Toronto-Area Fitness Clubs Get New Owners
By Dana Flavelle for The Toronto Star
4/26/07 - Two Canadian fitness club operators say they will invest more than $30 million fixing up and returning The Sports Clubs of Canada to their former glory, and also fixing up half a dozen Bally fitness centres, all in the Greater Toronto Area.
GoodLife Fitness Inc., of London, Ont. is buying six of The Sports Clubs, while Extreme Fitness Inc., of Thornhill, is buying the other three sites of the well-known downtown chain, the companies announced yesterday.
The two firms will also split seven Bally fitness locations, with GoodLife picking up four and Extreme Fitness the other three.
Altogether, the transactions will fetch $19.6 million for Chicago-based Bally Total Fitness Holding Corp., which is trying to restructure $827 million in debt.
The buyers both said they plan to invest heavily in the clubs, with Extreme Fitness injecting $20 million into the facilities and GoodLife $10 million, moves that could spell higher membership fees at some locations.
Both also said they would keep some element of The Sports Clubs names because of their strong brand recognition. The GoodLife clubs would become GoodLife Fitness Sports Clubs, for example. "That way they'll feel that their tradition is respected and honoured," GoodLife chief executive officer David Patchell-Evans said in a telephone interview yesterday.
"We're going to dress them up back to their former glory. We plan to spend over $10 million on the clubs to make them look as good as GoodLife clubs do. Quite honestly they just haven't had any money spent on them recently."
Extreme Fitness said it planned to incorporate the clubs' individual identities into their new names, at least during the transition period. The Delisle Club, at Yonge and Eglinton, would become The Delisle by Extreme Fitness.
The names of the Bally clubs will change to reflect their new ownership.
The two Canadian companies have distinct identities. GoodLife is the country's largest fitness chain, with more than 300 centres and 350,000 members, three times that of its closest competitor.
Extreme Fitness had just six locations before yesterday's announcement, which doubles its footprint. Founded in 1995 it was majority purchased by New York private equity firm Falconhead Capital LLC last June.