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Top 20 Facility Trends

From bodybuilding to express workouts, fitness centers have evolved to cater to their changing markets.The pages of Fitness Management magazine from the last 20 years reflect what was going on in the industry. What began as a showcase for men to show off their muscles became a safe and friendly place for men, women and children to maintain a healthy lifestyle. The industry continues to evolve, and we wanted to look back on the changes that have made us what we are today.3 1960s: Bodybuilding mecca4 1960s: A model of disaster5 1968: The aerobics revolution6 1970s: YMCAs and "aerobic dancing"7 1970s: Chains and names8 1980s: Corporations seek to get fit9 1980s: Fitness centers diversify, succeed, fail10 1980s: Children and strength training11 1980s: Many go one-on-one12 1980s: 'Lifestyle disease' and medical wellness13 1990s: ACSM standards conflict14 1990s: Older adults on the move15 1990s: The non-profit vs. for-profit fight16 1990s: Fitness goes public17 1990s-2000s: Mergers and acquisitions24 Hour Fitness, Pleasanton, Calif., has also been a big player in the acquisitions arena. It acquired 12 Gold's Gym facilities in Texas and four Sports Club Connection facilities in Southern California, all of which then operated under the name 24 Hour Fitness Sport. It also acquired Advantage Fitness in San Francisco's marina district (the company's seventh club in San Francisco and 141st overall). And, in a turn of the tables, in May of this year, 24 Hour Fitness Worldwide was acquired for approximately $1.6 billion by Forstmann Little & Co., a New York City-based private investment firm.18 1990s-2000s: Vertical markets abound19 2000s: Women opt to go it alone20 2000s: Workouts go express

Top 20 Product Trends from the Past 20 Years

The past 20 years have seen much invention in cardio and strength equipment, but the standards have stood the test of time.1. HARD-CORE TO EVERYONE2. KEEPING TRACKHeart rate capabilities on cardio equipment began appearing as early as the mid-1980s, with manufacturers such as Versa-Climber's Heart Rate,Precor, Life Fitness, Cybex and Star Trac adding contact heart rate sensors and heart rate programs to cycles, treadmills and steppers. And, as early as 1993, machines had the ability to track individual workouts, with Cat Eye's Data Card. Later, Technogym and FitLinxx (1995) made it easier for exercisers to track their workouts.Although circuit training has reemerged as a fitness trend (as 30-minute workouts), this idea is by no means new. Beginning in the 1980s, equipment manufacturers made lines of strength equipment specifically for circuits within a fitness center. These include Universal's Aerobic Super Circuit, developed in conjunction with Dr. Cooper's Institute (1985), the Lifecircuit in 1985 by Bally Fitness Products, later known as Life Fitness, Hoggan Health's Sprint Circuit (1986), Maxicam's Modular Machine circuit (1987), the PACE 30-minute workout (1990), Universal's CrossLine package (1995), Keiser's X-Press workout (1997), BodyMaster's Circuit Master strength equipment, Paramount's Direct Power circuit (1997) and SciFit's Fit-Quik program (1998). There were even products to go along with these circuits, such as timers, alarms and music.In the early 1990s, when thong leotards were all the rage, equipment manufactures jumped on the "buns" bandwagon. Companies began manufacturing (or at least advertising more) strength equipment for the buns, such as the Apex Butt Master, Leg Tech Butt Blaster, Motivations Marketing Bun Burner and the Hoist Glute Master.NordicTrack was big in the 1980s in the home market, and in 1990 launched a model specifically for fitness centers (although it wasn't alone in targeting facilities -- Fitness Master introduced a ski machine in 1986, as did Precor in 1987). Its new version, 900-T (1993) made the cross-country ski machine easier to use with built-in handrails. Despite the improvements, its popularity waned by the late 1990s. Nautilus made a similar machine when inline skating was all the rage called the Skate Machine (1995).Stair climbers, beginning with the StairMaster in 1983, were an enormous success. Following StairMaster, every other cardio equipment manufacturer had its version of the stepper, including Tectrix, Star Trac, Precor, Life Fitness, Trotter, Sci Fit Nautilus, CatEye and Universal. In addition to the upright stepper, moving stairs also made their way into fitness centers, in the form of StairMaster's StepMill. Also, NuStep designed a recumbent stepper, which is still popular today for the older adult market.Although cycles and treadmills were around before Fitness Management was first published, the '80s and '90s solidified their place in the market. By 1989, cardiovascular equipment sales nearly equalled resistance equipment sales. And, by the mid-1990s, treadmills became the most popular piece of cardio equipment in fitness centers. Cycles continued their steady hold on the market, with recumbents becoming popular in the 1990s. The basic types of strength equipment are also here to stay, with plateloaded, free weights and selectorized pieces all holding onto their popularity.In 1995, Precor came out with its C544 Transport -- later to be commonly known as an elliptical trainer. Since then, most other major cardio equipment manufacturers have come up with versions, and most have also added an upper-body component: Life Fitness' cross trainer (1996), Reebok's Body Trek (1996), Hoggan's Sprint Cross Trainer (1997), Sports Art Fitness' elliptical trainer (1998), Star Trac's Elliptical Edge (1998) and Sci Fit's Elliptical Walker (1998). Elliptical trainers have stood the test of time because they are low-impact and have a low rate of perceived exertion. They've all but replaced stair steppers.Group exercise, as we know it today, began as "aerobics" in the 1980s. This high-impact, dance style workout wasn't for everyone, so changes were made throughout the decades (by 1991, high-impact aerobics had declined from its popularity peak by 6 percent). In 1989, Step aerobics was introduced, and held on for years (many fitness centers still offer it). Because of the popularity of Step aerobics, another type of class was introduced: slide training, in 1993. That didn't make it through the '90s. Group strength classes also went commercial in 1990, with limited licenses to Exterior Design's Body Sculpting being one of the early offerings. "Group exercise" became the word in the late 1990s to encompass all of the new classes that were being offered, including kickboxing, group strength (such as BodyPUMP, 1997), aquatics classes, hip-hop and much more.What revolutionized group exercise was something called Spinning, invented by Johnny G. in 1987. This became "group cycling" when other companies (such as Keiser's Power Pacer in 1996, Reebok Studio Cycles in 1996 and Star Trac's V-Bike and program in 1998) offered cycles and programs. Group classes on machines (other than cycles) emerged in the late 1990s. These included the Boathouse Crew Class by Concept2 (1997) Star Trac's Trekking on treadmills (1998) and Precor Fit on elliptical trainers (1999). More recently, we have efi Sports Medicine's GTS unit/GravitySystem /Gravity4Programming (in 2003), and the Corepole product and program (2004).Going along with the advent of "group exercise," mind/body classes, referred to in a 1990FM article as "nouveau aerobics," surged in popularity beginning in the mid-1990s. Yoga and Pilates were now offered in fitness centers, not just at small studios aimed at the "hippie" niche. Equipment manufacturers responded, offering reformers for individual sessions and group exercise, such as Balanced Body's Allegro Reformer made especially for fitness centers (2000) and PeakPilates'/Life Fitness' reformer. Both Pilates and yoga continue to gain popularity into the 2000s.Beginning in the mid- to late-1990s, and continuing through the 2000s, equipment companies became one-stop shops for buyers. Companies that once only made cardio equipment or only made strength equipment either bought a company that offered the other, or made their own line of equipment. For example, Life Fitness added a selectorized strength line in 1995; Trotter added a strength line in 1995; Cybex added selectorized and plateloaded lines in 1995, and bought Tectrix cardio and Trotter treadmills in 1998; StairMaster teamed with Pacific Fitness to offer a strength line (1996) and, in 1999, acquired Quinton treadmills; Nautilus developed a plateloaded line in 1996 and added a treadmill in 1997; and Reebok/CCS Fitness added a selectorized strength line in 1998. More recently, Nautilus bought StairMaster and Schwinn Fitness; FreeMotion acquired NordicTrack and Reebok accessories and group cycling; Precor bought Fitness Products International (2004), maker of Icarian Strength, plus it acquired ClubCom, maker of Cardio Theater; and Life Fitness expanded into the mind/body arena with its StretchMate and the Life Fitness Peak PilateSystem.As a result of equipment company consolidations, manufacturers wanted to create a uniform and distinct look for all of their equipment. Cardio and strength equipment in the late 1990s began to have signature looks from each company. Technogym, perhaps, kick-started this trend, with its futuristic/metallic look. Every major manufacturer followed, with uniform colors, sizes, shapes and materials for their equipment. Cardio consoles also became uniform across every type of equipment for each brand."Core training," as it's called, refers to strengthening the mid-body. While in the past people simply performed sit-ups, in the late 1990s, a variety of products and classes became available to train the core. Products included the ABTrainer by Precise (1995), Quantum's Power-Crunch (1997) and the ABench (1997) by Fitness Products International. Exercise balls, while available for years, also had a surge in popularity, as did balance trainers. A new invention was the BOSU ball, which looks like an exercise ball cut in half. OPTP, among other companies, offered a variety of products for the "core.""Functional training" became popular in the 2000s (though perhaps alluded to as early as 1988 in an ad from a company called Lapko, promising a new exercise system that would "exercise muscles the way they are in real life") as a spinoff of sports-specific training. This type of training focuses on preparing the body for a particular activity; only now, in addition to sports (golf, tennis, running, etc.), it is designed for activities of daily living. Balance training is a big part of this, as is strength training. In fact, whole lines of selectorized strength machines were born from this idea. Instead of a fixed path, they had cables for user-defined paths of motion. FreeMotion Fitness (originally Ground Zero) and Cybex were the first to bring these machines to the commercial market in 2000. Precursors to these machines were Cybex' VR2 line in 1996, Paramount's ART line in 1997 and StairMaster's Arcuate line in 1997. Also, exercise accessories such as balance trainers (many from Fitter), bands, exercise balls, weighted bars (like the Body Bar from The Step Company) and medicine balls became more popular because of the "functional" trend.In the late-1990s, flexibility became a buzz word in the industry. Products such as Precor's Stretch Trainer in 1998 were all the rage at industry trade shows. Also available were Universal Gym Equipment's ProFlex (1996), Keiser's Stretch Zone (1996) and the MedX Stretch (1998). Since then, True's Stretch Station came out in 2002, and the StretchMate came out in 2003 (offered by Life Fitness).Since people began running, walking, cycling and stepping indoors, boredom has been an issue. Equipment manufacturers have always tried to respond to that problem, and never better than now. In the '80s and early-'90s, small companies sold "reading racks" for cardio equipment, so members had a place to put their books, magazines and personal stereos. Eventually, equipment manufacturers themselves responded to that need, and had built-in reading racks and water bottle holders on all cardio equipment. Of course, that was just the beginning. In 1990, the Health Club Media Networks proclaimed itself the "only nationwide television and radio network designed for health clubs." Then, Cardio Theater (1993) brought the focus away from the equipment itself and onto the facility walls with its Cardio Theater television and radio systems. Broadcast Vision did the same in 1995, and Quinton's Club FM with TV and music was created in 1997. Entertainment options built into cardio equipment (like cable TV and DVD players) became popular in the 2000s (Expresso Fitness' Spark Cycle, 2005, and CatEye's GameBike Pro, 2005), but many were around in the mid 1990s, such as Precise Fitness' Tele-Bike (1993), Life Fitness' Exertainment system (1995), and Tectrix' VR Bike (1994) and VR Climber (1995), which all had virtual reality workouts. In addition to equipment manufacturers, separate companies emerged that offered TV monitors that could connect to cardio equipment to watch TV or a DVD, or use the Internet. These included e-Zone (1999), Transcape System's ICE stations (1997), which later became NetPulse, and CardioVision (2003).Instead of entertainment on cardio equipment, in the early 2000s, the entertainment became the cardio equipment. Active entertainment, such as Broadcast Vision's Dance Exercise Revolution (2005), Cybex' Trazer (2005), Konami's Dance Dance Revolution (2005) and Motivatrix' MX7 Workout Master (2005), have users respond to lights and a monitor to step or jump onto a pad. This idea came from the video game industry, but also keeps track of time and calories used during the "workout." This is a relatively new trend, but Cybex' Reactor was around in 1997.Climbing walls; aquatic classes, equipment and accessories; and rowing machines have been around since before Fitness Management first published. Brewer's Ledge's Tread Wall, a revolving climbing wall (whose club-targeted advertising dates back to 1990), made climbing more accessible for fitness center members, and easier for facilities than installing an entire wall. When the popularity of racquetball waned in the '90s, some facilities turned their old courts into climbing areas. As for aquatics, cardio and weight equipment for use in the water has been around for years, and group classes in the pool continues to have a steady market. Concept2's Flywheel Rower debuted in 1981, and by the mid- to late-1980s, rowing machines, some of which could be linked together for virtual racing, were a fitness center staple. In 1988, at least seven companies manufactured them, and Concept2 continues to offer newer models today.Since the elliptical trainer, cardio manufacturers have been looking for the next big thing. Some ideas are spinoffs on old ones: FreeMotion Fitness' (NordicTrack) Incline Trainer (2003) is a treadmill that has a steeper incline and can actually decline; Nautilus' Treadclimber is a split-deck treadmill for walking, introduced in 2005; and SportsArt's X-Trainer is a cycle with an upper-body component, introduced in 2004 -- although this wasn't the first time this was done; Reebok's Cycle Plus (1997) had an upper-body component, as did many of the cycles dating back to the mid-1980s. And although not a direct spin-off, Cybex' recently released Arc Trainer is similar to an elliptical trainer, with more of a swinging motion rather than an elliptical motion. This, again, isn't a new idea, either. Reebok's Skywalker, a machine that operated similarly to the Arc Trainer, came out in 1994, but failed.

Management Lessons Learned

Managers can learn from where the industry has been to help them move forward.What do you think of when you picture big hair, leg warmers and high-impact aerobics? You likely think of the 1980s. You may wonder how there weren't more lawsuits against fitness centers then (did they even know the word "contraindicated" in those days?), but it was during the 1980s that structured fitness became an accepted part of American life.Managers can learn from where the industry has been to help them move forward.During the 1980s, baby boomers were young adults. The cultural icon of the day was the hard-charging, Walkman-wearing, briefcase-carrying, well-dressed yuppie, and fitness routines reflected that. High-impact, high-intensity aerobics were perfect for a population at the peak of its physical power. As baby boomers moved into their 30s and 40s, they experienced the time pressure that goes with raising families and building a career, and their fitness choices reflected that. During the 1990s, the fitness industry tried to figure out, "How can I stay fit and healthy within a minimum time frame and in the most convenient location?" The answer was circuit training, high-intensity cardio and machines designed to work multiple muscle groups; in short, anything to squeeze as much calorie-burning,heart-pounding activity as possible into 30 minutes or less.Take-home message. Be sure to take demographics into consideration when designing programs and marketing. The 50-plus population is huge, both in numbers and in purchasing power.In addition to the fitness industry boom, it was also during the 1980s that the obesity epidemic took off. The National Center for Health Statistics says that the percentage of obese adults increased by two-thirds from the 1960s to the 1990s. Even more depressing, the Centers for Disease Control says that obesity has increased two-thirds more since then.Take-home message. Despite three decades of information to the contrary, many people still believe that the key to a svelte physique is some elusive magic diet or pill. Consider your facility a front in the war on obesity. Education is your ammo.It's official:People know they should exercise, and they say they should exercise, loudly and often, from the couch. To quote American Sports Data Inc.,"One of our cardinal statistics is that 62 percent of the U.S. population acknowledges the benefits of exercise, knows it should exercise more, but never does...."REFERENCESBooming health clubs, slipping fitness participation and healthier diets all coexist in the overweight society. American Sports Data Inc. www.americansportsdata.com/pr-fitnessrevolution.asp, Aug. 28, 2000.Forever young. The Economist www.economist. com/surveys/PrinterFriendly.cfm?Story_ID=2516900, Mar. 25, 2004.The United States Department of Agriculture.www.mypyramid.gov/.

Top Legal Issues of the Past 20 Years

The creation of industry standards, the increase in litigation and the changing demographics of fitness center users are but some of the changes that have affected the fitness industry. Some 20 years ago, relevant standards and guidelines were just beginning to be addressed by the fitness industry. When the American College of Sports Medicine's (ACSM) first edition of its Health/Fitness Facility Standards and Guidelines published in 1992, there was not, then, a published guide for professionals in the industry to follow. However, 20 years ago, beginning essentially in the 1980s, the profession saw the development and publication of a myriad of written standards, so-called "parameters of practice," and guidelines to assist the profession in the delivery of service to consumers. At this same time, the medical profession first experienced a remarkable growth in the development of written standards of practice, which, in 1988, the American Medical Association (AMA) called the most important medical story of the year. Standards development in the fitness industry during this time was also an extremely important development, which would foretell of things to come.Standards statements are often used to establish standards of practice for the delivery of service in health and fitness facilities. They are also used to compare and judge particular conduct in relevant litigation through expert witnesses. The standards and guidelines development process is continuing, and will continue for some time in the years ahead. ACSM and the AHA have teamed up to publish at least one paper dealing with health and fitness facility practices, and ACSM is about to finish and publish its fourth edition of ACSM's Health/Fitness Facility Standards and Guidelines (expected to be published in late 2005 or early 2006). As this trend continues, professionals in the industry must stay abreast of developments that affect their practices if they want to avoid legal pitfalls, damages and suits while delivering service in accordance with accepted practices.At or about the same time that standards and guidelines development began in this industry, the 1980s experienced what many believed was a rather dramatic increase in litigation in a variety of areas, particularly in medical malpractice and general personal injury cases, including those dealing with product liability. Ultimately, this trend began to spill over into the health and fitness industry. The 1980s and 1990s saw a somewhat dramatic increase in litigation dealing with exercise activities and the delivery of services in this setting. This litigation focused primarily on issues dealing with screening, recommendation/prescription of activity, supervision of activity and emergency response. Injuries associated with exercise equipment and activities that were treated in hospital emergency rooms throughout the United States began to increase starting in the 1980s -- at least until the most recent reporting periods when there seemed to be a decrease in the number of such injuries so treated. That trend may well portend a coming decrease in litigation associated with such injuries, despite the fact that some within the industry believe that litigation continues to increase against health and fitness facilities and fitness professionals with more litigation predicted to be forthcoming.As a result of the development and publication of standards of practice, coupled with at least a perceived increase in litigation associated with health and fitness facilities, a number of somewhat subtle events also occurred over the last 20 years that may be viewed as beneficial off-shoots of such litigation. First, health and fitness facilities have become better designed and more "tuned in" to the needs and desires of their customers. Facilities themselves have also became safer. The exercise equipment located within such facilities has become increasingly safer to use. Better design and manufacturing techniques have reduced the number of dangers associated with such equipment and, as a consequence, claims related to products liability issues pertaining to exercise equipment have been, and should continue to be, reduced.Also during this time period, fitness professionals became more educated, better trained and more qualified than in years past. Efforts presently under way by the International Health, Racquet & Sportsclub Association (IHRSA), as well as those of the National Board of Fitness Examiners (NBFE), have been designed to help improve the qualifications of personal fitness trainers. In the last few years, IHRSA has been pushing for its member facilities to hire only those personal fitness trainers who are certified by an organization that is accredited by an entity such as the National Commission for Certifying Agencies (NCCA) or a similar specified entity. This is in hopes that the qualifications of the certification organizations and their students might be objectively established. Efforts by the NBFE are designed to create an examination and registration process for personal fitness trainers so that facilities will know that such professionals have the proper training, background and experience to competently render service as judged by a respected third party.Coupled with the increase in health and fitness facility use and exercise activity in the United States, there has also been an effort by health and fitness facilities to minimize the occurrence of untoward events, claims and related lawsuits. This has taken many formsbut, among other risk-management techniques that have been employed in this industry, more facilities have moved toward the use of waivers of liability or releases. This ensures that individuals using these facilities give up or relinquish their rights to sue in advance of the occurrence of any untoward event. While such documents in the past were viewed as not being worth "the paper they were written on," most releases and waivers of liability are now valid in the vast majority of states. Litigation as to these issues has frequently been filed over the last 20 years, which has dealt with a number of concerns and matters primarily dealing with the execution process associated with these documents and the wording of the waivers themselves. Generally, the courts have taken a favorable attitude toward such documents, more frequently than not allowing them to be effective, to release those "normal" untoward events associated with health and fitness facility activities.Of late, particularly over the last several years, a number of lawsuits have focused on alleged deficiencies in the emergency response process by health and fitness facilities toward their members and guests. Originally, such suits focused on the lack of appropriate CPR emergency response. However, most recently ,the suits filed have dealt with the alleged failure to have an automated external defibrillator (AED) present for use when needed, or the alleged failure to use such a device in these facilities where an AED was installed. As a consequence, many health and fitness facilities, and now various state legislatures, are moving toward mandating the presence and use of such devices within these facilities, along with the presence of CPR/AED-trained and certified individuals to carry out appropriate emergency response activities.

Progress in Science?

While the laws of thermodynamics still apply to energy balance in humans, we have learned more over the past 20 years about the many factors that affect energy balance. Well, not exactly. While the laws of thermodynamics still apply to energy balance in humans, we have learned more over the past 20 years about the many factors that affect energy balance. Here are some of the most interesting scientific findings that have come to light since publication of Fitness Management's first issue in 1985.For centuries, scientists have observed enormous individual variation in body types and body composition, and in the factors that contribute to energy balance. During the past two decades, studies of twins have led to the conclusion that genetic variation explains only about 25 percent of the variation among people in body composition. While this percentage is fairly important, this conclusion also means that 75 percent of the variation we see in body composition is caused by other factors, such as eating and exercise behavior.The biochemistry of obesityAnother interesting messenger affected by adipose stores is adiponectin. Adiponectin helps insulin do its job of getting sugar from the bloodstream into cells, where it can be stored or used for energy. As fat levels rise, their secretion of adiponectin falls, which may help explain the insulin resistance that often develops with obesity.Progress in our understanding of obesity has not yet spawned progress in obesity treatment, but it is probably just a matter of time before effective weight-loss medications hit the pharmacy shelves. To date, weight-loss medications have been plagued with risky side-effects and low rates of long-term efficacy. As scientists continue to unravel the complex biochemistry of obesity, new preparations will no doubt be developed, since the market for such drugs is large.Cosio-Lima, L.M., K.L. Reynolds, C. Winter, et al. Effects of physioball and conventional floor exercises on early phase adaptations in back and abdominal core stability and balance in women. Journal of Strength and Conditioning Research 17(4): 721-726, November 2003.

20 Trends for the Future

While predicting the future is impossible, some leading industry suppliers offer their best guesses as to what will happen in the fitness industry in the years to come.1 Existing fitness centers will expand2 Small facilities will open 3 Competition will heat up4 Location will become more important 5 Niche markets will open up "I would recommend the club owner ... focus on the needs of an older population with various function levels, and on the deconditioned young, so they will be prepared to be a leader in the health and fitness industry of the future," says Steve Sarns, vice president of sales and marketing for NuStep Inc., Ann Arbor, Mich.7 Educated members will look for results 8 New ways to profit will be implemented9 Specialization will set fitness centers apart 10 High-quality staff will be mandatory11 Regulation will increase12 Spa services will raise the bar13 Paperless billing will be here to stay14 Insurance companies will incentivize fitness 15 Information will increase the power to sell 16 The Internet will enhance communication17 Consolidation will continue18 Equipment innovations will stall19 Technology will be less intimidating 20 Business will improve Looking ahead

Top Financial Breakthroughs of the Past 20 Years

The business of buying, selling and running a fitness center has changed a lot over the last 20 years.The fitness industry has roots in the 1960s and 1970s, with two different antecedents. The gyms of that era were pure fitness offerings: small in physical plant and limited in the variety of equipment. Its business model focused on selling prepaid annual memberships for affordable prices and, in many cases, encouraging members to pay for three-year or even lifetime memberships at highly discounted prices. The key assumption in this sales-oriented atmosphere was that most members would not remain regular users after the first few months. The emphasis was always on sales and selling the next new joiner.These two models came together in the early 1980s, and became part of a multi-sport club concept, with both racquet sports and fitness in the same building. There were many larger pure-fitness facilities developed, some with or without a few racquetball courts. The racquet-sport-based clubs often converted underused court space to a growing fitness component.The membership agreementOne of the major financial developments that took hold in the 1980s was the acceptance of membership billing on a monthly basis through the concept of EFT (electronic funds transfer), either via a member's authorization of a bank checking account or through a credit card. This became the norm for receiving funds. It involved little staff time and still allowed fitness centers to enter into contracts for 12 months or more, depending on how the facility chose to price its offerings. It simplified much of the mystery of running a fitness center, so outsiders (bankers, investors, potential buyers and even sophisticated Wall Street firms) could understand the business better. Often, they referred to this new financial model as analogous to a real estate owner's "rent roll." EFT allowed fitness facilities to charge higher prices, since the members would be committing to a higher price tag, but paid over many intervals. (Plus,the prepaid concept was encountering buyer objections.) It led to fewer accounts-receivable problems and minimal bad debts. It led to fewer dollars needed to go out for collection by third parties. Obviously, it led to predictable and timely payments. For upper-end clubs, house billing for extras (as in the country club model) was still available, but the core dollars from dues became automatic, once a month. The various state fitness facility laws often sanctioned this EFT concept.In the 1980s, the fitness center industry was immature, often with successful business professionals as key investors, with few having grown up within the industry. With no track records within the industry, and no data being published about the norms of this industry, bankers and lenders were ignorant about deals and their likelihood of success. Many start-ups went to their local banks for debt. Some tried to take advantage of Small Business Administration or other governmental agency guarantees, or even direct funding. Some developers went to regional banks or even national bank centers, as these institutions were regularly consolidating. The knee-jerk bank reaction was to always request a personal guarantee, at least for the key investors, as a second form of debt repayment in case the fitness center's cash flow was insufficient. EFT dues made the facility's revenue picture much more understandable.In the last 10 to 15 years, private equity firms became investors in the fitness center industry. They were interested in the larger, multi-club organizations, with the concept to grow the size of the business dramatically and then sell it or take it public. As part of their success formula, they wanted to leverage their equity dollars with debt from sophisticated lenders, or even the public debt markets. They were often able to borrow for club companies' total debt equal to four or five times the club's annual cash flow. This type of lending shifted away from pure assets (land, building or leasehold improvements, equipment and business) to a pure cash-flow basis.Owners/managers learned that they have to recarpet, repaint and redecorate once every certain number of years. Computer hardware and software has to be replaced or upgraded every few years. The space needs to be renovated (expanded or converted) from one use to another to meet changing demand. So, an underused racquetball court that was busy 10 years ago may today be a double-decked space housing a dedicated cycling studio and a Pilates studio -- both new concepts. Also, fitness equipment gets replaced regularly, and even added to as demand increases. On average, fitness centers spend 4 to 6 percent of their annual gross revenues, with some years as high as 10 to15 percent, for a major renovation. Maintenance capital expenditures, as distinguished from the original start-up capital expenditures, are accepted as a standard for all businesses in this industry; outsiders now accept this category as an industry norm.As the fitness facility industry has matured, even start-ups can obtain funding from various sources beyond friends and family. Today, real estate owners often seek out club operations as an acceptable use, and are willing to invest substantial capital to help pay for the fit-out of a fitness center, well beyond the plain vanilla shell. They are also willing to escalate the rent from no rent during construction to below-market levels as the facility ramps up its business.Equipment leasing has become plentiful, especially with leasing companies either owned by or affiliated with the major fitness equipment manufacturers. Today, a good business idea, along with the proper homework, is more likely to get funded and created. The value of data from trade associations, such as IHRSA (International Health, Racquet & Sportsclub Association), has helped the funding process on all levels.As any industry matures, there becomes a need for valuing a business for every reason imaginable. Businesses and business owners typically will have the need, at some point, to sell the business or transfer some ownership stock as part of an estate plan, or will want to buy out one or more investors within the business. Unfortunately, the business also has to deal with stockholder divorce issues or even death of an investor. Or, the business may need to get financing/refinancing or protest its real estates taxes or defend its value for insurance purposes. In some cases, there may be a building owner/tenant dispute. For all of these purposes, fitness centers may need to obtain an independent valuation. Some appraisers have studied the industry, learned about the relevant and factual data, and determined the proper methodology. However, over the past 20 years, it has been more common to expect appraisers to be uninformed and to struggle to understand the nuances of the industry. Trade industry articles and publications have helped. The breakthrough in recent years has led to the acceptance of the income approach as the singular way to analyze fitness facilities, and the capitalized earnings method as the way to calculate it. This presumes accrual-based accounting and an adjusted financial statement from a recent representative period of time based on a third-party perspective."Smart money" coming from private equity firms has found the industry over the last 10 to 15 years. These firms raise large funds, often with investments from pension funds, large financial institutions, insurance companies and some wealthy investors, and then leverage their equity with substantial debt. These are sometimes called LBOs (leverage buyout funds), where the intention is to grow these businesses and then have a capital event in five to seven years. This event may be a sale or an IPO (initial public offering) as the company goes public. The exit strategy is part of the initial plan. There are more than 10 club companies that are or have been backed by these private equity firms, with more such investment companies likely to invest in the industry in the future.All sophisticated financial investors and analysts study an industry over the long term. They are concerned with how specific industries perform during weaker economic cycles, such as recessionary times. The fitness industry postulated that it did well during recessions in the early 1980s and 1990s, but it had no hard data. During the most recent recession, IHRSA created an index, where it collected financial and membership data on a sample of club companies from quarter to quarter. It then compared this data to the previous year to measure trends. The conclusion was that the fitness industry was recession-resilient, but not purely recession-proof. Revenue, memberships and earnings grew, but at a lesser pace than during pre-recession times. This data, which is still being regularly collected, has helped convince outsiders of the long-term viability of this industry.As industries develop, there is a need to define common metrics that allow for comparisons between fitness centers and between companies. Several key metrics have begun to emerge, including revenue per member, revenue per square foot, revenue per FTE (full-time equivalent) staff, EBITDA percent (earnings before interest, taxes, depreciation and amortization), net membership growth, attrition rate, non-dues revenue percent, revenue growth, payroll percent of revenue, etc. These measures are valuable as an industry is studied by both outsiders and insiders, and create a common set of indicators for industry understanding.

30 Years and Counting

What's the secret to Almaden Valley Athletic Club's success? Keeping up with the times, excellent staff and customer service, and offering a little bit of something for everyone.

Reform Initiative

Penn's recreation department opens the nation's first campus-based, full-serive Pilates studio.

Photo of Penn students using Pilates studio

Splash Register

Swimming has become a lucrative programming option for facility operators who know to position themselves in the marketplace.

Photo of members of Indy's SwimFit

Good Works, Good Workouts

The homeless in Kirkland, Wash., now have access to a local health club, thanks to a music director with a passion for health.

Photo of Jason Buckley pumping iron at 24-Hour Fitness

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AB Show 2026 in Orlando

AB Show is a solution-focused event for athletics, fitness, recreation and military professionals.

Nov. 17-19, 2026