenue (according to sources), an increase from an estimated $1.3 billion for 2013. 24 Hour Fitness, San Ramon, California, acquired 32 Bally Total Fitness clubs in New York, New Jersey, Denver and the San Francisco Bay Area at the end of the year.

This purchase came after 24 Hour was infused with cash from a new owner and the installation of new management earlier in the year. In May 2014, Forstmann Little and Co., which bought 24 Hour Fitness in 2006 for $1.6 billion, sold the company to an investment group led by New York-based private equity firm AEA Investors; the Ontario Teachers’ Pension Plan, Toronto; and Fitness Capital Partners, a fund organized by Dean Bradley Osborne and Global Leisure Partners. 24 Hour Fitness did not disclose the sale price, but the Wall Street Journal reported that it was $1.85 billion. The new owners brought in a Mark Smith, former chairman of Town Sports International, as CEO and Frank Napolitano as president. The two, along with their new management team, set about making upgrades in equipment and plant at many of its locations.
When it comes to changes, Life Time Fitness, Chanhassen, Minnesota, has seen plenty this year, as it was sold to Leonard Green & Partners, TPG and LNK Partners for more than $4 billion and became a private company once again. However, in 2014, the company focused on an acquisition of its own in ShapeMed, an Atlanta-based wellness clinic. It also focused on opening six new clubs. Those efforts helped Life Time remain at No. 3 again this year with $1.291 billion compared to 2013 revenue of $1.206 billion.

Equinox, New York, saw some change of its own in 2014. The company ranks No. 4 with 2014 revenue reported by sources at $882 million. That compares to 2013 revenue of $740 million that sources reported for the company for last year’s list.

Part of the revenue growth likely came from Equinox’s purchase in 2014 of six of the Sports Club/LA clubs from Millennium Partners for an undisclosed sum (although The New York Times reported that it was $110 million). The deal brought the six clubs into the fold with four Sports Club/LA clubs that Equinox had purchased from The Sports Club Co. in 2011 for a reported $130 million.

In addition to its Equinox brand, the company’s low-priced Blink Fitness brand increased its number of locations by 60 percent in 2014 while doubling memberships, the company announced. Blink has 35 locations after opening 14 clubs last year in New York and New Jersey. The company did not offer membership numbers beyond that they had doubled.

This summer, Equinox’s SoulCycle brand filed for an initial public offering and will separate from Equinox, which means SoulCycle will likely appear on next year’s list as a separate entity.

One company that now has two years of experience as a public company is ClubCorp, Dallas, which ranks No. 5 on this year’s list with a reported $844.16 million in 2014 revenue. Last year, the company ranked No. 4 with $815.1 million in 2013 revenue.

ClubCorp, which operates fitness centers in many of its golf and country clubs, has been on quite a purchasing tear in 2015, but in 2014, things were a bit quieter with one major purchase in the second half of the year. That purchase of Sequoia Golf, Atlanta, for $265 million added 50 private, semi-private and resort golf facilities across the United States to ClubCorp portfolio. At the end of the year, the company had 209 clubs. The company noted at the time of the purchase that the acquisition made the company nearly five times the size of its next largest competitor.
One company that saw a decline in 2014 was Town Sports International, New York, which ranks No. 6 on the list with $453.84 million in 2014 revenue compared to $470.2 million in 2013 revenue. That was a 3.5 percent ($16.4 million) decrease in revenue for 2014, according to the public company’s 2014 filing with the Securities and Exchange Commission. The company’s management blamed part of the revenue drop on its transition of 71 of its clubs from a mid-priced model to a low-priced model in 2014, a move that it accelerated in first quarter 2015. Management also said that the company’s opening of its first BFX Studio in September 2014 caused part of the hit. Town Sports operates clubs under the brands of Boston Sports Clubs, Philadelphia Sports Clubs, New York Sports Clubs and Washington Sports Clubs.

During 2014, TSI closed eight clubs and slowed development on others as it focused on growing its existing clubs and improving the productivity of its asset base.

An activist investor, Patrick Walsh, took an interest in the company in 2014. By mid-year 2015, Walsh led changes of the board and management, including removing Daniel Gallagher as CEO. Earlier in 2015, the former board had discussed a possible sale of the company, but the new board has yet to comment on whether that possibility is still being discussed.

One company that likely came up in a lot of discussions in 2014 was Planet Fitness, Newington, New Hampshire. Planet Fitness went public this month, and its 2014 revenue was pulled from its initial public offering filing with the Securities and Exchange Commission. Planet Fitness reported $279.8 million in 2014 revenue, which lands it at No. 7 on the list, the same as last year when it reported 2013 revenue of $211 million.

Landing at No. 8 on this year’s list is Capital Fitness, which does business as XSport, Chicago. The company reported $190 million in 2014 revenue. XSport also ranked No. 8 last year with a reported $176 million in 2013 revenue.

Part of the $14 million revenue increase for XSport came from expansion. In January 2014, XSport opened two express clubs in Woodbridge, Virginia, and Matteson, Illinois, and opened a full-service club in May 2014 in Norridge, Illinois. In August 2014, XSport announced plans to add three new clubs. One of those clubs in Melrose Park, Illinois, opened in 2014, but the club in New York was expected to open later this year while the one in Washington, DC, will open next year.

XSport completed an $8 million expansion at its Belmont-Ashland club in Chicago, doubling that club’s size to 60,000 square feet.

Another company that had a significant revenue increase was The Bay Club Co., San Francisco. Ranked No. 9 this year as well as last year, The Bay Club Co. rose in revenue from $139.5 million in 2013 to $162.36 million in 2014.

Part of the increase may have been due to an infusion of cash from new owners. In June 2014, KSL Capital Partners LLC sold The Bay Club Co. to York Capital Management, JMCA Ventures and The Bay Club Co.’s management team, including President and CEO Matthew Stevens. Stevens said the company has aggressive growth plans outside of California.

Also in 2014, The Bay Club purchased StoneTree Golf Club in Novato, California, the first in what the company said would be a series of acquisitions to transform traditional golf courses into modernized country clubs with a blend of hospitality, sports and recreational offerings that capitalize on changing consumer demands.

The Bay Club Co. should rise on next year’s list, as it followed through on its expansion promises in April of this year with the purchase of 11 Spectrum Athletic Clubs for an undisclosed sum. This year, Spectrum ranks No. 30 on the list with $46.75 million in 2014 revenue, a drop from last year when Spectrum Athletic Clubs ranked No. 26 with 2013 revenue of $50 million.

Another club company that had been rumored to be on the block in 2014 was Crunch Fitness, New York. The company had been purchased out of bankruptcy in 2009 by private equity firms New Evolution Ventures (NeV), Lafayette, California, and Angelo, Gordon and Co., New York. No purchase came of the 2014 rumors.

Crunch ranks No. 10 on this year’s list with 2014 revenue of $146 million, rising one notch from No. 11 last year when it brought in $131 million in revenue. In April 2014, Crunch acquired a Club One club in Yerba Buena, California, for an undisclosed sum. Also In 2014, Crunch began to sell franchises in Canada.
Other Notable Club Movement on the Top 100 List

A few clubs are missing from the list this year because they have been acquired. The 23 clubs that comprised The Rush Fitness Complex, Knoxville, Tennessee, were acquired by Gold’s Gym, Dallas, which ranks No. 11 on our list with an estimated 2014 revenue of $139.05 million. All the Rush clubs became corporate-owned Gold’s Gym facilities. Prior to that July 2014 purchase, Gold’s Gym had also purchased eight of the nine Aspen Athletic Clubs in Nebraska, Missouri and Kansas.

Another club company that no longer exists is Club One. The majority of the assets of Club One were acquired by Active Sports Club, San Francisco, in March 2014. Active Sports Clubs ranked No. 41 on this year’s list with $25 million in 2014 revenue. Neither company was on last year’s list, as Club One did not submit financials that year, and Club Industry was unable to get a reliable estimate of revenue for the company. Active Sports Clubs was founded in late 2013 by Jill Kinney, who was a co-founder of Club One in 1991, and by Bill McBride, who had been president and COO of Club One, so the company did not have a full year in business to report financials for 2013.
While this is the first year on the list for Active Sports Clubs, it is not the only company making its debut. Chelsea Piers made quite the splash in its first appearance on the list, landing at No. 13 with $100 million, which it reports was a 10 percent increase from 2013 revenue. Chelsea Piers has one club in New York and one in Stamford, Connecticut, that opened in 2014, although a sports complex had been on that site since 2012.

David Barton Gyms, New York, also appears on the list for the first time this year, coming in at No. 32 with $41 million, which the company reports was an 8 percent increase from 2013 revenue.

Total Woman Gym + Spa, San Diego, debuted on our list this year at No. 36 at $31.58 million in 2014 revenue. The women-only club company has 14 locations.

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Also new to the list is Orangetheory Fitness, Fort Lauderdale, Florida, which came in at No. 58 and $15.41 million, a 392 percent increase in revenue. The franchisor had 157 locations open at the end of 2014, but in April of this year, the company announced its 200th club opening. Orangetheory Fitness CEO David Long told Club Industry in July that he expects to have 500 to 550 studios open by the end of 2016.

Debuting at No. 67 on our list is RetroFitness, Colts Neck, New Jersey, which reported $11.67 million and 125 sites. In January 2014, Forbes named the low-cost, high-value franchisor as one of America’s Best Franchises. It was named second among franchise chains with entry costs of $500,001 and higher.

One company returns to the list after an absence of several years. Management company Corporate Fitness Works ranks No. 59 with a 169 percent revenue increase to $14.99 million in 2014. The St. Petersburg, Florida-based women-owned business likely can attribute much of that increase to its April 2014 purchase of L&T Health and Fitness. In 2014, L&T tied for No. 75 on the list with $9.8 million in 2013 revenue and 53 locations. Corporate Fitness Works reports that it has 140 locations in 2014.

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Corporate Fitness Works wasn’t the only company with a large revenue increase in 2014. UFC Gyms, Santa Ana, California, had a growth of 20 clubs and 40 percent revenue increase, rising from $36.3 million in 2013 revenue to $53 million in 2014 revenue. It ranks No. 24 on the list this year.

Denver-based CorePower Yoga, another franchisor, had a 22 percent increase in revenue for the year, coming in at $70.35 million in 2014 revenue and ranking No. 19. Much of that growth is likely due to the increase from 92 CorePower Yoga studios at the end of 2013 to 119 at the end of 2014.

Other companies with 10 percent or greater increases in revenue include:
•No. 9 The Bay Club Co. (16 percent)
•No. 10 Crunch Fitness (10 percent)
•No. 11 Midtown Athletic Clubs (11 percent)
•No. 16 Anytime Fitness (12 percent)
•No. 17 Wellbridge Co. (35 percent)
•No. 21 EXOS (18 percent)
•No. 29 Powerhouse Gyms International (10 percent)
•No. 31 ACAC Fitness and Wellness Centers (10 percent)
•No. 34 Edge Fitness LLC (24 percent)
•No. 40 Healthworks Group (10 percent)
•No. 44 Urban Adventures Companies Inc. T/A VIDA Fitness (13 percent)
•No. 46 Bailey’s Health & Fitness (11 percent)
•No. 47 Corporate Sports Unlimited Inc. (18 percent)
•No. 52 Brick Bodies (12 percent)
•No. 69 Bodyworks Family Sports Centers (10 percent)
•No. 74 Cooper Aerobics Enterprises Inc. (15 percent)
Less Growth for Some

Not everyone had a stellar year in 2014. Of the companies that reported their 2014 revenue, nine reported flat years and 11 reported declines.

One of those reporting a decline was No. 91, Spearman Clubs, Laguna Niguel, California, which had a 6 percent revenue decrease in 2014 to $5.8 million. The drop was mostly due to a decline in tennis revenue, according to Cecil Spearman, owner.

“We are down due to many of our Baby Boomer members dropping tennis as they get older,” Spearman said. “The oldest Boomers are 69, and the youngest are 54. It has been my experience that tennis players stop playing the game in their late 50s, and most tennis people stop playing by age 65. Thus, we are losing the people that created the tennis boom in the late 1960s and early 1970s, and we are not replacing them with the Millennials, primarily due to price.”

Even though the Spearman Clubs had been experiencing a decline in the number of tennis players for six years, the company had been making up for it by a growth in fitness members –until 2014, Spearman said.

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Top 100 Caliber Companies Not on the List

Every year, several companies who deserve to be on the list decline to provide their information, and we are unable to secure accurate estimates from other sources. The following companies likely should be on the list but are not for this reason:
•The Alaska Clubs, Anchorage, AK
•American Family Fitness, Glen Allen, VA
•California Family Fitness, Orangevale, CA
•Chicago Athletic Clubs, Chicago
•Fitness 19, Maple Valley, WA
•Fitness USA, West Bloomfield, MI
•Genesis Health Clubs
•In-Shape Health Clubs, Stockton, CA
•Lucille Roberts, New York, NY
•MVP Sports Clubs, Orlando, FL
•New York Health and Racquet Club, New York, NY
•O2Fitness, Raleigh, NC
•PRO Sports Club, Bellevue, WA
•Titan Fitness Holdings (Fitness Connection), McLean, VA
•World Gym International, Los Angeles
•WOW! Work Out World, Wall, NJ
•YouFit, St. Petersburg, FL

Access the Top 100 List Here

For the full Top 100 Clubs list, click on this link for the PDF or on this link for a gallery of the list.

Editor’s Note: The companies on the Top 100 Clubs list are ranked by 2014 gross revenue, not by any other standard. Club Industry allows franchisors to report revenue from corporate-owned facilities and franchisee fees but not revenue from individual franchisees, as each franchisee can report its revenue separately to be considered for the list.

THANK YOU

A big thank you to Rick Caro, president of Management Vision, for his help with the list and the analysis this year. And thank you to all the club companies who submitted their forms this year.