T Nation

Gyms, Profits and Litigation

Does anyone know whether or not the average Health Club (say a Golds’s or Bally’s) 1) has a reasonable profit margin and 2) has litigation cost that is at, above or below the average American buisness? It seems from reading a few of the threads (and personal experience)on this site that a)numbers is the key to success, and b)like any buisness, a LOT is tolerated from the public at these clubs. Any thoughts?

Mufasa, I have no numbers at my disposal, just observation. I belong to a Bally’s (got a cheap life membership 5 years ago). These gyms make money off of bulk memberships … they get people to join during special rate promotions, knowing full well that only a small percentage will keep coming back after 2 weeks. Think about it … it’s genius! Charge someone for a year membership and they only use it a few weeks. I can’t blame them, really. It’s not their job to force us to go work out.

If I totally mis-read your intent with this post, I’m sorry. I’m still groggy this morning. :slight_smile: But, yes, I think their profit margins are good.

Growth: That’s along the lines of what I’m looking for…just wondering if there are any Gym Owners/Managers/Trainers are just someone with some “inside” knowledge who could give additional insights?

I’ve been in the business for 6 or 7 years now. The gyms I’ve been associated with have not been as big as a Bally’s or World gym however. I would say the profit margins are not all that high, but I guess it depends on how you look at it. It takes a lot of people and a lot of overhead to make the money. It takes a certain amount of members to meet expenses…for places like that probably a minimum of 1500 members…after that everything is profit so membership sales are where the money is. As far as litigation in my experience in 7 years we’ve only had one case which never even went to court. I would assume it’s not that big of a deal but most definitely any gym needs insurance.

Just a small personal anecdote; a small gym in my home town had to shut it doors a few years ago because it was being sued. Some guy fucking up his neck when the cable snapped while he was doing lat pulldowns. One more reason to do chins I guess.

My point is the same as GrowtH’s, they must be geared toward getting as many people into contracts. They are pretty ironclad so getting out of them is nearly impossible.

Talk about MARKETING, guys…as always, Bally’s has some of the HOTTEST promotions on the planet. The current one is no exception. I guess that there are two big pushes: Pre-Summer/Summer, and of course, the New Year. Is that about right?

So, any more thoughts on Profits/Litigation would be appreciated…

Mufasa … genius marketing. Not only do you see beautiful buff people in Bally’s ads, but not ONE of them is lifting a weight. They are running on the beach, playing volleyball, etc., having a grand ol’ time. As if to say, “Join Bally’s and you’ll look just like this and have so much easy fun doing it!” But that’s fine … the people who buy memberships and stop after two weeks keep the gym in business for people like us.

Without the people who join up and quit after 2 weeks not a single commercial gym would be in business. Sadly, the fewer hardcore lifters a gym has the better it is for business. I say that as a hardcore lifter myself and also as someone in the gym business. Newbies responsible for most of the cash flow are intimidated by people who work out regularly. You’ll would be amazed how many people are too intimidated to join a gym.

I work in a Gym and I can not beleive some of the people who join and then dont come back after their first few sessions yet still carry on paying their memberships even when my gym offers the option of fourteen day money back gurantee for the joining fee etc, as well as the option of cancelling there direct debit at any point. But I must say the way my gym runs is fairly good, a guy I work with told me that a large chain style gym he used to work at (one of the largest in Britian) actually told him to not help newbies until after a month because that way you new who was serious and who wasnt!!!

You may find the health club industry’s stats at this site:

http://www.ihrsa.org/industrystats/opbenchmarks.html

Jethro: That site is pretty cool! I wanted to share with the Gang a few things that stuck out. No real “surprises”, but it is always good to see confirmatory data:

1)In 1987, 63% of Health Club membership was LESS THAN 35. Today, 35% are GREATER THAN 35. (Obviously “The Boomer Effect”).

  1. THE MOST PROFITABLE PROGRAM OR SERVICE FOR CLUBS IS (YOU GUESSED IT!) PERSONAL TRAINING! So guys…when we knock or critisize these guys, you will certainly know why the clubs (and trainers) are so defensive. You’re messin’ with the Moola!

No real info on litigation. Maybe it's not above the average for American buisness. If anybody has come up with anything, let us know!

The BIG money for some of the larger chains like 24 Hour Fitness comes from the automatic monthly debits. They do even better from these than they do with the big yearly dues, because they get that monthly monthly until the member tells them to stop, not when the year is up. I’ve known several people that have had a 24 Hour Fitness membership for years with monthly dues taken from their checking accounts that haven’t gone to the gym since the first month they joined. “Oh, it’s just nice to know it’s there if I ever need it…” There’s gotta be thousands of members like that, paying $30 - $50 a month just to know that the gym is there for them if they ever motivate themselves enough to use it.

OOps…a typo…today, 55% (not 35%) of Health Club Membership is over the age of 35. (“Boomer” effect).

Any thoughts on Personal Training being a big cash cow for many Health Clubs?

Am the manager of one gym and a trainer at another. We have a policy of helping the new, the weak and the old. Unfortunately, it is much more profitable to slash prices, fill the place up to the point of extreme overcrowding, then when people get pissed at poor service, lines, and the equipment starts to get old close down and open a new gym somewhere else. However the owner won’t let me do this :slight_smile: Also personal training is like any other business, the good go to places where they are appreciated and can make a living, the shitty go to chain gyms and try to eke out a buck or two. If you go to a cheap chain club and wonder why the personal trainers suck, it’s like wondering why the food is better at a fancy french restaurant than mcdonalds. If you had any cooking skills, you’d get the hell out of mcdonalds.

Rafael: A few questions. As a manager, has litigation been much of a problem, and do you get a sense that the litigation for Health Clubs is probably below or above that for other buisnesses?

As I’m reading your comments, that seems to fit with some thoughts a lot of the other posters had. If you get the money coming in for, say, 100 people, and only 35 show up on a regular basis, you have the funds coming in AND can provide resonable sevice for the “regulars”. Is that about the bottom line?

Have you noticed the “Baby Boomer” aging in your gym?

(Last one!) As a TRAINER, what are your thoughts of the “bashing” that trainers often get on this site? (Like everything else, I would imagine there are good ones and bad ones, irrespective of certification). Do you “weed out” bad ones as a manager, or is that just not practicle?

Thanks ahead of time Rafael!!!

Not going to bash personal trainers here as like any business there are many good and bad ones but a couple this epec about the gym chains that always baffles are:
-Personal trainers that are in worse shape then their clients
-how anybody in the right frame of mind can actually pay a minimum of $40 a session to have someone train them on machines. WTF? If I was to hire a coach or trainer in my life the last thing I want him to do is run me on a workout of leg extensions and cybex rows. Fuck show me a variable routine with free weights and some machines. Any monkey can sit on a leg extension machine and pump out reps.