The Business After stretching his capital to rejuvenate this 15-year-old health club, the owner is financially overextended. Located on the main street of its tiny town (population 5,000), the facility offers free weights and Nautilus equipment, aerobics, a sauna, a whirlpool, and indoor swimming. There's no other fitness center within 20 miles to muscle in on the club's territory, and some 500 clients currently pay $114 to $336 for 3-, 6-, or 12-month contracts. The ideal buyers? A couple of health enthusiasts with the stamina to handle physical labor and extended hours -- nearly 80 a week.
Financial Summary 1992 1993 1994Gross revenues $0 $49,499 $48,433Recast earnings before $0 $15,409 $1,071 depreciation, interest, taxes, and owner compensation
OutlookReports of the $7.8-billion health-club industry's death have been greatly exaggerated. After bulking up back in the 1980s, club memberships went on a crash diet in the early 1990s. But last year industry watchers saw nationwide membership in 11,655 fitness centers climb no less than 10%, to 20 million. The size of this club and its 40% attrition rate match industry standards, but its revenues and membership are weaklings compared with the 1994 national averages of $725,000 and 1,585. A previous owner declared bankruptcy in the late '80s, and the FDIC closed the club until mid-1993. With additional capital, new management could pump up revenues by invigorating the center's advertising, expanding hours of operation, and responding to a robust market for massage services and health-care products.
Price Rationale With a building and real estate worth $100,000; $85,000 in equipment, fixtures, and furnishings; customer contracts worth $20,000; and anemic inventory; this price is asset-based but flabby. Even in the Sooner State's metropolitan areas, similar clubs aren't worth more than $125,000. Experts trim this price to roughly $75,000.
Pros No competition in the neighborhood and an up-to-date, fully equipped health club -- all yours, 24 hours a day.
Cons Not much else in the neighborhood. And you'll be too busy to use the facilities. -- Robina A. Gangemi* * *
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 Affiliated Business Consultants at 719-540-2200.