To health club consumers, it was like Starbucks buying up your beloved corner coffee shop.
In December, the Buffalo Athletic Club announced it had sold all but one of its co-ed gyms to LA Fitness, the country’s largest gym chain. In doing so, LA Fitness became the health club with the largest presence in Western New York, shaking up the local scene and leaving thousands of members in transition.
It’s a scenario that has played out throughout the country and Canada as LA Fitness continues an aggressive and rapid expansion plan and bulks up its portfolio to more than 510 clubs through a combination of new builds and acquisitions.
Majority-owned by three private equity groups, the well-financed company has expanded at a steady clip over the past six years and is currently the fastest-growing club in the industry.
As was the case in many other markets before Buffalo, LA Fitness pursued the Buffalo Athletic Club for more than a year with increasingly attractive offers.
“It got to the point with what they were offering that we couldn’t say no, as long as we got to keep our core business of women-only clubs,” said Jeremy Heim, operating partner of the Buffalo Athletic Club.
The BAC sold four of its co-ed Buffalo gyms to LA Fitness, leaving the BAC with four local locations and bringing LA Fitness to seven.
Each gym had 3,000 to 4,000 memberships that were included in the sale. Heim declined to disclose the sales price.
It was a win-win for the BAC, according to Heim, who said the co-ed clubs weren’t nearly as profitable as its women-only ones.
“Over the past five years, our market has become extremely saturated with co-ed clubs,” Heim said. “I think most people understand why we made the decision that we did.”
When the Buffalo Athletic Club was formed in 1980, there were fewer than 25 health clubs in the Buffalo metropolitan area. Today there are more than 175. As a result of that squeeze, the BAC found the bulk of its growth and profit was coming from its women-only clubs. Of the last five locations the BAC opened, four of them were geared toward women.
The BAC will announce the addition of a new female gym in the Buffalo market within the next six months and will embark on a $2 million, 10,000-square-foot expansion and upgrade of its Colvin and Eggert facility in spring, Heim said. It has also retained many of its “superstar” trainers, such as the popular Robbie Raugh, and is looking into expanding into other markets in the country, possibly beginning near Charleston, S.C.
But the sale has left many members and staff at the co-ed gyms unhappy.
One manager whose club was included in the sale said that morale is down among staff, traffic has decreased dramatically and a third of members have cancelled their memberships. Worse, managers and salespeople at LA Fitness stand to take pay cuts because of the way LA Fitness calculates commission and how high it sets its sales goals.
“There are people who were making $60,000 to $80,000 a year who will be making mid-$20s to $30s now,” he said. “We’re all looking for new jobs. It’s just such a drastic difference, you can’t live on it.”
He spoke on condition of anonymity because he is still employed at LA Fitness and fears he would lose his job if his employer knew he is looking for work elsewhere.
Making matters worse, the manager said, there has been no advertising and no attempt by LA Fitness to sort out customer concerns or confusion.
“With the BAC, we were more customer service-driven. With LA Fitness, we’re much more focused on making our numbers,” he said. “We pushed for new members at BAC, too, but customer service was always more important in the long run.”
That change in focus has been felt abruptly by members.
“The friendly, welcoming atmosphere seems to have vanished,” said Alisha Janicki, a member at the former downtown BAC location which was sold to LA Fitness. “I would think that if you’re trying to retain members you would want to make a good first impression.”
Members are also upset that LA Fitness does not accept Medicare-related discounts, which allowed seniors to pay just $25 a year or less for memberships. Customers have also complained about broken equipment and that LA Fitness has been unresponsive throughout the transition, especially about questions as to whether it will close the former Eastern Hills BAC location, since it has a new facility just a half-mile north on Transit Road.
LA Fitness did not return several calls seeking comment for this and other stories about the sale.
But fitness club industry guru Rick Caro insists consumers are in good hands with LA Fitness and that they’ll be happy with the company once the transition is complete.
Caro said LA Fitness is the biggest in the industry with good reason: It has big, beautiful, clean clubs; affordable prices without the need to sign a long-term contract; high-quality equipment; and LA Fitness knows how to run a winning facility.
“They’re really very well respected in the industry,” Caro said. “Nobody likes change. It doesn’t matter what kind of facility they have or what price point, there are going to be people who are unhappy at first. But there will be members who stay and become a source of positive word of mouth in the marketplace.”
Female members will have until Jan. 31 to make the choice to stay with LA Fitness or request to have their memberships transferred to the Buffalo Athletic Club. For a smoother billing transition, members are encouraged to switch immediately. After Jan. 31, memberships will be locked in, Heim said.