The Business The largest facility of its kind in the southeastern United States, this club has 600 members; 20 outdoor and 9 indoor tennis courts (generating 77% of revenues); a Nautilus fitness center and an aerobics room (18%); a café; a pool; a pro shop; and three air-conditioned racquetball courts, all spread across 12 verdant acres. The owner, who opened the club nearly 20 years ago, wants to change careers.

Financial Summary 1989 1990 1991*
Gross revenues $595,000 $606,000 $624,000

Recast earnings before $137,000 $132,000 $146,000

interest, taxes, depreciation

and owner compensation * projected

Price $2.6 million

Outlook Mixed. Exercise remains hip, especially among gracelessly aging baby boomers, and tennis, after slumping in the 1980s, is coming back. But in these more down-market times, health clubs themselves are being threatened by such low-or no-price alternatives as the YMCA and your local municipal park, and club failure rates are 50% worse than they were a decade ago. Still, this club boasts margins (23% recast net) that most others (industry average: 7%) can't touch.

Price Rationale In terms of its size and range of facilities, this is a lot of club: nearly $3 million in hard assets alone. But unless you're looking for your own private playground, you're buying the club's income-producing potential, not its hard assets. Experts say clubs like this typically fetch between 3 and 6 times net operating income, which makes this price -- 18 times earnings -- appear, well, ludicrous. What's the deal? Several advisers wondered whether all those tennis courts represent the "highest and best use" for all that land.

Pros There is room for expansion, and it's got to be good for the soul to spend workdays around people having fun. Couldn't be bad for the body, either.

Cons The price. The low gross. The price. The stiff and plentiful competition in the club's home market. And, uh, the price.

-- Alessandra Bianchi

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Georgia Business Associates, 404-319-6500. n