fitness centers still in business are projecting a 37% decline in revenue this year relative to 2019. To date, more than $15 billion in revenue has been lost, along with the economic activity that brick and mortar facilities contribute to their local communities. Smaller footprint clubs and studios will also need to strongly consider filing for bankruptcy.” “Larger club groups are using Chapter 11 bankruptcy protection to reorganize, shed creditors, reject bad leases in order to reset and survive.
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They are trying to hold off lenders seeking debt payments, landlords seeking full rent payments, members on freeze, and increased cost of operations related to safety/cleaning,” said Pete Moore, founder of Integrity Square, an equity and financial advisory firm serving the Health, Active Lifestyle, and Outdoors (HALO) sector. “To simplify what is going on, health club operators are in the same position as Luke Skywalker in the automatic trash compactor scene in Star Wars. “There is no overcoming an extended and forced government shutdown as we experienced earlier this year or extended capacity restrictions on the boutique industry that limit class sizes to 10-25% of normal capacity.” “It’s truly Armageddon for an industry that has historically outpaced GDP growth by a factor of 2-3 times and shown resilience to all economic downturns,” said Brian Smith, managing director of consumer investment banking at Piper Sandler Companies, a leading investment bank and institutional securities firm. The vast majority of facilities are small businesses at elevated risk of closure, typically lacking the leverage of larger boxes that often anchor shopping malls. Bankruptcies of national and regional health club groups reinforce the financial distress inflicted by the pandemic. Clubs are struggling with no real government support as a whole.”Īt the peak of mandated closures in the spring, virtually all health and fitness centers in the U.S. “COVID-19 is affecting the businesses, their members, employees, and the community at large. “In over 50 years of the club industry’s history, this is the toughest time for the club industry,” said Rick Caro, a 40-year veteran of the industry and president of Management Vision, Inc., a leading consulting firm specializing in the club industry.
Up to one in four American health clubs may close by the end of the year as club operators grapple with the coronavirus pandemic’s disproportionate impact.
have closed permanently as of September 30. BOSTON, MA-November 19, 2020-Based on data from major payment processing firms, 15% of fitness clubs and studios in the U.S.
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