TOPLINEA spate of lawsuits targeting gym chains—deemed non-essential businesses amid a near-national shutdown—over gym charges is just one bad sign for a huge industry that may have a hard time getting back into shape post-pandemic.
A Planet Fitness in Reading, Massachusetts before the onset of Coronavirus.
Dina Rudick/The Boston Globe via Getty Images
KEY FACTS
Gym chain Town Sports International’s Boston Sports Club is getting sued for allegedly continuing to charge members despite closures—and failing to provide an easy cancellation option—after laying off all its Boston employee
For similar reasons, gyms around the country, like 24 Hour Fitness in San Diego and San Ramon, California, LA Fitness in Irvine, California, New York Sports Club in Manhattan, New York, face lawsuits.
Centers can be notoriously tough to keep clean: 63% of gym equipment is contaminated with viruses, especially rhinoviruses, which cause the common cold, according to a 2006 study by the Clinical Journal of Sports Medicine.
“If there’s a downturn, you can bet decadent workout packages will be one of the first things people ditch,” wrote a Bloomberg Opinion columnist in September 2019 before the pandemic, warning of trouble for expensive fitness boutiques like Barry’s Bootcamp and SoulCycle.
Cowen analyst Oliver Chen told Forbes he is optimistic that low-cost gym chain Planet Fitness will “emerge stronger” post-coronavirus pandemic due to its liquidity and brand positioning.
There’s a widespread movement for at-home workout innovation, with Peloton’s revenue growing 98% year-over-year, though at $2,000-plus per bike, Seeking Alpha warns that in the crowded virtual workout space, less expensive options may be more recession-proof.
BIG NUMBER
$30 billion. That’s 2017 revenue from the 30,000-plus gyms and membership-based facilities in America, according to Statista.
KEY BACKGROUND
Fitness centers have been deemed non-essential businesses in the stay-at-home orders mandated by governors across the country, causing gym chains like Gold’s Gym, Equinox, Planet Fitness and Crunch Fitness to pause all membership dues while closed. Without these dues, it’ll be a question of how long these gyms can survive and support employees while occupying large retail spaces all over the country.
TANGENT
Gym chains had been taking over vacant mall real estate, tripling leases in malls on a square foot basis since 2008 with Planet Fitness as the leader of this trend. This adds to the uncertainty of what will become of malls—as tenants of Mall of America and American Dream skip rent, hindering parent companies’ ability to make mortgage payments, reports CNBC.
FURTHER READING
$30 For A Single SoulCycle Class? Not When A Recession Hits (Bloomberg)
Boston Sports Clubs Is Getting Sued For Continuing To Bill Members (Boston Magazine)
Prospective Study Of Bacterial And Viral Contamination Of Exercise Equipment (Clinical Journal of Sports Medicine)
Peloton Interactive: Going Nowhere (Seeking Alpha)